As the climate change conference concluded last week in Glasgow, one thing set it apart from all the other conferences before: The world’s bankers were there in force. In recent years, the world’s leading financial centers, and their regulators, have been talking a lot about climate change.

For all the attention to climate in the world of capital, investment dollars still too often aren’t moving in the right ways. In particular, the world of finance is flying blind on how the physical risks of climate change will affect the value of assets. When that changes there will be surprising, possibly massive, shifts in capital.

When bankers talk about climate change, they nearly always focus on the capital-intensive process of cutting emissions. That’s critically important, of course, and there’s some evidence that as attention to climate change rises, the share price of highly polluting assets slides. Markets are beginning to signal a transition to low pollution futures.

We must continue to urgently press ahead with deep cuts in emissions, but this alone […]