This past week I gave a presentation to a group on climate change. This was a group that was not fundamentally focussed on this issue but seemed to have a general interest and awareness of it. The theme I decided to follow was to give an overview of all the ways that a changing, warming climate was already altering so much of what we have come to take for granted. And furthermore, how that change was going to accelerate rapidly and create a new status quo of which they need to be aware in order to successfully navigate the transition.
I did this by rapidly reviewing current headlines with a brief display of the key point or two from the article. I think this worked well and as I told the group at the beginning, my purpose was to terrify them by seeing all this news in one place at one time. Mostly it was a review of all the themes I present to you weekly.
It worked well so I thought I’d do a mini version for you today and try and touch on some of the topics I cover with you. For a quick overview of the critical points, just read what I’ve highlighted in RED. That alone will give you a terrifying picture of where we find ourselves today.
The first quote from one of the articles really struck me with a new perspective on a new way to look at today’s news.
“Don’t think of it as the warmest month of August in California in the last century,” he wrote. “Think of it as one of the coolest months of August in California in the next century.”
You get the gist. What we look at today as breaking records for being the hottest is going to be relatively cool in the future. Ugh. That’s pretty sobering!
The next several headlines reflect how concerned regulators are becoming with the fundamental impact that the climate is going to have on financial markets and the need NOW to clearly disclose this so that the public is fully informed of the risk. The SEC, FED, bank regulators, FERC and more are all beginning to warn investors and financial institutions of the danger.
Biden’s SEC Pick Vows to Address Climate Disclosures
“In 2021, there are tens of trillions of dollars of invested assets that are looking for more information about climate risk,”
Fed Governor Warns of Climate Change’s “Substantial Economic Costs”
Feinstein, Casten introduce financial risk bill
Sen. Dianne Feinstein (D-Calif.) and Rep. Sean Casten (D-Ill.) yesterday reintroduced legislation to tackle climate risk in the financial sector which would establish a new climate committee at the Financial Stability Oversight Council and require bank regulators to update their guidance on climate risk.
FERC makes major shift on pipeline CO2 emissions
“Today’s order…allows us to honestly say we actually considered a proposed project’s potential impact on the environment,”
And the financial markets are reacting to their own inherent understanding of the risks along with the warnings and disclosure requirements mentioned above. The risk is not only to the value of their assets but also their brand. Investors are flocking to financial instruments and institutions that are going to be part of the solution and not part of the problem. Thus fossil fuel assets are being abandon like a hot potato.
“For investors, one thing is clear: the oil patch has lost its shimmer.
“Financing for coal projects is drying up at ever increasing rates as more countries target zero carbon emissions amid an energy transition sweeping the world…With insurance companies, banks and other financiers pulling out of coal “we are seeing a real tide of all these forces moving in capital markets,”…
“BMO is the latest bank to halt investment banking tied to U.S. oil and gas explorers
Citi Joins Wall Street’s Net-Zero Club
Goldman Follows Rivals in Setting Net-Zero Emissions Targets
U.S. Insurers Face More Pressure, Scrutiny on Role in Climate Change
Climate advocates argue that the insurance industry’s coverage of fossil-fuel projects exacerbates climate problems, while industry stakeholders worry about increased asset and liability risk.
Climate Threats Could Mean Big Jumps in Insurance Costs This Year
The federal government is revising rates for flood coverage on April 1. New data suggests premiums need to increase sharply for some homes.
And on and on… Pretty sobering to see how quickly and pervasively change is happening. As I say, buckle up. And protect your ass(ets).