The power demand of artificial intelligence in developed markets, coupled with continued growth in emerging markets limit the speed of adjustment. Moreover, any agenda of de-growth will also be unacceptable to populations in democratic societies and is arguably not even morally justifiable.

Thus, the transition will take a lot longer than investors generally anticipate. Consequently, it seems increasingly likely that temperatures will rise above the level assumed by most mainstream investors. The consequence is a significantly increased 'path risk' in the overall investment environment and a greater risk of non-linear outcomes.

AllianceBernstein argue that this has profound investment implications, requiring a significantly greater level of diversification than is generally assumed. It also may require a very material reallocation into real assets, although these also come with a host of climate-related issues.

Learn more here