Syndicate content

April 2013

Communicating Climate Risks to Investors: the Next Major Ratings Failure

Alan Miller's picture

 Reserves of coal outside a power generation plant. - Photo: Shutterstock

Only a few years ago, the failure to properly quantify and communicate the risks of a widely traded commodity, mortgage-backed securities, caused major damage to the US and ultimately the global economy. According to the IMF, total losses will approach $4 trillion (pdf). A significant share of the losses were incurred by pension funds and insurance companies typically viewed as among the more risk-averse and cautious segments of the investment community.

A new report by the Carbon Tracker Initiative and the Grantham Research Institute on the Environment and Climate Change evaluates the failure to properly value the risks of climate policy to companies with major fossil fuel reserves and finds a similar potential for massive financial fall-out. They conclude that “Between 60-80% of coal, oil and gas reserves of publicly listed companies are ‘unburnable’ if the world is to have a chance of not exceeding global warming of 2°C.” (A short video explaining the research and mapping the amounts of investment at stake in different countries is available online).

Climate Change: Lessons in Cross-Sector Collaboration

Lucia Grenna's picture

 The opening panel at the Alcantara dialogues with speakers from the worlds of fashion, architecture, production, government and international development. Photograph: Connect4Climate/Leigh Vogel
The opening panel at the Alcantara dialogues with speakers from the worlds of fashion, architecture, production, government and international development. Photograph: Connect4Climate/Leigh Vogel

Climate change is a pressing issue. Everyone knows that, certainly the development community and they don't need to be reminded of it. What they do need reminding of is that no one group can possibly solve this problem.

Strategic collaborations around climate change issues and action are essential. As World Bank president Jim Yong Kim said recently: "To deliver bold solutions on climate change, we need to listen to and engage broader and more diverse audiences." This is what the Connect4Climate (C4C) team has set out to do since the program began in 2011.

C4C is a global partnership program dedicated to climate change and supported by the World Bank, Italy's environment ministry and the Global Environment Facility (GEF). We operate as a coalition of more than 150 knowledge partners ranging from major UN agencies to academic institutions to media organizations and NGOs.

Our aim is to convene different organizations, groups and individuals who wouldn't normally speak to one another, around the table to talk about climate change. The first audience we had to convince of the merits of building relationships and networks outside of those which seem immediately relevant, was our own within the World Bank.