What are the implications of Climate Change in 2022? How climate change affects investment returns, could be a question that investors are pondering?
Put simply, climate change leads to conditions under which economies become less productive and productivity is a key driver of economic growth. This drives the expected returns of many financial assets. The trend is expected to continue and increase in 2022, as climate change impacts are on the rise.
Business opportunities and investments need to be made with an eye to transitioning towards a sustainable future, while pragmatically having impacts on real-world challenges. Climate change can no longer be used as an excuse for poor economic productivity and performance. Successful business strategies should be proactively adapted to the new reality of continuous climate change.
Science is now telling us that climate change effects are becoming more definite and they will continue into the near and medium-term. Investors must now make decisions based upon heightened risk and uncertainty in the face of these substantive changes. Businesses must adapt or perish in this changing environment. and the traditional “business as usual” approach has become a recipe for disaster.
How can investors move forward and be successful in this evolving context? One recommendation is to align business decisions and investments with the UN Sustainable Development Goals. These goals have multiple interactions that achieve the goal of mitigating climate change impacts while protecting our common future.
Aligning investments with these goals is the closest and best strategy for achieving a stable and sustainable investment pathway, as they create a framework of understanding, predictability, and clearly identify investment risks related to climate change.
Comprehending and keeping these UN sustainable development goals, front, and center in our mind’s eye, is fundamental as we move into 2022.
They are listed here as a reminder:
- Improve Clean Water and Sanitation
- Grow Affordable and Clean Energy
- Create Decent Work and Economic Growth
- Mobilize Sustainable Cities and Communities
- Influence Responsible Consumption and Production
- Organize Climate Action
- Develop Life Below Water
- Advance Life on Land
By welcoming change, it is definitely possible to achieve high investment returns in an age of uncertainty characterized by extreme temperatures, episodic droughts, and violent storms, depending on where in Africa the investments are made Regional risks and implications of climate change must be fully understood and factored into any investment strategy.
