NASA, Blackrock, McKinsey, World Economic Forum - and the Environment
Photo by Kai Dahms
Last week, Larry Fink, Chief Executive Officer of Blackrock (the world’s largest asset manager with over $7 trillion) in a letter to business leaders titled “A Fundamental Reshaping of Finance” said:
“Climate risk Is investment risk … The evidence on climate risk is compelling investors to reassess core assumptions about modern finance.
“Will cities, for example, be able to afford their infrastructure needs as climate risk reshapes the market for municipal bonds? What will happen to the 30-year mortgage – a key building block of finance – if lenders can’t estimate the impact of climate risk over such a long timeline, and if there is no viable market for flood or fire insurance in impacted areas? What happens to inflation, and in turn interest rates, if the cost of food climbs from drought and flooding? How can we model economic growth if emerging markets see their productivity decline due to extreme heat and other climate impacts?"
Separately, NASA and the National Oceanic and Atmospheric Administration reported that:
“Earth's average global surface temperature in 2019 was the second warmest since modern record-keeping began in 1880.
“Using climate models and statistical analysis of global temperature data, scientists have concluded that this increase has been driven mostly by increased emissions into the atmosphere of carbon dioxide and other greenhouse gases produced by human activities.
“Rising temperatures in the atmosphere and ocean are contributing to the continued mass loss from Greenland and Antarctica and to increases in some extreme events, such as heat waves, wildfires and intense precipitation."
Also, the World Economic Forum released “The Global Risks Report 2020” that said:
“Climate change is striking harder and more rapidly than many expected. The last five years are on track to be the warmest on record, natural disasters are becoming more intense and more frequent, and last year witnessed unprecedented extreme weather throughout the world.
“The near term impacts of climate change add up to a planetary emergency that will include loss of life, social and geopolitical tensions and negative economic impacts.”
The report’ list of top 10 global risks, placed the top five as environmental: 1) extreme weather, 2) climate action failure, 3) natural disaster, 4) biodiversity loss, 5) human-made environmental disasters.
Finally, the McKinsey Global Institute’s 144 page report “Climate risk and response: Physical hazards and socioeconomic impacts” presented potential impacts including:
“In Florida, for example, estimates based on past trends suggest that losses from flooding could devalue exposed homes by $30 billion to $80 billion, or about 15 to 35 percent, by 2050
“Ocean warming could reduce fish catches, affecting the livelihoods of 650 million to 800 million people who rely on fishing revenue.
“parts of India and Pakistan could be the first places in the world to experience heat waves that exceed the survivability threshold for a healthy human being
“In Ho Chi Minh City, direct infrastructure damage from a 100‑year flood could rise from about $200 million to $300 million today to $500 million to $1 billion by 2050, while knock-on costs could rise from $100 million to $400 million to between $1.5 billion and $8.5 billion.
OUR TAKE
As global leaders and influencers meet at the World Economic Forum’s annual gathering in Davos, Switzerland, (this year’s theme is "stakeholders for a cohesive and sustainable world” there will be heightened attention to 1) how their words are turned into action and 2) the responses from climate change deniers.
It is likely that information about the economic impact of climate change will have more influence on business leaders than discussion on increasing temperatures and rising sea levels.
Individuals can have a significant positive impact on the environment by eating healthier, wasting less and pursuing low-carbon approaches to transportation.