Weathering Climate Change: Opportunities and Risks in an Altered Investment Landscape
Prudential believes mispriced climate risk presents an opportunity for active alpha generation-
In PGIM's latest Megatrends paper, Weathering Climate Change, they propose an actionable climate change agenda for institutional investors, encompassing both hidden portfolio vulnerabilities and potential opportunities in the transition to a lower-carbon world.
The real question for investors is not if repricing of climate risks will occur, but when and how. In other words, whether it will be an orderly transition ushered in by government measures and gradual market adjustments or an abrupt, sharp decline in sentiment triggered by a series of local climate “Minsky moments.” The report outlines five catalysts that may drive a more significant repricing of climate change risk across asset classes, sectors, companies and individual securities.