A $50 billion UK investor has a heat warning for portfolios

economictimes.indiatimes.com:

heat records, one of the world’s biggest green investors says fund managers need to sit up and take note.Impax Asset Management Group Plc, which oversees about £40 billion ($50 billion) in client assets, has found that portfolio companies generally don’t know how extreme heat can affect their valuations. Heat waves “are a threat to revenue loss, productivity and the supply chain,” Matthew Wright, a research analyst at Impax who specialises in studying the fallout on asset values of climate change, said in an interview. The phenomenon has the potential to disrupt all sectors, but some are more vulnerable than others, he said.

“It’s something asset managers really need to think about,” Wright said. The planet just endured its hottest week on record, according to preliminary data published by the World Meteorological Organisation. The United Nations agency expects global temperatures to continue to surge in the next five years, fuelled by heat-trapping greenhouse gases and a naturally occurring El Niño event.

Impax’s analyses show that some companies’ labor forces are particularly at risk. “There’s a real productivity impact when temperature goes up,” Wright said. That’s especially true of construction companies and other businesses that require workers to toil outdoors, he said.

Even if global warming is limited to 1.5C by the end of the century, the accumulated financial loss due to heat stress is expected to reach $2.4 trillion by the end of this decade, according to a 2019 report by the International Labour Organisation that examined the links between heat stress and labor productivity. Wright said Impax was particularly struck by reports showing how extreme heat can affect portfolio assets in the tech sector. Last