This story is part of The Cost of Climate Change, CNET's coverage of how the changing climate impacts a range of financial issues.
Climate change is altering life as we know it. As we look to the future, experts have strong opinions about how this will continue to impact our finances. Some are more optimistic than others.
1. More green job opportunities
From turbine technicians to solar panel installers, job growth in eco-friendly industries will escalate as countries commit to reducing carbon emissions -- and citizens hold businesses and institutions more accountable to climate change. As John Kerry, the special presidential envoy for climate, recently said at the UN Climate Conference in Glasgow, Scotland, "The energy market is the largest the world has ever known ... I look at the tech industry that drove Massachusetts's rise in the 1990s. [That was] small compared to this energy market. The energy market has four and a half to 5 billion users today, and it's going up to 9 billion users in this century."
2. Wider wealth gaps
In a 2014 interview, famed astrophysicist Neil deGrasse Tyson offered a forecast on climate and money, saying that the world (more specifically, climate deniers) would begin to care once it began to lose its wealth.
But not all economies will fare the same. Since the 1960s, according to Stanford University researchers the wealth disparity chasm has only widened in a world where climate change has gone largely unchecked. One reason is that poor countries that tend to be in hot climates have experienced increasing harm from a warming planet that has been driven in large part by the energy consumption taking place in richer countries. And it may only worsen in the years to come if more countries fail to commit to reducing emissions.
3. Impact investing will normalize
What began as a thoughtful way to invest with your heart is now proving it has the added benefit of being quite profitable.
Since 2009, analysts at investment research firm Morningstar have tracked the performance of environmental, social and governance businesses in the US and Canada and concluded that there is evidence of a "premium for tilting toward ESG companies." In the first year of the pandemic, performance on many large ESG investment funds outran the broader market. "The world is heading towards a low carbon transition. There are investments to be made," says Amy O'Brien, head of responsible investing at Nuveen, a TIAA company where investors have access to various ESG-type stock funds through their employer-sponsored retirement plans.
This is grabbing the attention of more investors and demand for so-called impact investing is expected to soar. Bloomberg Intelligence predicts the asset class will skyrocket to $53 trillion by 2025. "We're at a pivotal moment in our industry," says O'Brien. "Climate is consistently coming up as the top investor issue."
A related prediction: Third-party designations will become more widespread so investors can better verify if an investment is, in fact, hitting its ESG claims. Currently, asset managers are self-certifying, but eventually independent parties may be the ones giving the green light, similar to how the US Department of Agriculture places its Certified Organic seal on food products.
"There will be demand for more transparency and accountability," says Georgia Lee Hussey, a certified financial planner and co-founder of Modernist Financial. "The standards right now are all over the place."
4. Wider access to 'direct indexing'
Direct indexing, an investing strategy that allows you to buy individual stocks in an index fund and omit the companies you find problematic or risky, was once a broker service mainly reserved for the wealthy with large portfolios. "You could take the S&P 500 index and pull out the fossil fuel companies, the gun makers, the people who make fast food. You can match it with your values," says Tanja Hester, author of Wallet Activism.
But the trend has been picking as more investors want customizable portfolios to meet their values. Vanguard began offering the service to customers over the summer -- and word on the street is that Fidelity's next.
5. Emergence of sustainable banking
While the market for socially responsible investing has been growing for years, the banking sector has been slower to provide savers with similar, impact-oriented bank accounts. This year marked the launch of a couple new financial technologies supporting that demand for sustainable banking. Ando, a neobank, launched in January with a commitment to investing its users' money in projects that support carbon reduction. In September, the female-led neobank Rallius arrived and vowed to invest exclusively in ESG including initiatives like decarbonization, affordable housing and the wealth acceleration of women and minorities.
As word gets out about how many of the world's largest financial institutions continue to contribute billions of dollars to fossil fuel projects, the trend should pick up. Rallius forecasts a deposit base of $500 million in its first year of business.
6. Sticker shock on essentials
As heavy rain and floods become more frequent and severe, they will destroy more farms and crops in their path. That leads to production disruptions and food shortages on everything from from wheat to coffee beans to produce. The drop in supply will then mean price hikes at the retail level and food insecurity for many more people. The increases are already being felt in the marketplace and experts believe they will continue for some time. "For next 16 to 18 months we're going to see prices increase. There's no question," says Phil Lempert, founder of the Supermarket Guru.
Beyond food, we may also see climate-change related price shocks on other essentials like medical supplies and microchips. Factory shutdowns and labor disruptions due to climate damage may lead to a slow down in manufacturing and deliveries. "It will reduce choice and increase prices," says Sanjay Patnaik, director of the Brookings Institute's Center of Regulation and Markets and a fellow at Johns Hopkins University whose research centers on climate policies.
7. Jump in home insurance
While the average homeowner's insurance rate has risen at around the rate of inflation, it's been a different story for homeowners in states that have experienced damaging storms like in California, Colorado and Louisiana. "For some policy holders, the increase has been 9% in one year. For others, as high as 20%," says Loretta Worters, a spokesperson for the Insurance information Institute.
A recent New York Times piece also highlights how some insurers have dropped existing customers or have raised premiums multiple times over a single year. "Affordability and availability [of home insurance] could be adversely affected in coming years," says Worters.