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Forum Views - January 2024

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10

FORUM VIEWS - JANUARY 2024

are bad for our health, bad for the planet, and create

significant costs for taxpayers. We can already see a

growing number of companies focusing on health and

healthy foods and this trend will be supported by an

increased focus from governments on addressing the

system costs that irresponsible food marketing causes.

Food environments and food architecture will be

reshaped as a result creating further investment

opportunities.

Early financial planning is crucial in mitigating the impacts of

climate change.

Crafting individual investment portfolios that align with the

Paris climate goals and the Kunming-Montreal Global

Biodiversity Framework is a basic step that will help to

protect capital against future losses, and investing in

sustainable businesses and divesting from those causing

harm aligns financial security with sustainability efforts.

Diversified portfolios that favour sustainable assets provide a

buffer against market volatility resulting from climate-related

risks, and there are a growing number of financial products

(such as ETFs) that make this easier.

However, there is a not a one-size-fits-all solution. In crafting

a financial strategy that safeguards their interests and

empowers climate action, individuals should align their

choices with their environmental and social values, and move

away from the old-fashioned approach that simply

encouraged a focus on ‘risk appetite’.

Aligning personal finance with one’s values provides a much

stronger underpinning investment philosophy than a simple

focus on expected returns, in no small part because historic

investment returns are likely to prove a poor indicator of

future returns as we transition from the stable Holocene to

the unpredictable Anthropocene. As the adverts say, ‘past

performance is no indicator of future returns’ and that has

never been more true than today.

As we confront the complexities of climate change, both on a

global and individual scale, proactive and sustainable

financial practices are key to building resilience in the face of

an increasingly uncertain future. But individual action alone

will not be enough. Governments and financial institutions

must champion policies and investments that achieve net

zero, foster climate resilience, restore and enhance

biodiversity, and ensure a just transition to a new, greener

economy that enhances the well-being of all, not the survival

of the few.

Conclusion

Governments and financial

institutions must champion

policies and investments that

achieve net zero, foster climate

resilience, restore and enhance

biodiversity, and ensure a just

transition to a new, greener

economy that enhances the

well-being of all, not the

survival of the few.

Broader business trends to watch

Investment strategies for individuals

Insurance becomes a key tool in maintaining financial

resilience against climate-related risks. However, that also

means that insurance premiums will increase as the

insurance companies respond to demand while also facing

an underlying increase in the risks of climate and nature-

related losses (and costs of restoration).

Innovative financial tools, such as sustainability-linked

bonds, offer promising solutions, both for companies and for

governments. These instruments tie financial outcomes to

sustainable targets, promoting responsible financial

practices, and often achieve cheaper financing for the

companies or governments issuing them.

Individuals, too, must navigate the financial implications of

climate change. Voting for environmentally conscious

governments and/or supporting positive environmental

policies is a crucial step, but personal financial decisions also

play a vital role.

Governments and financial institutions play a pivotal role in

preparing individuals for these challenges. Transparent

communication, clear transition strategies, and the

redirection of financial resources toward sustainable

initiatives are essential components of this preparation.

Peter Elwin is Director of Fixed Income, and Head of the Food & Land Use

Programme, at financial think tank Planet Tracker and has over 20 years of

financial markets experience in senior management and functional roles on the

buy side and sell side. His experience covers food systems, equity and credit

research, accounting, valuation, natural capital, sustainability, strategy, and

operations.

Peter was previously Head of Research at the Universities Superannuation

Scheme (USS), one of the largest UK private pension schemes with over £60bn

under management. Before joining USS, Peter was Deputy Head of European

Research and the #1-rated Global Head of Pensions, Valuation, & Accounting

research at JP Morgan. He is the lead author of Planet Tracker’s award-winning

Financial Markets Roadmap for Transforming the Global Food System.

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