Climate Risk, Action, and Society’s Responses,

The youth demonstrations and the “climate strikes” took place in more than 100 countries, on all continents, affirming the commitment of the next generation to fight against climate change. The movement emphasizes that the stakeholders of society are increasingly aware of the risks that climate change represents for current and future development. These risks and the different levels of knowledge and awareness about them serve as the focus of this weekly summary of knowledge of the SDGs.

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An opinion piece published in The Los Angeles Times by Michael Bloomberg issues “a wake-up call about the financial risks of climate change.” Using the example of Pacific Gas and Electric (PG & E), which declared bankruptcy following recent fires in California because it can not afford the rising costs of liability driven by “the hotter and drier climate that climate change is bringing to California “, Bloomberg calls for better disclosure and management of climate risks so that companies can prevent companies from becoming” the next PG & E “. It urges companies to “measure the financial risks they face due to climate change … [to reduce] their exposure to those risks,” and identifies several measures of cost-saving efficiency that companies can quickly implement.

Within the UN system, Ulrika Modéer, UN Development Program (UNDP), explains why the UN focuses on security risks related to climate. She points out that the financial cost of climate disasters is equal to that of all development cooperation, with droughts, floods, storms, landslides and fires of 2018 totaling approximately USD145 billion. However, going beyond the dollar amounts, the blog points to the competition induced by climate change for land and water in areas already affected by the drought, which have contributed to civil unrest in areas such as the Lake Basin. Chad. Modéer notes that, together with the United Nations Department of Political Affairs and Peacebuilding and the United Nations Environment Program, UNDP launched the Climate Security Mechanism, a joint effort to increase knowledge and the management of security risks related to the climate. The coverage related to the Mechanism is available in the SDG Knowledge Hub.

The ‘Global Climate Risk Index 2019’ by Germanwatch analyzes which countries and regions have been most affected by extreme weather events through a review of climate-related loss events from 1998 to 2017. The information document finds that The Caribbean and South and Southeast Asia are among the highest, as found in a previous index, along with the finding that less developed countries are generally more affected than industrialized countries. The index measures the impact by the number of deaths, deaths per 100,000 inhabitants, absolute losses (in purchasing power parities in USD) and losses per unit of the Gross Domestic Product (GDP) as a percentage.

Understanding climate risks, whether physical, financial or in terms of peace and security, requires measurement, as highlighted in the LA Times article by Michael Bloomberg. On the financial side, the Natural Capital Finance Alliance (NCFA) published a step-by-step guide to help financial institutions conduct rapid risk assessments on how environmental change could affect their portfolios. The report notes that conducting comprehensive assessments of natural capital risk, rather than evaluating individual transactions, may expose systemic risks in bank portfolios that would otherwise not have been detected. The four-step approach to a rapid assessment includes: 1) framework (why the evaluation should be done); 2) scope (determine what will be included); 3) evaluate (understand the bank’s key sources of natural capital risk); and 4) apply (take stock of the findings and identify follow-up actions).

The report is the second result of the NCFA’s “Advanced Environmental Risk Management” project (the first report, published in November 2018 on natural capital risk assessments and the ENCORE tool, is available here). The NFCA Secretariat is led by the Financial Initiative of UNEP (UNEP FI) and Global Canopy.

Source: SDG Knowledge Hub