BlackRock believes that Investors are underpricing the impact of climate-related risks, including more frequent and intense extreme weather events.

In a report, Getting physical: Scenario analysis for assessing climate risks the company has utilised new tools and data to highlight the potential impact on different US asset classes.

“The combination of advances in data sciences, including geolocation data and climate modelling, have allowed us to more precisely assess the investment implications of climate-related risks,” said Brian Deese, global head of Sustainable Investing. “Asset-level analysis is key for investors. We find that the risk posed by more frequent and severe weather events such as hurricanes and wildfires are not fully reflected in the price of many assets, including US utility equities. A rising share of municipal bond issuance is set to come from regions facing climate-related economic losses. And many high-risk commercial properties are outside official flood zones.”

Covering municipal bonds, commercial real estate and utilities, the report compiled with Rhodium Group, involved analysis from 160 terabytes of data to assess the climate-related risks facing specific asset classes, both today and under a range of future climate scenarios reaching out to 2100.

Full report here.

Share Story: