2020 heaped misery upon misery. But from beneath the weight of global pandemic, racial injustice, political animosity, and democratic instability, strong, heartening signals delivered an unequivocal message: Climate. Risks. Matter. Climate risks have mattered to many for forty years. In 2020, Big Finance joined its powerful voice.
In January 2020, the World Economic Forum, alongside Marsh and Zurich Insurance Group, put out a call to institutional investors to face the risks of climate change, extreme weather, and water crises head on—all while achieving attractive risk-adjusted investment returns.
The same month, BlackRock foregrounded sustainability in its investment criteria for the first time. Larry Fink proclaimed climate risks as investment risks: “Even if only a fraction of the [climate] science is right, this is a much more structural, long-term crisis [than the 2007-2009 recession].”
The European Banking Authority for the first time began requiring banks to incorporate climate into credit policies.
In August, commercial flood insurance giant FM Global tied the cost of business disruption by flood to 5% loss, on average, to shareholder value. “That would seem to dwarf the cost of flood protection,” it added.
By September, the US Commodity Futures Trading Commission joined the chorus: “climate change poses a major risk to the stability of the US financial system and its ability to sustain the American economy.” Financial regulators must “move urgently and decisively to measure, understand, and address” these risks.