In a groundbreaking survey published one year ago, Mercer found that the economic cost of climate policy could lead to as much as a 10 percent increase in portfolio risk for investors within 20 years.

"Climate-related policy changes could increase the cost of carbon emissions by as much as $8 trillion over the coming 20 years," Danyelle Guyatt of Mercer said at the time. "The longer the delay, and the poorer the coordination in implementing the changes, the more uncertainty there will be for investors. The cost of impacts to the physical environment could exceed $4 trillion."

Now, a year later -- and with the implications of the recent COP17 climate change conference still being debated -- Mercer has followed up with a second report. The new report surveys 12 institutional investors, with almost $2 trillion in assets under management, on how they are implementing the findings of the 2011 survey.

In addition to identifying the risks to portfolios from climate change -- adaptation costs could be as high as $180 billion per year, while the increase in the cost of emissions could reach $400 billion per year globally -- Mercer's original survey reported that investment opportunities in mitigation and adaptation could increase by $260 billion per year by 2030.

More than half of the respondents to Mercer's new survey -- which include the U.S.-based pension fund giants CalPERS and CalSTRS -- report that they have begun, or plan to begin, assessing the risks associated with investments in climate-sensitive asset classes. Four-fifths of respondents report that they have increased their engagement with companies and policymakers in response to the findings of the original survey.

One-third of respondents report that they have already decided to increase their investments in climate-sensitive assets.

"Traditional models for strategic asset allocation cannot adequately capture the effects of climate change," Mercer warns. Instead, investors should monitor climate change developments and track outcomes such as emissions levels and carbon price to anticipate volatility in their investments. They should consider increased investments in climate-sensitive assets, and engage with companies and policymakers on issues relating to climate change.

Did COP17 make a difference? According to Mercer, the key outcome from the conference was the extension of the Kyoto Protocol into a second commitment period. However, "internationally coordinated action remains some ways off," and "material policy related risks" to portfolios remain as a result.

On the other hand, "the agreement on the structure of the Green Climate Fund points to potential investment opportunities." Developed nations agreed to mobilize $100 billion per year by 2020 for climate adaptation and mitigation in developing nations through the Fund, although where the money is to come from has not yet been decided.

This article originally appeared on SocialFunds.com.