Decarbonisation: investors’ crucial role in achieving a global win-win
The US’s withdrawal from the Paris Agreement has once again brought climate change, and by implication its associated economic risks, to the fore. Investors, businesses and governments are no longer able to turn a blind eye to carbon risks in the pursuit of fast profits, but can a low-carbon solution that suits all parties be found?
The risks posed by climate change are many. Besides the well-publicised environmental impact – rising sea levels, melting ice caps and the destruction of habitats – businesses will also feel the effects. For example, Russia’s estimated losses from a 2010 heat wave and drought stand at $15bn, mainly from the destruction of crops. This contributed to global price increases and export restrictions on wheat. Meanwhile, insured losses from a 2011 flood in Thailand were similarly valued at $15-20bn and the disrupted supply of hard disk drives, of which Thailand produces 40% of the global total, led to price increases worldwide for both the drives and the products dependent on them (PWC, 2013)[footnote]“Business-not-as-usual: Tackling the impact of climate change on supply chain risk,” by Richard Gledhill et al. Published by PwC in Resilience: A journal of strategy and risk in 2013. [/footnote]. Clearly the effects of climate change on the global supply chain are already being felt, but can the problem be fixed?