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Carney, now United Nations special envoy for climate action and finance, has been in the habit recently of reminding us that we can’t self-isolate from climate change. The current crisis is being viewed as one more opportunity not to be wasted to break the tragedy of the horizons.
When a Risk Turns Into a Runaway Event
For the first time in generations, we see the very real social and economic disruption wrought by a hard-to-imagine natural event that arrives gradually and sporadically, but quickly morphs into a runaway systemic threat. This time, it is a virus. Next time, it will be temperature rises and extreme weather events.
Physical risks of climate change will shutter businesses, disrupt supply chains and diminish the health and well-being of employees. The transition risks will bankrupt unprepared companies, lead to job losses and exacerbate inequalities. While temperatures will rise gradually over the coming decades, left unchecked, climate change will eventually reach the critical point at which the scale and velocity of change will quickly overwhelm societies, disrupt political systems, inflame geopolitical tensions and create conflict over essential resources.
How to Break the Tragedy of Horizons
The climate and sustainable development agendas will be defined over the coming years by efforts to break the tragedy of the horizons with policy changes that allow businesses and investors to price long-term climate risks and ascribe greater value to resilience. In this way, as Guenther Thallinger, chair of theNet Zero Asset Owner Alliance, said, the global climate agenda has become a capital markets agenda.
The Task Force on Climate-Related Financial Disclosures (TCFD) has already made great strides in ensuring climate risks are transparently communicated by businesses, so investors understand the potential value at risk if the business fails to invest in resilience.
The TCFD’s agenda will continue to be pushed across sectors and calls will grow for its mandatory implementation. The Canadian government本周宣布在大流行中要求公司寻求紧急贷款的公司承诺实施TCFD建议。
Climate stress tests at central banks are another proposed measure for pricing the risks companies may face as a result of climate change. Unlike TCFD, stress-testing could have immediate economic implications for financial services firms potentially required to hold more capital against certain climate risks.
Net-zero targets and investment portfolios that align with the Paris Agreement goals are other leading approaches to signaling which businesses and economies are building resilience to the physical and transition risks of climate change.
Frans Timmermans，欧盟的绿色贸易署强调，绿色交易将是任何恢复努力的核心，欧盟将在原始时间表上与框架的关键支柱向前迈进。这包括拟议的新人气候法, making it legally binding for all EU-27 member states to achieve net-zero emissions by 2050.
All these measures — climate risk disclosure, climate risk stress-testing and net-zero targets — are being advocated as means of bringing forward and breaking the tragedy of the horizon by helping to price tomorrow’s risk and value resilience in today’s dollars.
For institutional investors holding PG&E stock, as well as those with investments in businesses similarly at risk, this was a wake-up call. The financial risks of climate change are here now, not on some distant horizon.
A Bull Market in Resilience
As with the PG&E bankruptcy, the current crisis gives investors and businesses a lens into the world once believed to be far on the horizon.
作为经营理念的康复，首席执行官Aron Cramer表示社会责任的业务, “has suddenly gone from overlooked buzzword to urgent objective.”
毫无疑问,将会继续mul的例子tilateral climate conferences postponed, sustainability initiatives put on pause and government climate policy delayed. But, amidst these near-term events is a coming bull market on resilience. Businesses that break the tragedy of the horizon and get ahead of policymakers by valuing resilience now will capture sustained competitive advantage.