What could a warmer world mean for investors?

Answering the climate challenge

14 Sep 2020

There is no doubt among the global investment community that we must take action now to avoid a climate crisis for future generations to come. Over the past decade, heightened awareness of the climate change challenge together with increased demand for climate-aware strategies has transformed climate investing from a nice-to-have to a must-have element of any investment decision.

Explore why we believe now more than ever is an opportune time for investors to consider allocating to climate aware investing.

Why is climate investing so imperative?

Current policies and commitments suggest average temperatures will increase 3°C by the end of this century. Do nothing and that figures rises to 4°C1 . Extreme weather events doubled between 2001 and 2019 while droughts and wildfires continue to increase exponentially. These physical effects have serious financial consequences. In addition, companies need to consider transitional risks including greater climate-related regulation as governments try to limit the impact of climate change and meet their Paris Agreement commitments.

Increased public awareness of climate change and its consequences are influencing societal preferences and behaviors and this is directly impacting companies’ cost of capital.

Climate aware investing at UBS-AM offers:

  • Opportunities to invest in economically viable solutions that help tackle climate change
  • An evolving opportunity set by reallocating capital to the climate change challenge which will require over USD 90 trillion of investment by 20302 in order to close the finance gap
  • Our climate aware investment framework which rests on three core pillars:
    • Climate adaptation: companies with products and services, providing solutions to a low-carbon future
    • Climate mitigation: companies that are leaders addressing climate change risks in their own operations
    • Climate transition: companies in carbon-heavy industries, transforming their existing business models
  • A suite of dedicated climate aware solutions across asset classes to help investors position themselves for the climate-smart future

Learn more about our Climate Aware offering at UBS Asset Management

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Views and opinions expressed are presented for informational purposes only and are a reflection of UBS Asset Management’s best judgment at the time a report was compiled, and any obligation to update or alter forward-looking statement as a result of new information, future events, or otherwise is disclaimed. Commentary is provided at a macro level and is not with reference to any investment strategy, product or fund offered by UBS Asset Management and is provided in Canada generally pursuant to the registration exemption provided for in Section 8.25(2) of National Instrument 31-103 and in Ontario pursuant to Section 34 of the Securities Act (Ontario) and does not purport to be tailored to the needs of the person or company receiving the advice.. The information contained in the materials should not be considered a recommendation to purchase or sell any particular security. The materials and content provided will not constitute investment advice and should not be relied upon as the basis for investment decisions. As individual situations may differ, clients should seek independent professional tax, legal, accounting or other specialist advisors as to the legal and tax implication of investing. Plan fiduciaries should determine whether an investment program is prudent in light of a plan's own circumstances and overall portfolio. UBS Asset Management services offered to Canadian persons are provided by UBS Asset Management (Canada) Inc., a Nova Scotia corporation. UBS Asset Management (Canada) Inc. is an indirect wholly-owned subsidiary of UBS AG and is registered as a portfolio manager and exempt market dealer (in all provinces of Canada), commodity trading manager (Ontario), adviser – commodity futures (Manitoba) and investment fund manager (Ontario, Quebec and Newfoundland), all pursuant to Canadian securities law. Materials may include forward-looking statements. Actual future results, however, may prove to be different from expectations. Past performance is no guarantee of future results. Potential for profit is accompanied by possibility of loss.

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