PLANETPOLICY Markets are flying blind on climate change

David G. Victor, Sadie Frank, Eric Gesick, and Parker Bolstad

These are excerpts from an important article published by the Brookings Institution on how climate change will affect markets including retirement savings and public sector financing.


In 2015, Mark Carney, then head of England’s central bank, rattled those markets (and the op-ed pages even more) by warning that global equities markets were poised for a major shock when governments started to regulate emissions of gases that contributed to global warming…..

….In new Brookings research, we are investigating the hypothesis that the physical risks of climate change are the real worry for financial instability.

…We focus on the U.S. and on two classes of investments in particular: public equities (that is, stocks) and municipal debt. There’s a lot more climate disclosure information about equities — thanks in part to work from groups like Ceres that are putting a spotlight on these important investments. By contrast, very little is known about what the municipal debt markets know about climate change. That should be deeply worrying because municipalities are on the front lines of the physical impacts of climate change, such as the communities in California that have been eliminated by wildfires. Firms whose stocks trade can move around as needed and adjust. But you can’t move a city. Because municipalities are on the front lines, we start there.

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