Summaries from each of the conference speakers are now available, including photos and presentations. Congratulations to the 2018 Leadership Award winners, see here for details.
"Insurers and banks are to be expected to manage and report their climate-related risks, according to a draft supervisory statement from the UK’s Prudential Regulation Authority (PRA).
The consultation paper, which was described as “a major step for a regulator of a global financial centre”, says the risks from climate change are far-reaching and foreseeable and require a strategic approach." Read More
The Australian Renewable Energy Agency (ARENA) has today announced it will help build Australia’s first Business Renewables Centre to encourage Australian businesses to make the switch to renewable energy.
“The Business Renewables Centre will help in that transition by using its expertise in running programs, entrepreneurship, innovation, education and other sustainability objectives to make it easier for companies and councils to enter the renewables market.”
In a salutary indicator of how our politicians have created a vacuum in climate change policy, the Business Council of Australia feels it must provide leadership.
"The nation's energy companies and biggest electricity users have given up on politics and begun backroom talks about a self-regulated package of measures to reduce greenhouse gas emissions, restore energy reliability and improve investor stability.”
The budding economic crises in a number of emerging countries, like Turkey and Argentina, illustrate that a sudden tightening of financial conditions constitutes one of the major risks to financial stability.
Financial conditions in the developed countries have remained accommodative to date, but a turnaround is possible in these countries, too. The trigger for such a turnaround may be a quicker than anticipated tightening of monetary policy in the United States, but it may also be further escalating trade tensions, or a hard Brexit. These developments are discussed in our Autumn 2018 Financial Stability Report (FSR), published today.
Accommodative financial conditions are fuelling vulnerabilities
Ten years after the crisis, financial conditions in most developed countries are accommodative. Prolonged accommodative financial conditions fuel financial stability risks, however, as they lessen the incentive to pay off debts and stimulate risk-seeking behaviour on the financial markets. If financial conditions were to tighten suddenly, debtors will be severely hit by rising financing costs and financial markets may experience sharp corrections, which may in turn translate into heavy losses in the investment portfolios of financial institutions.
Risks are already surfacing in a number of emerging countries
Particularly in emerging countries with large financial and macroeconomic imbalances, financial conditions have been tightening over the past few months. This has painfully revealed the vulnerabilities that have been building up over time, such as high corporate debts denominated in foreign currencies. All emerging countries may be faced with ongoing capital outflows if investor confidence deteriorates and investors at the same time do not differentiate between vulnerable and less vulnerable countries. In due course, a budding economic crisis in emerging countries may also hit the Dutch financial sector through direct exposures and negative confidence effects.
Rising real estate prices demand attention
Real estate markets in the Netherlands are running at full steam, especially in prime locations. House price rises are driven by the insufficient supply of homes, low interest rates and vigorous economic growth. Easing of the borrowing capacity relative to the borrower’s income is undesirable as this would only serve to fuel overheating in the market. In order to ease the pressure on house prices, the housing supply must be increased, particularly in the middle segment of the rental market. The price increases on the commercial real estate market are being driven mainly by the search for yield among investors. As a result, this market is more sensitive to a turnaround in sentiment. As vulnerabilities often build up in times of economic boom, financial institutions must pay extra attention to monitoring and managing the risks associated with commercial real estate in the period ahead.
Further efforts by insurers remain necessary
This issue of DNB's FSR also discusses the vulnerabilities in the Dutch insurance sector. Although insurers are making progress in developing a future-proof insurance sector, further efforts of insurers, supervisors, and policymakers remain necessary, including successful implementation of the recovery and resolution framework.
Disruptive energy transition stress test
DNB developed a targeted stress test in order to quantify the possible effects of a disruptive energy transition on the Dutch financial sector. The stress test revealed that a disruptive energy transition may induce severe losses for Dutch financial institutions. Governments can prevent unnecessary costs by implementing timely and effective climate policies, while financial institutions should include energy transition risks in their risk management process.
“Governments can no longer make promises they don’t fulfil. Countries have an obligation to protect their citizens against climate change. That makes this trial relevant for all other countries.”
Extreme weather events and climate variability, whether occurring under present or future climate conditions, can have severe consequences for development and pose risks to human health and safety and the environment......Climate change is expected to exacerbate flooding, hurricanes, prolonged drought periods, shifts in precipitation patterns, and extreme heat conditions. Social, ecological, and economic vulnerabilities to such weather events currently exist across LAC.
“Greater proposed guidance on the disclosure of climate change risk (also referred to as “carbon risk”), includes explaining the different types of climate change risk, and that listed entities with material exposure to climate change risk implement the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures.”
One can only hope that governments will start acting with urgency to avoid this fast moving train crash and the scientists writing the reports are not suffering from “conservative bias”.
In order to achieve the 1.5°C target, we have the enormous challenge of reducing net emissions to ZERO by 2050!
Below are the links to the report published by the IPCC. It assesses the impact of not achieving the 1.5°C target of global warming. We have also included the reporting from some of the major newspapers.
The report highlights a number of climate change impacts that could be avoided by limiting global warming to 1.5°C compared to 2°C, or more. For instance, by 2100, global sea level rise would be 10 cm lower with global warming of 1.5°C compared with 2°C. The likelihood of an Arctic Ocean free of sea ice in summer would be once per century with global warming of 1.5°C, compared with at least once per decade with 2°C. Coral reefs would decline by 70-90 percent with global warming of 1.5°C, whereas virtually all (> 99 percent) would be lost with 2°C.
“Preventing an extra single degree of heat could make a life-or-death difference in the next few decades for multitudes of people and ecosystems on this fast-warming planet, an international panel of scientists reported Sunday. But they provide little hope the world will rise to the challenge.”
“The world’s leading climate scientists have warned there is only a dozen years for global warming to be kept to a maximum of 1.5°C, beyond which even half a degree will significantly worsen the risks of drought, floods, extreme heat and poverty for hundreds of millions of people.”
The Washington Post.
“There is no documented historic precedent” for the sweeping changes required to hold the planet’s warming to just 1.5 degrees Celsius (2.7 degrees Fahrenheit), the U.N. Intergovernmental Panel on Climate Change found.”
“A landmark report from the United Nations’ scientific panel on climate change paints a far more dire picture of the immediate consequences of climate change than previously thought and says that avoiding the damage requires transforming the world economy at a speed and scale that has “no documented historic precedent.”
“As the financial impacts and risks of climate change on pension fund portfolios become ever clearer and their investment regulations are updated, trustees have no excuse for failing to examine this topic and disclose their risk management of it.”
“A new amended concise statement, lodged in the federal court late last month, alleges REST failed to discharge its duties as a trustee to act with "care, skill and diligence" in relation to the impact of climate change, which it argues posed "material or major risks" to "many" of the super fund's investments.”
UNEP FI’s work includes a strong focus on policy – by fomenting country-level dialogues between finance practitioners, supervisors, regulators and policy-makers, and, at the international level, by promoting financial sector involvement in processes such as the global climate negotiations. Useful publications from the Finance Initiative can be found here.
“We don’t just want to insure people against an event happening, we want to make sure whatever the impacts of that event are, it’s less than it would have been,” Martin said.
This unfolding scenario is reshaping previous lines of segregation in coastal cities. As investors shift capital to higher ground and shoreline properties become costlier in terms of insurance and repairs, low- to middle-income people are squeezed out from both areas.
"The more companies know about the risks they face, the faster and more effectively they can address them — and the more they report that information, the better equipped investors will be to make smart decisions. It is encouraging to see the Task Force's group of supporters continue to grow. It will make the global economy more resilient and drive more capital to projects that are helping to reduce emissions and protect people from harm," said Michael R. Bloomberg.
This update was published the day before the AFL Grand Final and consequently received little attention. It is likely our appalling track record documented in this report will receive considerably more attention in the future - particularly from the EU!
Concentrations of carbon dioxide in the atmosphere surged at a record-breaking speed in 2016 to the highest level in 800 000 years, according to the World Meteorological Organization's Greenhouse Gas Bulletin. The abrupt changes in the atmosphere witnessed in the past 70 years are without precedent.
Globally averaged concentrations of CO2 reached 403.3 parts per million in 2016, up from 400.00 ppm in 2015 because of a combination of human activities and a strong El Niño event. Concentrations of CO2 are now 145% of pre-industrial (before 1750) levels, according to the Greenhouse Gas Bulletin.
Rapidly increasing atmospheric levels of CO2 and other greenhouse gases have the potential to initiate unprecedented changes in climate systems, leading to “severe ecological and economic disruptions,” said the report.
Summaries from each of the speakers are available on this page. Click on the link below to go to your chosen speaker's summary. To view conference photos, please click here.
The research challenges the ways that researchers have worked out sea temperatures until now, meaning that they may be increasing quicker than previously suggested.
The methodology widely used to understand sea temperatures in the scientific community may be based on a mistake, the new study suggests, and so our understanding of climate change might be fundamentally flawed.
The new research suggests that the oceans hundreds of millions of years ago were much cooler than we thought. If true, that means that the global warming we are currently undergoing is unparalleled within the last 100 million years, and far worse than we had previously calculated.
The published research paper can be found here.