Embargo: 0915 CET, 1515 Hong Kong local June 24
Hong Kong, London Climate Change Risk for Investments, Although Growth Opportunities Exist
As industry, investors and public authorities this week gather for the 2014 Banking Environment Initiative Forum in Asia, evidence continues to mount concerning the costs and disruptive impacts that climate change will have on the economy, society, and stability of the financial system; as well as the amount of investment needed to transition to a low-carbon economy.
Finance sector groups have published a guide to the IPCC’s findings on the physical, economic, and regulatory impacts of climate change.
- Sea-level rises: extreme sea-level events increased by 95% between 1970 and 2010, exposing 270 million people and USD 13 trillion worth of assets
- Rainfall patterns: increasing flooding and drought, with variable rainfall likely to affect electricity generation
- Food security: changing rainfall and higher temperatures will increase crop pests and volatility in agricultural markets, affecting food companies and supply chains
- Labour: Higher temperatures has led to declining labour capacity and productivity. Significant investment in e.g. cooling needed to maintain productivity levels.
- Policy: The amount of capital required and what gets allocated will depend in part on the policy response to climate change. Willingness to invest will depend on level of risk and incentives
The summary also conveys that decarbonising the economy requires increased investment in low-carbon energy and reduced investment in fossil fuel energy sources. It also suggests that this transformation may result in ‘stranded assets’, where the value of assets linked to high-carbon activities is significantly reduced or eliminated because they are rendered obsolete or non-performing.
Stephanie Pfeifer, Chief Executive of the Institutional Investors Group on Climate Change, which represents 88 of Europe’s largest investors worth €7.5 trillion, said:
“Investors are at risk from climate change, as well as being a potentially significant source of capital for the low-carbon investment needed to mitigate climate change. The investor community is taking action on climate change, and investments are being made, but more could be done with stronger policy. As we head towards Paris in 2015, ensuring investors and institutions have the tools to understand the impacts of climate change is crucial.” Head Office: 1 Trumpington Street, Cambridge, CB2 1QA, United Kingdom Telephone: +44 (0)1223 768850 Brussels Office: The Periclès Building, Rue de la Science 23, B-1040 Brussels, Belgium Telephone: +32 (0)2 894 93 20 www.cisl.cam.ac.uk Patron: HRH The Prince of Wales
Andrew Voysey, Director, Finance Sector at the Cambridge Institute for Sustainability Leadership said:
“To avoid what governments have agreed would be unacceptably dangerous climate change, patterns of investment will need to change considerably. This will include significant decreases in investment in fossil fuel extraction and conventional fossil fuel-based power generation, and significant increases in investment in low-carbon energy and energy efficiency. If we are to ensure that this transition is as smooth as possible and avoid sudden shocks to investor value, investors, governments and others must work together urgently, fully informed about what is at stake.”
Karin Ireton, Chair of UNEP Finance Initiative’s Climate Change Advisory Group, and Director, Group Sustainability Management, Standard Bank, Africa’s largest commercial bank, said:
“The scale and seriousness of climate change as an environmental, economic, social and financial problem is not only indisputable now; it is also unprecedented. The key challenge for the finance sector in coming years will be to devise and implement strategies that weather the stresses and risks of a changing climate as well as seize the opportunities of low-carbon and climate-resilient development. This guide is an important aid for financial institutions - particularly those in developing countries - to understand the complexities and implications of climate change so that informed action can be taken."
For further information please contact:
Morgan LaManna Mlamanna@iigcc.org +44 (0)207 960 2718
John Dombkins John.dombkins@unep.org +41 (0) 22 91 78134
Nicolette Bartlett Nicolette.bartlett@cisl.cam.ac.uk +44 1223 768840
Notes for Editors
The report is one of a series of thirteen, based upon The Fifth Assessment Report (AR5) of the Intergovernmental Panel on Climate Change (IPCC). AR5 represents the most comprehensive overview of climate science to date and is the fact base that will used by governments and businesses to formulate climate policy in the coming years. Sustainable Fisheries Partnership, the European Climate Foundation, the University of Cambridge Programme for Sustainability Leadership (CISL) and the Cambridge Judge Business School have worked together to distil relevant AR5 findings into concise, clear, relevant findings and visuals derived from, and in line with, the original text.
The set of summaries cover the broad implications of climate change, how the IPCCC works and give an overview of the physical science, as well as adaptation and mitigation options. The specific summaries cover the energy sector, investors and financial institutions, the transport sector, the tourism industry, the agricultural sector, fisheries and aquaculture, the defence sector, primary industries and cities, buildings and employment.
