A new report from KPMG in Canada updates its previous analysis of how capital markets are pricing in climate risk and is asking whether the calculations accurately reflect risks and opportunities.
Doron Telem, ESG National Leader with KPMG, says, “Many investors, including major Canadian companies, are striving to effectively value climate risks and opportunities, given the complexities, uncertainties facing investors and reporting issuers. And the data gaps are challenges for capital markets.” in Canada. “Currently, there is no generally accepted method for incorporating climate risks and opportunities into a company’s valuation. Each investor conducts his or her own fundamental research or runs its own quantitative strategy.”
looking long term
Among the issues identified by the report is that investors can only look at risks for the traditional investment time horizon.
This means that they may be underestimating the long-term impact, which the market can later determine and affect their selling price.
The firm’s recent survey of CEOs, CIOs and senior investment strategists worldwide found that 7 in 10 do not believe that public equity markets fully reflect climate risks, with only one in ten for alternative investments. Another is one in twelve for bond prices.
