A recent news article in The Economist reports on the growing number of financial institutions that are investing in climate service firms and quotes Climate Service CEO James McMahon. Most climate-service providers, the article explains, feed public climate data into economic models, which they then use to assign a dollar value to the risks climate change poses to businesses, usually over a five or ten year period.
“On such a timescale the range of estimates for the impact of global warming should be quite narrow,” says James McMahon, CEO and Co-Founder of The Climate Service in the article. “To handle unpredictable inputs, such as whether a city will decide to build sea walls,” McMahon explains, “Climate-service firms offer a range of scenarios.”
The article attributes the pique in investors’ interest in such firms to several factors. Acquirers want to utilize climate analysis software to evaluate their own risks. Moreover, policymakers appear to be gearing up to require investors and regulators to disclose their climate risks.
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