Last week, as “fiscal cliff” comments by U.S. political leaders triggered market swings, United Nations representatives met in Doha, Qatar to work on a climate change agreement. Executive Secretary Christiana Figueres said 'What is very clear is that the science; no matter whether you read through…all these reports that have come out have said that we are running out of time.”
- In the World Bank report “Turn Down the Heat: Why a 4°C Warmer World Must be Avoided (Nov. 2012) its president, Dr. Jim Yong Kim said, “climate change affects everything. The solutions don’t lie only in climate finance or climate projects. The solutions lie in effective risk management and ensuring all our work, all our thinking, is designed with the threat of a 4°C [warmer] world in mind.”
- In a NY Daily News article (Nov. 15, 2012), New York State Governor Andrew Cuomo said, “Extreme weather is the new normal. In the past two years, we have had two storms, each with the odds of a 100-year occurrence. Debating why does not lead to solutions — it leads to gridlock. The denial and deliberation from extremists on both sides about the causes of climate change are distracting us from addressing its inarguable effects. Recent events demand that we get serious once and for all.” Note that Superstorm Sandy recovery costs are estimated at $41.9 billion for New York State and $29.4 billion for New Jersey.
- The report Climate and Social Stress: Implications for Security Analysis (Nov. 2012), sponsored by the U.S. intelligence community and released by the National Academy of Sciences, suggests that within a decade “events will likely include clusters of apparently unrelated climate events occurring closely in time, although perhaps widely separated geographically, which actually do have common causes … in which a climate event precipitates a series of other physical or biological consequences in unexpected ways; and disrupt globally connected systems, such as food markets, supply chains for strategic commodities, or global public health systems.”
Recent events and studies illustrate that climate change triggers events with significant social and economic impact. Hopefully, global policy makers avoid the “last –minute” tactics applied to challenges such as the fiscal cliff. In the meantime, investors should add climate change dynamics to their list of investment risk factors.