How Climate Change Is Reshaping Ag Investing

Climate change is what we call the new “über-variable” that will shape investors’ risks and returns more than any other variable over the coming years and decades.

Currently, traditional portfolio investing relies on making decisions that balance risk and reliability — at the right time. However, climate change urgently threatens to upend this balance by accelerating shifts in nearly every decision-critical factor, from weather disruptions to yields to input prices to labor to interest rates. It’s likely that at least some part of every investor’s portfolio has experienced a climate change-related event, leading to undesirable volatility.

Forward-thinking investors need to anticipate these unprecedented changes and can find tremendous value in preparing for climate risk with strategies that uncover and avoid unforeseen risks. These are all the pieces of conventional wisdom about the investment risk landscape that climate change is proving wrong, and how investors can prepare or avoid these traps.

Myth #1: Past performance of investments is a predictor of future performance.

Historical numbers and metrics have long helped guide investment decisions. But in a warming world, historical averages can’t offer much insight.

For example, imagine you have a portfolio of almonds, cherries, and/or pistachios in California’s Central Valley. Your…