This is another post along the lines of how a changing climate will impact financial and economic interests. The article below points out that financial institutions are waking up to the costs in real dollars and cents that the warming climate will have. Not having read the study I surmise that the only aspect that has been evaluated is strictly focused on capital, financial and business results and has not considered the impact on humanity and the rest of the living things on this planet.
As I’ve previously pointed out, adoption and the cost of it, is continually coming into focus due to the financial risk that is not sometime in the distance but which we’re beginning to feel right now. Furthermore, we’ve already locked in further and more dramatic consequences for several decades no matter how quickly we stop putting more and more CO2, methane and other climate heating elements into our atmosphere. We’re in for huge impacts and the sooner we begin to plan for adoption the better.
It appears that the economic impact is finally getting those with financial outcomes at stake to take note and begin to consider the risk and how to evaluate and mitigate it.
As always, follow the money. The more money is at stake, the quicker changes will occur.
“The Economist‘s study marks a sharpening focus in banking circles that climate change, and the regulations to slow it, is a financial threat.
If the planet warms by 5 degrees Celsius past preindustrial levels, according to the report, $7 trillion worth of economic growth could be lost”
Banking Regulators Increasingly Bothered by Climate Change Costs
Benjamin Hulac, E&E News reporter
Friday, July 14, 2017
But companies and governments are increasingly viewing climate change as an economic red flag, and bank and financial regulators are poised to fill the void, authors of a report published yesterday by a research division of The Economist said.
They analyzed the goals of 10 financial institutions established to stave off or extinguish economic crashes and confront the planet’s socio-economic ills — a group including the International Monetary Fund, the World Bank, the Bank of England, stock market watchdogs and Group of 20 advisory bodies.
Not one institution was explicitly set up to address climate change, but because all are meant to stamp out financial hazards, they should also tackle climate change, the authors argued.
Any institution that falls into that category “has the responsibility — automatically and by definition — to address climate-related financial risk,” the report reads. “The absence of explicit requirements within their mandates to address climate change does not preclude them from acting on climate change.”
The Economist‘s study marks a sharpening focus in banking circles that climate change, and the regulations to slow it, is a financial threat.
If the planet warms by 5 degrees Celsius past preindustrial levels, according to the report, $7 trillion worth of economic growth could be lost — a chunk equal to the combined economies of India and Japan.
Aviva PLC, a British investment and insurance company, sponsored the report.
Officials at government financial regulators in Canada, Australia, France and the United Kingdom have sounded warnings in recent months about climate change fueling financial hazards.
“Some climate risks are distinctly financial in nature,” Geoff Summerhayes, a member of the Australian Prudential Regulation Authority, said in February.
Luiz Awazu Pereira da Silva, a former deputy central banker for Brazil, said in a speech yesterday in Germany that climate change could distort financial markets. “It could impact financial stability locally and globally,” he said.
And the Bank of England is leading its peers on the issue, having released a series of updates on its work responding to climate change. In a recent statement, the bank said it has ingrained the study of climate change and financial ramifications with its day-to-day operations.
While it acknowledged climate change could affect interest rates and lending, the bank said its “response to climate-related factors is primarily driven by its responsibilities to promote the safety and soundness” of companies and to keep the economy stable.
Still, such a practice is rare, and global leaders have yet to reach an international deal about how to analyze climate risks.
“There are still no binding international agreements or standardised directives for financial regulators, stock exchanges and institutional investors to incorporate climate-change risk into their financial models,” yesterday’s report reads.
The Financial Stability Board, a G-20 group and one of those surveyed, submitted what is widely seen as the most expansive set of guidelines to pinpoint climate risk at the organization’s summit last weekend in Hamburg, Germany (Climatewire, June 29).
The G-20 nations rejected those guidelines.
