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The evolving climate drives physical risks—damaged or strandedassets and business-interruption costs from severe weather events. However, approximating transition and location risks has to be done with great care, particularly as we consider tipping points and cascading events.
These were highlighted at last October’s PRI in Person event by Jan Rasmussen, Head of ESG and Sustainability at PensionDanmark. At least part of the rationale is the risk of breaching fiduciary duty by potentially landing clients with strandedassets and higher costs due to the persistence of policies that overshoot 1.5°C.
Increasing gas infrastructure must be avoided to avert dangerous climate impacts and strandedassets.”. By including gas, the EU is “giving the false impression that gas is ‘green’, which might lead to the wrong investment decisions” and potentially “delay the large-scale investments we need into renewables”, says Diamantopoulou.
Recent events are forcing us to consider new economic paradigms. The repercussions of these dramatic events are reverberating around the world and calling us to confront deeply entrenched weaknesses in our economic systems. It does this by reforming markets to address real needs while factoring costs and stakeholder concerns.
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