Investments into tackling climate change

November 2019: Quantifying risks to critical systems finds that investing into climate change mitigation shows positive returns when compared to the projected costs of climate change impacts; hence reinforces the benefits of avoiding them.

Information

A recent study reveals that costs of impacts on people, infrastructure, and ecosystems arising from climate change will exceed the required investments needed to mitigate climate change. These findings coincide with evidence noting that prior research has underestimated the sensitivity of natural and human systems to climate change, the speed with which these changes are happening, and the synergistic nature of climate threats that are resulting in rapid and growing damage to ecosystems, people, and livelihoods. In light of these developments, a new wave of private sector investments is following positive screening strategies, causing increased investments into the environmental, social and corporate governance (ESG) sector, which are also delivering high returns.

Implications & Opportunities

There is a growing body of evidence indicating that the impacts of climate change are happening faster and more extensively than previously projected, which represents a compelling case for investors to contribute to avoiding the associated costs and damages. Against these findings, the report particularly foregrounds risks arising from extreme weather and responses to weather-related phenomena. For example, rising sea-levels may lead to greater damage during storm events which may exacerbate poverty in deprived areas. The authors call on policy makers to accelerate action and tighten emission reduction targets to avoid high costs and risks. In addition, the report proposes that direct collaboration with the private sector will accelerate investments and represents a growth market for companies.

Limitations

The study does not aim to produce specific policy advice to governments. Its recommendations and projections are based on scenario modelling but outcomes of these models may change in accordance with the efficiency of climate change mitigation strategies.

Sources

The London Economic. (2019). Investing in fight against climate change ‘good for business’. Retrieved from https://www.thelondoneconomic.com/news/investing-in-fight-against-climate-change-good-for-business/19/09/

Hoegh-Guldberg, O., Jacob, D., Taylor, M., Guillén Bolaños, T., Bindi, M., Brown, S., … Zhou, G. (2019). The human imperative of stabilizing global climate change at 1.5°C. Science, 365(6459), eaaw6974. doi:10.1126/science.aaw6974