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Climate Change May Cost Institutional Investors Trillions of Dollars, Finds IFC-Supported Study

Washington, D.C., February 15, 2011— A continued delay in policy action and a lack of international coordination to tackle climate change could cost institutional investors trillions of dollars over the coming decades, according to a new report supported by IFC, a member of the World Bank Group.
The report, Climate Change Scenarios: Implications for Strategic Asset Allocation , is a collaborative effort headed by Mercer and supported by IFC in partnership with Italy, Luxembourg, the Netherlands, and Norway. Other partners in the project were 14 global institutional investors, representing around $2 trillion in assets under management, as well as Carbon Trust. IFC supported the study by contributing technical expertise based on its experience working in emerging markets.
“This study makes a significant contribution to our ability to measure the level of risk that climate change creates for investment portfolios.  Managing that risk in a way that maintains the returns expected by beneficiaries is a crucial responsibility for the management of these investment portfolios,” said Rachel Kyte, IFC Vice President for Business Advisory Services.  “The report provides some practical steps that investors can take today to shift their asset allocation to manage climate-change risks and finance the much-needed infrastructure for a lower-carbon future.”
Tackling climate change in developing countries is a strategic priority for IFC.  The Mercer study is one of several IFC initiatives to help development and commercial financial institutions better understand the risks and opportunities associated with climate change.
IFC recently published two studies that assess the risks and opportunities that climate change poses to the private sector and suggest approaches for how the private sector can adapt.   Climate Risk and Business assesses hydropower, agribusiness, and manufacturing projects in Asia and Africa.   Climate Risk and Financial Institutions analyzes the risks that financial institutions may face from climate impacts.   Climate Risk and Business: Ports will be published in March.  Click here to access the reports
Tackling climate change in developing countries is a strategic priority for IFC. IFC plans to double its climate-related investments to at least 20 percent of its overall commitments within two years. IFC Advisory Services spending on climate change is also expected to double to the same share over the same period.
About IFC
IFC, a member of the World Bank Group, is the largest global development institution focused on the private sector in developing countries. We create opportunity for people to escape poverty and improve their lives. We do so by providing financing to help businesses employ more people and supply essential services, by mobilizing capital from others, and by delivering advisory services to ensure sustainable development. In a time of global economic uncertainty, our new investments climbed to a record $18 billion in fiscal 2010. For more information, visit .