Executive Summary

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Climate change is perhaps the greatest threat to prosperity that humankind has ever faced. It is not a distant threat, though; heavy costs are being borne here and now. The World Meteorological Organization reported in 2021 that climate- and weather-related disasters have risen five-fold over the last half century, comprising 11,000 individual events, more than two million lives lost and US$3.64 trillion in financial losses.1 In 2021, almost one in three Americans experienced a weather disaster.2

Last year3 we saw deadly floods in western Europe, where as much as two months’ worth of rain fell in two days. Flooding also hit central China, where a three-day downpour delivered a year’s worth of rain in one city. A “heat dome” that enveloped much of the Pacific Northwest and Canada during the summer of 2021 caused several hundred deaths and damaged transportation infrastructures and crops. Fires forced evacuations and damaged property and infrastructure in the American west, the Mediterranean and Russia. One company has even been charged with manslaughter in the deaths of four people caught in a wildfire found to have been caused by company’s inadequate management of its transmission assets.4 This is just a sampling of the impacts of climate change‑related extreme weather in the past year.

But today’s suffering and costs pale in comparison to what future damages will be. A recent report from Swiss Re contained the sobering estimate that climate change could cost the world 10% of its total economic value by 2050 if we stay on our current warming trajectory.5 By contrast, by investing the money needed to prevent warming above 1.5⁰C — the threshold under which we must stay to avoid climate catastrophe — the estimated negative impact on global GDP would be reduced to about 4.2% by midcentury.

The damages, costs and suffering caused by climate change can be mitigated because we have the capacity and the technology to prevent them from becoming significantly worse. Investing now in low-carbon technologies and solutions is, in fact, likely to be less expensive than coping with increasingly severe and frequent disasters and heat waves. The IPCC estimates6 that it will take US$1.6 – 3.8 trillion every year to avoid surpassing 1.5⁰C in additional warming between now and 2050. That is a hefty price tag, but these investments will also create jobs and add to economic output, unlike the damages and losses incurred by extreme weather and the chronic effects of climate change.

Investing in mitigation need not undermine financial outcomes for both equity and fixed income investors. In fact, it should be profitable. This paper reviews recent evidence on the performance of portfolios and companies that lean into the transition to a low- or no-carbon economy. Investing in mitigation and low-carbon solutions, or at least incorporating both transition7 and physical risks into investment portfolios, can provide competitive, if not superior, financial results to investors.

As the studies highlighted in this report show, the evidence is mounting that climate change poses a great many risks and financial markets are increasingly pricing those risks into securities markets today. Investors will do well to pay attention.


1 United Nations, “Climate and Weather‑related Disasters Surge Five-fold Over 50 Years, but Early Warnings Save Lives – WMO report,” UN News, Sept. 1, 2021.

2 Sarah Kaplan and Andrew Ba Tran, “Nearly 1 in 3 Americans Experienced a Weather Disaster This Summer,” The Washington Post, Sept. 4, 2021.

3 Agence France-Presse, “A Roundup of the World’s Worst Climate Change Events in 2021,” July 26, 2021.

4 Ron Brackett, “PG&E Charged with Involuntary Manslaughter in California’s Zogg Fire That Killed Four People,” The Weather Channel, September 25, 2021.

5 Swiss Re Institute, “The Economics of Climate Change: No Action Not an Option,” April 2021.

6 Joeri Rogelj, Drew Shindell, and Kejun Jiang, et. al, “Mitigation Pathways Compatible with 1.5⁰C in the Context of Sustainable Development,” IPCC, Chapter 2, Global Warming of 1.5⁰C, June 18, 2018.

7 Transition risks are primarily attached to larger emitters and involve risks of stranded assets as the world moves away from fossil fuels and toward alternative ways to produce energy, and the risk of cost increases and reduced competitiveness as rising carbon prices are incorporated into companies’ cost functions.

 IMPX-0919

Julie Gorte, Ph.D.

Senior Vice President for Sustainable Investing

Julie Gorte is Senior Vice President for Sustainable Investing at Impax Asset Management LLC, the North American division of Impax Asset Management Group and investment adviser to Pax World Funds.

She oversees environmental, social and governance-related research on prospective and current investments as well as the firm’s shareholder engagement and public policy advocacy. Julie is also a member of the Impax Gender Analytics team.

Prior to joining the firm, Julie served as Vice President and Chief Social Investment Strategist at Calvert. Her experience before she joined the investment world in 1999 includes a various number of roles. Julie spent nearly 14 years as Senior Associate and Project Director at the Congressional Office of Technology Assessment. Additionally, she has held the roles of Vice President for Economic and Environmental Research at The Wilderness Society, and Program Manager for Technology Programs in the Environmental Protection Agency’s policy office and Senior Associate at the Northeast-Midwest Institute.

Julie serves on the boards of the Endangered Species Coalition, E4theFuture, Clean Production Action and is the board chair of the Sustainable Investments Institute.

Julie received a Ph.D. and Master of Science in resource economics from Michigan State University and a Bachelor of Science in forest management at Northern Arizona University.

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