Money talks: Climate change is going to be really bad for business
Over the past couple of weeks, a group of cold, calculating experts have been spouting warning after warning about the severity of the climate threat. No, I’m not talking about climate scientists (though they’ve just had something to say on the topic too). I’m talking about the capitalists. You know, the bankers, the insurers, the service firms, and the economists who are worried that there’s a lot less money to be made on a boiling planet. And who recognize that taking steps to shift to clean energy sources and solve climate change can be darn good for the economy and for, well, making money.
So let’s take a quick survey of all those crazy hippy capitalists who used the release of the IPCC’s Fifth Assessment Report (AR5) to make the dollars and cents case for combating climate change.
The massive professional services firm
Late last month, PwC (formerly PricewaterhouseCoopers), the giant multinational professional services firm (think accounting and consulting and some other number crunchy stuff) that made a cool $32 billion last year, analyzed the AR5 report and didn’t mince words in their findings.
“Business understands the concept of dealing with risk, and climate change is the mother of all risks that we’ll face this century,” said Dr Celine Herweijer a partner at PwC . Herweijer continued, “For business, planning for a 2C world is about business resilience. Planning for a 3C or 4C world is about business and societal survival. It’s not a world any of us should be planning for.”
PwC also acknowledged that business can’t solve this thing alone, that governments need to act. Again, Herweijer: “Businesses can do a lot by themselves but they can’t provide all the answers. Companies want and need governments to minimise the risks they will face; they want clear, consistent and long-term government policies and investment that will prevent warming beyond 2C”
The big developers
Earlier this week, the heads of two of the world’s largest financial institutions, the World Bank and the International Monetary Fund (IMF), took to a webcast to make the case that shifting to a climate-friendly, resilient economy does not mean losing revenue or slowing economic growth.
Christine Lagarde of the IMF talked about the importance of removing fossil fuel subsidies and of putting a price on carbon. Jim Yong Kim of the World Bank talked about investing in clean energy, efficient cities, and more resilient agricultural practices.
Legarde said, “It is important that our two institutions always have climate change, environmental issues and price setting at the forefront of our agenda…We have got to think about it every day.”
The basic gist of their unified message was that by transitioning away from support of fossil fuels governments and other institutions are also transitioning away from economic risk. In effect, said Lagarde, climate inaction will be a whole lot more expensive than addressing it.
“If we don’t tackle climate change – considering the disasters lurking in the future – one single event could reverse years of success on the poverty agenda.” said Kim. “You [finance ministers] can raise revenue by doing the right thing, and in the same token take care of the future for your grandchildren.” added Lagarde.
The international economic policy forum
On the heels of the World Bank and IMF announcement, the Secretary General of the OEDC (Organisation for Economic Co-operation and Development), gave a lecture in London all about “Achieving Zero Emissions.”
The lecture itself was full of the expected diplomatic wonkery — granted it was diplomatic wonkery about the critical importance of cutting carbon emissions to zero in order to avoid terrible economic risks.
But in some comments after the talk, Secretary-General Angel Gurria called for “a big, fat price on carbon,” which was anything but expected diplomatic wonkery.
The very rich men
Billionaire investor Tom Steyer, billionaire former Mayor Michael Bloomberg, and hundred millionaire former US Treasury Secretary Hank Paulson all linked arms this week to launch their “Risky Business” initiative that promises to “assess and respond to climate risks in the economy.”
The very rich men will be putting their resources into a massive study that will figure out exactly how much economic risk industries, companies, and communities face as the impacts of climate change alter the physical and business landscapes.
“Climate change is every bit as big a risk to our economy as it is to the environment,” said Paulson. “With any complex issue, we can never know with certainty what the timing and the impact will be, but we know from the data that the climate risk is very real. If we quantify its economic impact, I think that will be a catalyst for action.”
Businesses, businesses, and more businesses
Risk may be the dominant economic and financial message coming out of the capitalist camps over the past couple of weeks, but at least some companies are looking at the opportunities that solving climate change present. A group of 700 companies have signed onto a statement by the Ceres group that calls climate change “one of America’s greatest economic opportunities of the 21st Century.”
The “Climate Declaration,” organized by Ceres, calls for emissions reduction policies that will help set the stage for companies to make a real difference.
“Business momentum is growing to innovate new strategies and products to manage climate risks and opportunities. But scaling these efforts to levels that will slow warming trends will require stronger carbon-reducing policies globally,” said Ceres president Mindy Lubber.
By my totally unofficial tally, all these warnings, announcements, and assessments come from those in charge of trillions and trillions of dollars. So if you’re not the type to take the warnings of scientists seriously, maybe the convictions of all these capitalists are more convincing.