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Influential money managers start to warn of climate risks [1]

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Date: 2023-04-06  

There have been any number of climate related stories here on DKos but when CNBC has a “front page” banner on it’s website (here) saying:

SUSTAINABLE FUTURE A hidden time bomb? A ‘Big Short’ investor sees financial disaster brewing in housing markets

As probably unnecessary background — the ‘Big Short’ was the investment analysis back in 2008 that the mortgage-backed securities market was a disaster and was followed by several money manager selling, or “shorting”, the banks and securities and making billions. These are people that the financial types listen to.

And what is this person saying:

Burt said DeltaTerra Capital’s research suggests that 20% of U.S. homes have “meaningful exposure” to a mispricing issue because of flood risk. If realized, he warned the fallout could resemble the extraordinary correction seen during the global financial crisis. “We think of this repricing issue as maybe a quarter of the size and magnitude of the [global financial crisis] in aggregate, but of course very, very damaging within those exposed communities,” Burt said. ... “The biggest reason why it matters from our perspective is that climate risk isn’t being priced into the housing market,” Jeremy Porter, head of climate implications at First Street Foundation, told CNBC. “The costs now or the valuations of homes don’t take into account the realization of that actual flood risk, and that’s not taking into account that we have a tremendous amount of overvaluation attached to properties across the country.”

Things the article points out are that:

The potential impact is likely to be felt more by lower-income property owners in many cases (something that environmental justice advocates have stressed); and

This could be catastrophic to many local and county communities since so many count on property taxes as their major source of revenue

The reinsurance industry is taking major charges due to climate change. They are starting to become much more direct on the relationship between the cost of insurance for properties and unaccounted climate risks.

This is not to be taken as a sign that ALL the financial markets will start to punish carbon emitters and force a massive change. But it is a sign that the gradual change of where big money investors put their money may continue to shift faster and faster.

It is at least encouraging that these types of media outlets are putting this information out in a way that will resonate with people who may not normally care about combating climate change.

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[1] Url: https://www.dailykos.com/stories/2023/4/6/2162421/-Influential-money-managers-start-to-warn-of-climate-risks

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