Schroders integrates climate change into 30-year investment returns forecasting

Schroders has integrated climate change into its global investment returns forecasts for the next three decades, uncovering the stark impact global warming is set to have on international markets.

Schroders has historically produced 30-year return forecasts across equity and fixed income markets on an annual basis.

Today’s landmark research ‘Climate change and financial markets’ is the first time the impact of climate change has been integrated across these calculations. Schroders has developed a three-stage process for quantifying the likely impact of climate on long-term returns.

These steps encompass quantifying how output per capita will change as temperatures rise, the economic impact of the steps taken to mitigate temperature increases and understanding the potential costs of stranded energy assets.

The findings emphasise the focus Schroders is placing on the implications of global warming, adding to its market-leading sustainable investment framework.

Schroders’ SustainEx framework measures the positive and negative ESG impacts companies place on society and the environment.

Furthermore, Schroders’ Climate Progress Dashboard, Carbon Value at Risk and Physical Risks of Climate Change modelling all underpin our fund managers’ approach to navigating risk to better meet the investment needs of our clients.

Johanna Kyrklund, Group Chief Investment Officer, Schroders, commented:

“Climate change raises the stakes – there will be winners and losers. Having a clear framework for measuring the impact of climate change on a company by company basis and from a country perspective has never been more important. The message is clear: an active approach to managing the risks of climate change is no longer optional, it is essential.”

Craig Botham, Emerging Markets Economist and lead report author, Schroders, commented:

“Our innovative three-stage framework that integrates climate change into our 30 year return assumptions is just the beginning of our journey into better quantification of the opportunities and risks that may evolve over the longer term.

When we look beyond 30 years, the path of temperatures will depend on the actions taken before then. Without mitigation efforts, temperatures will rise by four degrees by 2100[1], bringing negative consequences for all.”

To read the research in full, please click here.

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Estelle Bibby, Head of Media Relations

+44 20 7658 3431


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[1] According to the Intergovernmental Panel on Climate Change