1.

We talk a lot at our Institute about scenario analysis. “AI 2027,” which imagines how artificial intelligence might unfold, shows how compelling — and unnerving — a fully narrative scenario can be, thanks to a highly-effective interactive website. The scenario, developed by the nonprofit AI Futures Project (the lead author, @Daniel Kokotajlo, is a former safety researcher at OpenAI), has two endings, both set in 2027, when the leading U.S. AI company lets AIs run independently. There is a doom ending, in which AIs turn adversarial and proceed to colonize space; and a “slowdown” scenario, in which an accord is brokered with China, ushering in the dawn of a new age. For a more hopeful outlook, see “AI as Normal Technology,” in which Princeton’s Arvind Narayanan and Sayash Kapoor assert that the economic impacts of AI could take decades. Defense against AI’s acting against the intent of its developers lies downstream, where how organizations adopt technology and the evolution of technology itself mitigate the concern.

Read here and here. (The New Yorker’s Joshua Rothman contrasts the two reports here.)

2.

The mortgage market is the financial bedrock beneath millions of homes — but is it waking up to the growing reality of climate impacts? In their sharp new paper, “Does the Mortgage Market Price in Physical Risk,” MSCI’s Joy Zhang, Sara Shen and David Zhang dig deep into whether mortgage markets are factoring in the rising threat of floods, wildfires and hurricanes. Spoiler alert: Extreme weather seems to be driving up risk and dragging down values. U.S. home prices grew four-tenths of one percent less per year in high-risk areas than in safer ones over the 10 years ending in 2024. That contrasts with the previous decade, when the appeal of high-risk areas — such as scenic value — often offset the impact of high physical risk. (The chart on page 9 details the difference between the decades.) About 20% of mortgages in the residential market are in high-risk areas. While insurance still covers much of the exposure, nearly 2% of property insurance policies in high-risk areas are not renewed each year — double the rate in lower-risk regions. This paper is a must-read for investors, policymakers and anyone betting on the future of housing finance in a warming world.

Read here.

3.

Blended finance — the combining of public or philanthropic capital with commercial private capital in a single investment — can challenge institutional investors seeking to fund projects in emerging markets and developing economies. To meet the risk, return and impact requirements for each participant, such projects have typically been structured with a high degree of tailoring that limit their replicability and scale. How to make sense of such disparate approaches, let alone scale them? In their recent report “Scaling Blended Finance,” British International Investment, the U.K. government’s development arm, and Boston Consulting Group inject much-needed clarity on the asset class. The report outlines a typology of five archetypes to distinguish blended funds by purpose, risk appetite, and the riskiness of underlying assets. (Followers of our Institute know that we have a soft spot for typologies!) We especially love the table on page 10 that summarizes these factors along with typical fund structure, size and terms. That’s not all. The authors present a scorecard (another fave!) for assessing fund structures based on the rationale, the alignment with investor risk appetite, and alignment of interests between investors and fund managers. If clarity drives action, this report makes a very good start to unlocking the billions for sustainable development that has long been the promise of blended finance.

Read here.

4.

Many businesses may not yet adequately account for nature-related risks, which can be highly concentrated in some operations, the available evidence from MSCI researchers suggests. All the more important for investors to glean some tips from “Asking Better Questions on Nature — For board directors,” published by the Taskforce on Nature-related Financial Disclosures. The guide comprises 12 questions divided into five topics: Nature’s relevance to a company’s business, integrating nature into decision-making, understanding the external context (including standards and regulation), organizational competence on nature-related issues, and board reflection. The questions include how companies’ impacts and dependencies on nature give rise to not just financial risks, but also opportunities for long-term value creation.

Read here.

5.

Celebrate World Ocean Day with an episode of the Climate Proofers podcast featuring a conversation with Paige Roepers, CEO and co-founder of Ocean Ledger, a geospatial analytics startup at the forefront of climate adaptation. Ocean Ledger’s algorithms analyze 30 million hectares of coastline and seabed to model shoreline changes with remarkable detail — and crucially, to identify the drivers behind those changes. As Paige explains, this precision helps insurers, property owners, and developers better quantify and manage risks like coastal flooding and erosion, and make smarter decisions about where to build sea defenses. It also supports innovative projects such as seagrass restoration in Mallorca by sharpening developers’ view of the suitability of sites for restoration. By enabling the market to correctly value natural coastal assets, tools like these are key to unlocking effective resilience strategies — and protecting our shorelines for the long term.

Listen here.