Report on climate and capital return

The consulting company Mercer today presented a report on long-term consequences of climate change on the global capital markets. The Norwegian Ministry of Finance entered into a contract with Mercer about such a study in 2009, and encouraged other large institutional investors to participate. Consequently, 13 other large investors worldwide joined the project.

"Climate change is a risk factor that all long term investors should take into account when formulating their investment strategy. Norway has therefore taken a leading role in this extensive research project. We are pleased that the report is now ready, and we will study the recommendations carefully," says State Secretary Hilde Singsaas.

The report analyses how climate change and the authorities' response to these changes may affect risk and return in global capital markets over the next 20 years. The report is partly based on macro-economic analysis carried out by Grantham Institute, which has continued the analyses from the Stern Report on how climate change can affect the development of world GDP. The report recommends that investors pay close attention to climate risk, although the overall impact on the world’s capital markets are expected to be relatively small up to 2030.

Mercer has worked closely with The Grantham Research Institute on Climate Change and the Environment at London School of Economics (where Professor Lord Stern, author of the Stern Report, is chairman of the board). Other joint venture partners have been The International Finance Corporation in Washington D.C. (of the World Bank Group), Carbon Trust in London, and a selection of experts in environmental science and economics from both private sector and academia.