Thursday 23 September 2010, 11:30 AM (AAD Theatrette)

Dr Keith Finlayson

Senior advisor on climate change, Norwegian Central Bank 

Climate change and main-stream financial investment

Climate change is of increasing concern for diversified, long-term investors, for two reasons.  First, regulatory risk is proving difficult to manage, as carbon prices are increasingly being driven not by broad-based market mechanisms, but via a fragmented system of regulations defining various mandatory technology standards, sector emission caps, and renewable energy targets.  The exposure of individual companies to this regulatory patchwork is hard to track for investors, given the geographic spread of operations of multi-national companies, and the generally poor standard of company disclosure on emissions. Secondly, while there is overwhelming evidence that climate change is indeed taking place and is likely to have serious consequences, the direct physical impacts are harder to define and predict for the operations of individual companies, sectors and regions. Nevertheless, from a financial and social perspective, it is important to quantify or bound the risk so that the appropriate allocation of funding to mitigate and adapt to climate change is available. While regional climate change models of increasing resolution are becoming available, the challenge remains to interpret their output in terms of impacts, and to integrate this into corporate and financial portfolio risk management. Keith will talk about these challenges, and the initiatives that financial institutions are taking to manage climate change risk

BIO: Keith is currently the senior advisor on climate change for the investment arm of the Norwegian Central Bank, which manages one of the largest sovereign wealth funds in the world.  Keith was the 1996 ANARE physicist at Davis, and has also served in the United Nations Environment Programme with responsibility for arctic and antarctic regional projects. He has a PhD in experimental physics from Heidelberg University, an MBA from UNSW, and a BSc(Hons) from the ANU.