We Are Fiduciaries...

It is clear we will undergo an extraordinary amount of change, in an exceptionally short time frame and at a magnitude we have not experienced in our lifetimes. We must fully decarbonize our economies by 2050. Impacts of climate change are affecting the real estate markets - hurricanes, extraordinary rain events, out of control fires and extreme heat. Increasingly assets are at risk of becoming ‘stranded’ due to direct impacts of the changing climate and devaluations related to the transition to a low carbon economy.

We face sweeping and long-term consequences for the global economy, biodiversity and human development. How do we assess the risk? How do we stave off what appears to be inevitable and what can be done to shore up our portfolios in order to remain good stewards of capital? it is no longer an abstract exercise.

How will you reallocate capital in the face of climate change?

  •  "Will cities, for example, be able to afford their infrastructure needs as climate risk reshapes the market for municipal bonds? 

  • What will happen to the 30-year mortgage — a key building block of finance — if lenders can't estimate the impact of climate risk over such a long timeline, and if there is no viable market for flood or fire insurance in impacted areas? 

  • What happens to inflation, and in turn interest rates, if the cost of food climbs from drought and flooding? 

  • How can we model economic growth if emerging markets see their productivity decline due to extreme heat and other climate impacts?"  

 Larry Fink, CEO Blackrock

https://www.blackrock.com/corporate/investor-relations/larry-fink-ceo-letter

Market Perspective: Are your investments at risk? Facing climate change threats head on in institutional real estate portfolios. Institutional Real Estate Investor, Americas. January 2020. Molly McCabe https://irei.com/publications/article/investments-risk-facing-climate-change-threats-head-institutional-real-estate-portfolios-2/