GSF 2023 Unit 2 HR - Climate Change & Sustainable Finance PDF

60 |Principles and Practice of Green and Sustainable Finance Unit 2: Climate Change and Our Changing World INTRODUCTION In this chapter, written with the generous help and assistance of c...

60 |Principles and Practice of Green and Sustainable Finance Unit 2: Climate Change and Our Changing World INTRODUCTION In this chapter, written with the generous help and assistance of climate science experts from the UK Met Green and Sustainable Finance Professionals do not Office, we examine the science of climate change and its need to be experts in climate science, but they should impact on our planet, including the environment, society, understand how the climate is changing, the factors that and the finance sector. cause climate change, and its impacts on people and the planet. This is essential in order to align finance to LEARNING OBJECTIVES support climate change mitigation and adaptation, and to identify and manage climate and broader environmental On completion of this chapter, you will be able to: and sustainability risks. explain the key factors that underpin the science of The most recent comprehensive assessment of climate change and global warming; climate science, published by the Intergovernmental outline the most recent IPCC (Intergovernmental Panel Panel on Climate Change (IPCC) in 2021/22, shows on Climate Change) assessments of future climate that human activities are having unprecedented and scenarios, and the impacts of climate change on irreversible effects on the global climate. Global surface human and natural systems; temperatures have already risen 1.1o since the Industrial describe the risks and opportunities for the finance Revolution; and have increased more rapidly since 1970 sector arising from our changing environment; than in any other 50-year period in the past 2000 years. Temperatures are likely to rise by more than 1.5o above explain the nature of, and challenges arising from, pre-industrial levels by 2040 and by more than 2oC later ‘stranded assets’ and the ‘carbon bubble’; and in the century without dramatic reductions in greenhouse outline the ways in which the finance sector can gas emissions in the current decade. support the transition to a sustainable, low-carbon economy. The activities of the finance sector have a substantial impact on the environment and society, both directly and indirectly. This is a two-way relationship; the finance sector itself is also affected by environmental and social sustainability factors, especially by climate change. Impacts are both positive and negative. Finance can generate positive financial and sustainability returns for itself and for society by supporting the transition to a sustainable, low-carbon world. A range of negative impacts for financial institutions and society occur where climate and other environmental and sustainability risks lead to increased costs, asset impairment and stranding, and environmental and societal harms. 61 | Principles and Practice of Green and Sustainable Finance Unit 2: Climate Change and Our Changing World 2.1 OUR CHANGING PLANET As we will see in this chapter, and throughout this study 1. Stratospheric ozone depletion guide, the finance sector has a substantial impact on 2. Atmospheric aerosol loading Our planet is impacted by a wide range of interlinked the environment and the world we live in. Many of our environmental factors which affect all living things – lending and investment decisions to date have been 3. Ocean acidification people, animals, and plants. Human activity, particularly destructive, such as financing companies and projects 4. Biogeochemical flows (nitrogen and phosphorous) since the Industrial Revolution, has caused significant that are heavy users of fossil fuels or that create harm, including: 5. Freshwater use significant environmental and/or societal damage through deforestation or harmful waste. We saw in Chapter 1 that, 6. Land-system change Climate change – large-scale, long-term shifts in the following the signing of the Paris Agreement in 2015, bank 7. Biosphere integrity (formerly ‘loss of biodiversity’) planet’s weather patterns and average temperatures lending to the fossil fuel sector increased rather than Habitat loss – destruction or damage to habitats, which decreased. Like the rest of the world, the finance sector 8. Climate change means that they are no longer able to support the is also directly and indirectly impacted by environmental 9. Introduction of novel entities (formerly ‘chemical species previously sustained and social factors, particularly climate change. pollution’, and now including the release of radioactive Biodiversity loss – extinction of species at local or global materials)1 Many environmental and broader sustainability factors level, leading to a reduction in the variety of plant and are interconnected. An increase in global temperature, Of the nine planetary boundaries, researchers believe animal life for instance, leads to marginal desert habitats becoming that four of these: climate change, biosphere integrity Poor air quality – increasing natural or human-made uninhabitable, which may lead to a significant decline (due to decreased biodiversity), biogeochemical flows and pollution, making the air unhealthy or toxic for in or the complete extinction of one or more species. land system change, have already been exceeded2. This humans, plants, and animals This process could then have further effects on the food increases the risk of the Earth departing from the ‘safe Poor water quality – deterioration in the extent to which chain. operating space’ we are accustomed to. water is clean and healthy for human, plant and animal Humans have always had an impact on the environment. life But since the Industrial Revolution, and particularly Scarcity of fresh water – lack of available water to meet since the mid-20 th century, these effects have increased the needs of a particular locality or region dramatically and have led to some irreversible impacts, as Deforestation – destruction of trees to create clear land we describe below. for other uses (e.g. agriculture) 2.1.1 Planetary boundaries Soil erosion – wearing away of topsoil (the upper layer The concept of ‘planetary boundaries’, pioneered by of soil, which contains the most nutrient-rich materials) the Stockholm Resilience Centre, attempts to define the Contaminated land – land that contains substances that ‘safe operating space for humanity’. It identifies nine key are hazardous to human, plant and animal life processes and systems – encompassing atmosphere, land, ocean and life – that interact to support and Contaminated seas – the presence of waste, industrial regulate the Earth. chemicals, sewage, and other materials that harm marine life 62 | Principles and Practice of Green and Sustainable Finance Unit 2: Climate Change and Our Changing World 2.1.2 The effects of climate change and this is likely to lead to more frequent and more Melting sea ice The effects of climate change are already visible, and severe floods, especially in African and Asia. There are Arctic sea ice has been declining since the late 1970s, by include: also changes between the seasons in different regions; about 4% or 0.6 million square kilometres (an area about for example, the UK’s summer rainfall is decreasing on the size of Madagascar) per decade. AR6 finds that in Higher temperatures average, while winter rainfall is increasing. the period 2011–2020, the annual average Arctic sea ice Scientific research shows that the average temperature area covered the smallest area since at least 1850. The Changes in biodiversity and nature of the planet’s surface has increased since pre-industrial Arctic is likely to be almost completely free of sea ice in times, and in particular during the 20 th century. Global The UN’s Intergovernmental Science-Policy Platform September at least once before 205010. surface temperatures have risen 1.1o since the Industrial on Biodiversity and Ecosystem Services 2019 Revolution, and surface temperatures have risen more assessment finds that biodiversity is declining at a rate Retreating glaciers rapidly since 1970 than in any 50-year period in the unprecedented in human history6. This is caused by a Glaciers all over the world (in the Alps, Rockies, Andes, past 2,000 years, according to the International Panel very wide range of factors including or linked with climate Himalayas, Africa, and Alaska) are melting, and the rate on Climate Change’s (IPCC) Sixth Assessment Report change, such as air and water pollution, deforestation, of shrinkage has increased in recent decades. The most (AR6)3. Global greenhouse gas emissions during the and the destruction of habitats. Some 1 million animal recent IPCC report notes that this rate of retreat is decade 2010-2019 were higher than at any previous and plant species are threatened with extinction, unprecedented in at least the last 2,000 years.11 time in human history, and despite efforts to reduce including more than 40% of amphibians, more than 33% these emissions, they continue to rise, although the of marine mammals and almost 33% of reef-forming Melting Ice sheets rate of increase is slowing4. According to the World corals. According to the WWF, species loss is estimated The Greenland and Antarctic ice sheets, which between Meteorological Organization (WMO), the most recent to be between 1,000 and 10,000 times higher than the them store the majority of the world’s fresh water, are decade (2011-2020) is the warmest on record. In 2020, natural extinction rate7. Changes in the climate are also both shrinking at an accelerating rate. Research shows the global average surface temperature was 1.2oC bringing changes in the behaviour of species, such as that polar ice caps are now melting six times faster than above pre-industrial times5. Sulphate pollution (which butterflies appearing earlier in the year and birds shifting in the 1990s. According to AR6, the rate of ice sheet reflects sunlight and cools the planet) means warming is their migration patterns. loss increased by four times between 1992–1999 and approximately 0.5oC lower than would otherwise be the 2010–201912. Taken together, retreating ice sheets and Rising sea levels case. glaciers were the main contributors to the rise in average Since 1900, sea levels have risen by about 20 cm globally sea levels. Changes in precipitation on average, the rate of sea-level rise has accelerated There have been observed changes in precipitation, in recent decades, and sea levels will continue to rise, although not all areas have data over long periods. according to the IPCC8. Depending on the growth in Rainfall has increased in the mid-latitudes of the northern emissions and the extent of further global warming, the hemisphere since the beginning of the 20 th century, average sea level may rise by between approximately with heavy rainfall events becoming more frequent and 28cm and 1m by 2100, compared with 1995-2014 average more intensive, especially over North America. The IPCC levels. More substantial rises cannot be ruled out. Even predicts that more frequent, heavier falls of rain and a relatively small rise of 65cm by 2100 would flood many snow will become the norm in many parts of the world, coastal cities on a regular basis, according to research from NASA9. 63 | Principles and Practice of Green and Sustainable Finance Unit 2: Climate Change and Our Changing World 2.2 THE CLIMATE SYSTEM AND ANTHROPOGENIC CLIMATE CHANGE QUICK QUESTION: REFLECTING ON THE VISIBLE EFFECTS Before we begin to understand the science of climate OF CLIMATE CHANGE OUTLINED ABOVE, HOW DO YOU change, we must first be able to differentiate between THINK THE FINANCE SECTOR HAS DIRECTLY OR INDIRECTLY weather and climate. CONTRIBUTED TO THEM? ‘Weather’ is the term to describe the daily fluctuations Write your answer here before reading on. in the state of the atmosphere. It is characterised by changes in temperature, wind, and precipitation, among other weather elements. Changes can occur rapidly, hour by hour or over a period of several days to a week. ‘Climate’ refers to the average and spread in weather conditions for a particular area over a period of time. Usually this is over many years - the World Meteorological Organisation defines this in terms of a period of 30 years. There is natural variability in both weather and climate. ‘Climate change’ refers to systematic changes across the climate system in response to a forcing agent. The forcing agent can be natural, for example, a solar cycle or volcanic eruption. Or it could be the result of human activities such as greenhouse gas emissions from industry or changes in land use. The latter is referred to as ‘anthropogenic climate change’; that is, climate change caused by humans and human activities. The Intergovernmental Panel on Climate Change (IPCC) defines climate change as: “A change in the state of the climate that can be identified (e.g., by using statistical tests) by changes in the mean and/ or the variability of its properties and that persists for an extended period, typically decades or longer”.13 64 | Principles and Practice of Green and Sustainable Finance Unit 2: Climate Change and Our Changing World READING: EXTREME WEATHER EVENTS IN 2020 Windstorms Ciara and Alex in Europe Floods in India Over the course of 2020, many countries in Europe Between June and October 2020, floods in India Whilst the world grappled with the COVID-19 were hit with fierce storms which caused immense killed more than 2,000 people. Across the country, pandemic in 2020, a series of extreme weather damage. The two most severe were storms Ciara the monsoon season brought extreme rainfall, events led to catastrophic results for millions of and Alex, costing a combined $5.9 billion of damage. exacerbated by climate change. Damages amounted people, animals and many ecosystems. A report to more than $10 billion. by Christian Aid lists ten of the most financially Cyclone Amphan in the Bay of Bengal devastating events, the costs of which were Floods in Kyushu, Japan As the planet warms, annual cyclones in the Bay estimated to exceed $140 billion: of Bengal have strengthened. In 2020, at least 128 July saw record-breaking rainfall hit the island of Bushfires in Australia people were killed by one of the strongest storms Kyushu in Japan. This caused major floods and on record, Cyclone Amphan. With sustained wind landslides, and 3.6 million people had to leave their In January 2020, bushfires fuelled by high speeds of 270 km/h, the storm caused more than homes. The floods caused 82 deaths, with damage temperatures and extreme drought in Australia $13 billion of damage across India, Bangladesh, Sri estimated at more than $8.5 billion. led to the deaths of 34 people and more than a Lanka and Bhutan. billion animals. 65,000 people were forced to leave Floods in Pakistan their homes. The fire, which engulfed more than 18 Atlantic Hurricane season in the USA and Central Increased rainfall in July and August brought million hectares, caused damage estimated at $5 America extreme flooding to Pakistan. This resulted in more billion. Between May and November 2020, the Atlantic than 400 deaths and $1.5 billion of damage. As Locust Storms in East Africa hurricane season killed more than 400 people and with many other developing countries, Pakistan has devastated more than $41 billion worth of homes contributed relatively little to climate change, but is During the first few months of 2020, countries and property. Despite having contributed minimally suffering from the effects. including Eritrea, Ethiopia, Kenya, Somalia and to global warming, countries in Central America are Uganda experienced a devastating invasion of West Coast Fires, USA some of the most vulnerable to extreme weather locusts. This followed an unusually wet rainy effects. Between July and November 2020, dozens of season, creating ideal conditions for the insects wildfires ripped through more than 8 million to reproduce. Locust swarms attacked vast areas, Floods in China acres of land across California, Colorado, Arizona, destroying crops, trees, and pastures, at an China is the country with the highest flood risk in Washington and Oregon, killing at least 42 people. estimated cost of $8.5 billion. As climate change the world, with a warming climate contributing to The direct cost of the fires was estimated at $20 continues, these vulnerable regions are likely to intense downpours of rain. In June 2020, China billion, with fumes and smoke indirectly triggering suffer increased rainfall and flooding, potentially experienced devastating floods that affected more health issues for many more individuals. leading to further swarms. than 35 million people and caused $32 billion of Source: Christian Aid (2020) Counting the cost 2020: A year of damage. climate breakdown (online). Available at: https://web.archive.org/ web/20220710002024/https://www.christianaid.org.uk/sites/ default/files/2020-12/Counting%20the%20cost%202020.pdf [Accessed: 17 January 2023] 65 | Principles and Practice of Green and Sustainable Finance Unit 2: Climate Change and Our Changing World 2.2.1 Understanding the climate system The climate system is highly complex and interactive. It QUICK QUESTION: TO WHAT EXTENT DO YOU THINK THE comprises five major components: EXAMPLES OF EXTREME WEATHER EVENTS DESCRIBED 1. Atmosphere – a layer of mixed gases that circles the IN THE READING ABOVE HAVE BEEN CAUSED BY, OR THE globe. This is the most rapidly changing part of the IMPACTS INCREASED BY, CLIMATE CHANGE? climate system where everyday weather takes place. Global atmospheric circulation consists of three main Write your answer here before reading on. cells: the Hadley, Ferrel and Polar cells, which provide a natural air-conditioning system, transporting heat from the equator to the poles. 2. Ocean – all the liquid surface and underground water, both fresh and saline, which includes rivers, oceans, lakes, aquifers, and seas. Approximately 70% of the Earth’s surface is covered by oceans, which are important for the transport and storage of energy. 3. Cryosphere – those parts of Earth’s surface predominantly covered by snow and ice, which play an important role in the climate system. This is due to their high reflectivity (albedo) of incoming solar radiation. The cryosphere consists of ice sheets, glaciers, sea ice, and permafrost. 4. Biosphere – the component in which life occurs (terrestrial and marine), and which plays an essential role in the global carbon cycle, mainly through photosynthetic processes in plants. 5. Lithosphere (land surface) – includes surface vegetation and soils, which play important roles in the flow of air over the surface, the absorption of solar energy, and the water cycle. 66 | Principles and Practice of Green and Sustainable Finance Unit 2: Climate Change and Our Changing World The Sun is the most important natural forcing agent, and THE EARTH’S ENERGY BALANCE the primary driver of the Earth’s climate. To maintain a stable global climate, a balance must exist between incoming solar radiation (shortwave radiation) and Reflected Solar 342 Incoming 235 Outgoing 107 outgoing radiation (longwave radiation), which is reflected Radiation Solar Longwave and emitted out to space. This is known as the Earth’s 107 Wm -2 Radiation Radiation energy balance, and is represented in the illustration 342 WM -2 235 Wm -2 opposite. Humans, comprising just a small part of the biosphere, should not have a substantial effect on the climate - but, as we will see later in this chapter, human Reflected by Clouds, activity has become an increasingly significant forcing Aerosol and 40 agent. Atmospheric Emitted by Atmospheric Gases 77 Atmosphere Window Over the long term, the incoming solar radiation 165 absorbed by the Earth and the atmosphere is balanced 30 Emitted by Clouds Greenhouse by the same amount of outgoing longwave radiation Gases being released. About half of the incoming solar radiation is absorbed by the Earth’s surface. This energy is transferred to the atmosphere as the air in contact with Absorbed by the surface warms (thermals). This process happens by 67 Atmosphere evapotranspiration and by longwave radiation, which is absorbed by clouds and greenhouse gases. The Latents atmosphere, in turn, radiates longwave energy back to 78 Heat Earth as well as back out to space. 24 A number of other drivers can lead to variations in the mean state and other elements of the climate, such as the ‘El Niño’ event described on the next page. These Reflected may occur over a range of timescales- from weeks and by Surface 40 324 months, to decades, centuries, or even millennia. 30 350 Black 24 78 Radiation 168 Thermals Evapo- 390 Absorbed transpiration Surface by Surface Radiation 324 Absorbed by Surface 67 | Principles and Practice of Green and Sustainable Finance Unit 2: Climate Change and Our Changing World CASE STUDY: NATURAL VARIABILITY - EL NIÑO SOUTHERN OSCILLATION What is El Niño and La Niña? ‘El Niño’ refers to a change in sea surface temperatures across the Tropical Pacific Ocean, linked to a weakening of the usual easterly trade winds. In a non-El Niño year, strong trade winds blowing from east to west maintain a temperature gradient across the Pacific Ocean, with warmer surface water in the West Pacific (near Indonesia) than in the east (near the coast of South America). This warm surface water provides an ample moisture source for cloud formation and precipitation across the Western Tropical Pacific. During an El Niño event, the trade winds slow, and the warm water in the West Pacific extends east, reducing the temperature gradient. El Niño events are sporadic, taking place every 2-7 years, and often peak during December. The El Niño and La Niña cycle causes a redistribution of energy that changes weather patterns across the entire globe, triggering floods in Ecuador, droughts in Indonesia, and a migration of fish away from the coast of Peru. El Niño even causes an increase in global average temperature. These events are associated with widespread changes in the climate system that last several months, and can lead to significant human impacts, affecting sectors such as infrastructure, agriculture, health and energy. ENSO – an atmosphere-ocean interaction These episodes alternate in an irregular inter-annual cycle called the ENSO cycle. ‘ENSO’ stands for ‘El Niño Southern Oscillation’, where ‘Southern Oscillation’ is the term for atmospheric pressure changes between the east and west tropical Pacific that accompany both El Niño and La Niña episodes in the ocean. The name ‘ENSO’ is a reminder that the close interaction between the atmosphere and the ocean is an essential part of the climate process. While the global climate system contains many processes, ENSO is by far the dominant feature of climate variability on inter-annual timescales. 68 | Principles and Practice of Green and Sustainable Finance Unit 2: Climate Change and Our Changing World A question often asked about climate change is whether NASA satellite imagery showing a side-by-side comparison of Pacific Ocean sea surface height (SSH) anomalies the observed changes in the Earth’s climate are due to during the 1997-1998 and 2015-2016 El Niño events. human influence, or if they can be explained by natural causes. The answer is that both natural causes and human activities (‘anthropogenic factors’) drive climate change. But the strong scientific consensus is that the latter has had, and continues to have, a significant impact. The IPCC’s most recent assessment of the climate science (AR6, 2021/22) goes further, stating: It is unequivocal that human influence has warmed the atmosphere, ocean and land. Widespread and rapid changes in the atmosphere, ocean, cryosphere and biosphere have occurred. The likely range of total human-caused global surface temperature increase from 1850–1900 to 2010–2019 is 0.8°C to 1.3°C, with a best estimate of 1.07°C.14 In other words, anthropogenic (human) factors have caused approximately 1.1°C of global warming since the Industrial Revolution. Human factors also increase the scale, speed and environmental and societal impacts of global warming, as we shall see on the next page. Global CO2 emissions would have to peak by 2025 to limit global warming to 1.5°C above pre-industrial levels by 2050, however achieving this seems highly unlikely at present.15 Image source available at: https://sealevel.jpl.nasa.gov/elnino2015/index.html [Accessed: 17 January 2023] 69 | Principles and Practice of Green and Sustainable Finance Unit 2: Climate Change and Our Changing World 2.2.2 The greenhouse effect atmosphere for much longer, but the majority of CO2 is emissions by 2030. Cutting global methane emissions As we saw previously, the primary driver of the Earth’s absorbed into the oceans over that period. Ice-cores, by 50% by 2030 is estimated to reduce global warming climate is energy from the Sun. Most of the Sun’s energy which give an insight into CO2 levels over hundreds by some 0.2-0.3°C. that reaches the Earth is reflected back into space. of thousands of years, show that concentrations today are higher than at any time in the last 800,000 Nitrous Oxide (N2O) But some is trapped by gases in the atmosphere as it radiates back from the Earth’s surface. This is the years. CO2 enters the atmosphere largely through the Nitrous Oxides have an average atmospheric lifetime ‘Greenhouse Effect’, and it warms the Earth like a blanket, burning of fossil fuels. According to the IPCC, emissions of 120 years. Concentrations in the atmosphere are making life on Earth possible by elevating the global of CO2 reached nearly 60 GtCO2e (gigatonnes) in 2019, approximately 120% above pre-industrial levels, mean temperature to about 14°C, which is about 30°C although there was a fall in emissions the following according to the World Meteorological Organization21. warmer than it otherwise would be. Since the Industrial year because of the COVID-19 pandemic. The IPCC N2O emissions stem largely from agriculture, soil Revolution, human activity (such as burning fossil fuels has medium confidence that global CO2 emissions sources and fossil-fuel activities. The photolysis of and changing land use) has altered the natural balance of between 2010-2019 approximate the remaining N2O in the atmosphere could lead to the depletion of these greenhouse gases, pushing up their concentrations carbon budget for limiting global warming to 1.5°C stratospheric ozone. in the atmosphere and increasing the greenhouse effect. above pre-industrial levels, meaning a further decade of emissions at this level would use up the remaining According to the IPCC, methane emissions have grown by This has caused a rise in global temperatures and other carbon budget well before mid-century19. 29% and nitrous oxide emissions by 33% since 199022. changes to our climate. Methane (CH4) Only about 0.1% of the atmosphere is made up of these As we noted earlier, according to the IPCC global greenhouse gases. The rest mainly consists of nitrogen greenhouse gas emissions during the decade 2010-2019 Methane is a naturally occurring greenhouse gas (approximately 78%), oxygen (approximately 21%) and were higher than at any previous time in human history16. with an average atmospheric lifetime of 12 years. argon (approximately 0.9%). Although scarce in our Despite the signing of the Paris Agreement and other Concentrations in the atmosphere are now some atmosphere, greenhouse gases have an impact on the efforts to reduce emissions, they have continued to rise 260% above pre-industrial levels, according to the Earth’s climate system energy balance by trapping heat in - although at a slower rate than previously: 1.3% per year World Meteorological Organization20, and it is the most the atmosphere, as illustrated on the next page. for the period 2010-2019, compared with 2.1% per year potent greenhouse gas (in terms of its contribution for the previous decade17. to global warming) after carbon dioxide, being some 25 times more effective at trapping heat. Man-made The main, naturally occurring greenhouse gases are: methane emissions mainly come from natural gas extraction, with other sources including wetlands, Carbon Dioxide (CO2) landfill, livestock and agricultural practices. Because Current (2021) atmospheric concentrations of CO2 are methane remains in the atmosphere for a relatively nearly 150% of those compared with levels prior to short time compared with other greenhouse gases, the Industrial Revolution, and reached 413.2 parts per reducing methane emissions – especially from natural million in 2020, according to the World Meteorological gas and agriculture – is an effective way to quickly Organization18. CO2 is the main greenhouse gas limit global warming. It was for this reason that at COP responsible for global warming, with an atmospheric 26 in Glasgow in 2021 a global coalition of some 100 lifetime of up to 200 years. It can, in fact, remain in the countries, led by the US, pledged to reduce methane 70 | Principles and Practice of Green and Sustainable Finance Unit 2: Climate Change and Our Changing World READING: MEASURING GREENHOUSE GAS EMISSIONS: CARBON DIOXIDE EQUIVALENT (CO2E), GLOBAL WARMING POTENTIAL (GWP) Solar radiation powers The Greenhouse Effect AND THE GHG PROTOCOL the climate system. SUN Some of the infrared The most commonly used measure of greenhouse radiation passes through gas emissions is ‘carbon dioxide equivalent’, the atmosphere but most is abbreviated to CO2e, with reductions in emissions absorbed and re-emitted in often reported using ‘annual CO2e’. While carbon all directions by greenhouse dioxide is the most common greenhouse gas Some solar radiation gas molecules and clouds. The responsible for global warming, as we have seen is reflected by effect of this is to warm the above other greenhouse gases including methane the Earth Earth’s surface and the (CH4), nitrous oxide (N2O) and hydrofluorocarbons and the lower atmosphere. (HFCs) also have a significant impact. Methane, for atmosphere. instance, is 28 times more effective at trapping heat than carbon dioxide, and nitrous oxide 265 times ATMOSPH more effective, making them important contributors ERE to the greenhouse effect. EARTH This value for the ‘effectiveness’ of other greenhouse gases is known as the ‘global warming potential (GWP)’, measured over a 100-year timescale, with carbon dioxide given a GWP of 1. Different sources offer different values for the GWP of other greenhouse gases, but the IPCC’s Assessment Reports provide a generally accepted benchmark. In the IPCC’s Fifth Assessment Report About half the solar (AR5), methane is given a GWP of 28, and nitrous radiation is absorbed oxide a GWP of 265. by the Earth’s surface and warms it. In measuring and reporting greenhouse gas Infrared radiation emissions, and the impact of activities designed is emitted from the to reduce these, CO2e is used as a common unit of Earth’s surface. measurement. A given quantity of greenhouse gas Source: IPCC 71 | Principles and Practice of Green and Sustainable Finance Unit 2: Climate Change and Our Changing World As the table below demonstrates, the majority of emissions can be reported as CO2e by multiplying it financial services context, this would include global CO2 emissions are produced by the power by its GWP. For example, if an oil and gas company emissions from buildings, etc., which for many generation sector, which accounts for nearly half of all can reduce leakage in its methane pipeline by 10 financial institutions will not be major sources of emissions, a reflection of its current dependency on tonnes per year, this could be expressed as 280 emissions compared to, for example, factories. fossil fuels. Industry accounts for nearly a quarter of tonnes annual CO2e (i.e. 10 tonnes CH4 x 28). This global emissions, with surface transport generating allows us to measure increases or reductions in Scope 2 emissions: indirect greenhouse gas approximately 20%: emissions in a common unit, despite the different emissions from the consumption of purchased properties of different greenhouse gases. electricity and power for heating, cooling and Share of total global CO2 emis- similar uses by the reporting organisation. Again, in Sector sions (2020) Many approaches are used for estimating and a financial services context, emissions are likely to reporting greenhouse gas emissions avoided be limited, at least in comparison with other sectors Power Generation 44.3% and/or reduced. They mainly differ according of the economy that are major users of electricity Industry 22.4% to the assumptions used in the models (e.g. in and power. estimating emissions avoided, assumptions have Surface transport 20.6% to be made regarding the future efficiency of, and Scope 3 emissions: other indirect emissions that are the result of activities from assets not owned or Public buildings and emissions from, fossil fuel power stations and 4.2% controlled by the reporting organisation, and which commerce other industrial units). It is good practice, therefore, for organisations to publish the methodologies are emitted through the organisations’ value chain. Residential 5.6% they use to estimate emissions, and where For many organisations, including financial services possible to keep their methodologies consistent firms, Scope 3 emissions represent the majority of Aviation 2.8% to facilitate comparison between investments and total emissions, including the loans and investments environmental impacts over time. made by financial institutions. Scope 3 emissions Source: Le Quéré, C., Jackson, R.B., Jones, M.W. et al. (2020) Temporary are the hardest to measure, however, because reduction in daily global CO2 emissions during the COVID-19 forced confinement. Nat. Clim. Chang. 10, 647–653 (2020). Available at: https:// Global standards for measuring emissions are set they include items such as the transportation of doi.org/10.1038/s41558-020-0797-x [Accessed: 17 January 2023] by the Greenhouse Gas (GHG) Protocol, established products, the usage of products by consumers, by the World Resources Institute and the World waste disposal and – for financial services firms – Business Council for Sustainable Development 23. emissions from loans and investments. In 2019, The Guardian reported on a study that found Emissions are divided into Scope 1, 2 and 3 20 fossil fuel companies were responsible for a third of emissions, and it is important to understand the The GHG Protocol, working with UNEP FI and the the world’s entire carbon (CO2 and MH4) emissions since differences between these: 2 Degrees Investing Initiative (2o), has launched the mid-1960s. The study, conducted by the Climate the Portfolio Carbon Initiative, which provides Accountability Institute, showed that four global energy Scope 1 emissions: all direct greenhouse gas guidance for financial institutions on understanding companies alone - Chevron, Exxon, BP and Shell - were emissions from sources that are owned or and measuring emissions from lending and responsible for 10% of all such emissions since 196524. controlled by the reporting organisation. In a investment activities. 72 | Principles and Practice of Green and Sustainable Finance Unit 2: Climate Change and Our Changing World 2.2.3 Observed and projected changes in the climate system QUICK QUESTION: THINKING ABOUT THE ORGANISATION The Intergovernmental Panel on Climate Change (IPCC) YOU WORK FOR, OR AN ORGANISATION YOU ARE FAMILIAR Created in 1988 by the World Meteorological WITH, WHAT (IF ANYTHING) HAS IT DONE/IS IT DOING Organization (WMO) and the United Nations Environment Programme (UNEP), the Intergovernmental Panel on TO REDUCE ITS DIRECT OR INDIRECT EMISSIONS OF Climate Change (IPCC) provides regular assessments of GREENHOUSE GASES? the scientific basis of climate change. The IPCC’s work includes looking at the causes and consequences of Write your answer here before reading on. climate change. It also assesses options for mitigating climate change and the potential for adapting to its consequences. The IPCC currently has 195 member countries, with thousands of scientists and experts contributing to IPCC reports. Respected, world-leading scientists assess the thousands of research papers published each year to create a synthesis of our current understanding of climate change and related topics. This consensus approach, which takes in a wide range of views, expertise and research, leads to the IPCC’s reports being widely viewed as highly authoritative. IPCC reports are intended to provide scientific information to governments and other players. They are used to develop evidence-based climate policies, as well as to underpin international climate negotiations. Outputs include Assessment Reports (published at intervals of around 5-8 years), and Special Reports on specific subjects related to climate change. Since its formation, the IPCC has completed five full assessment cycles, the most recent being its 5th Assessment Report (known as AR5) published in 201425, supplemented by a Special Report on Global Warming of 1.5o in 201826. 73 | Principles and Practice of Green and Sustainable Finance Unit 2: Climate Change and Our Changing World In August 2021, the IPCC published Climate Change 2021: Observed and future projected changes in global can be combined in Integrated Assessment Models The Physical Science Basis. Contribution of Working Group temperatures (IAMs) to develop scenarios including both climate and I to the Sixth Assessment Report of the Intergovernmental The IPCC’s Fifth Assessment Report (AR5), published in socioeconomic factors. Panel on Climate Change 27, the first part of the report 2014, presented four future climate scenarios for the from its sixth assessment cycle, AR6, introduced earlier The original SSPs (published in 2016) were numbered 1-5. period to 2100; they are known as Representative in this chapter. Climate Change 2021, endorsed by all They ranged from SSP 1 (where the world successfully Concentration Pathways (RCPs): 195 IPCC members, contains the most up-to-date mitigates the impacts of climate change, and a successful scientific assessment of climate change and the role of A ‘low emissions scenario’, RCP 2.6, featuring significant transition to a more sustainable, low-carbon world is anthropogenic factors. It also presents a range of future emissions reductions that aim to limit warming; the managed) to SSP 5 (where economic growth continues to scenarios for global warming and climate change. Climate scenario assumes that average greenhouse gas be powered by fossil fuels). Climate Change 2021 updates Change 2021 was followed in 2022 by two further Working emissions peak between 2010-2035 and decline the SSPs and presents 5 new scenarios for average Group Reports: Working Group II - Climate Change 2022: substantially thereafter. global temperature rises (over pre-industrial levels) for Impacts, Adaptation and Vulnerability28, and Working Group the short, medium and long term, as set out in the table Two ‘intermediate scenarios’ – RCP 4.5 and RCP 6 – on the next page. SSP 1-1.9 and SSP 1-2.6 assume low III - Climate Change 2022: Mitigation of Climate Change29. with emissions in the former peaking around 2080 greenhouse gas and CO2 emissions declining to Net The IPCC is clear that human activities are having before declining, and in the latter peaking around Zero around 2050, with negative CO2 emissions after unprecedented and irreversible effects on the global 2100. that. SSP 2-4.5 assumes that emissions will remain at climate, and on the environment more broadly. This A ‘high emissions scenario’, RCP 8.5, which does approximately current levels until 2050, and is based on includes rising sea levels, increasing ocean acidification, not include any explicit efforts to reduce output countries’ current climate policies and pledges. SSP 3-7.0 retreating glaciers and ice sheets, further losses of of greenhouse gases from human activity. In this assumes that emissions will double from current levels biodiversity, and increasing frequency and severity of scenario, emissions continue to rise throughout the by 2100, and SSP 5-8.5 that they will double from current extreme weather events including storms, wildfires, century. levels by 2050. heatwaves, floods and droughts. Global CO2 emissions would have to peak by 2025 to limit global warming to The RCPs describe future climate scenarios based 1.5oC above pre-industrial levels by 2050, but achieving on different levels of greenhouse gas emissions and this seems highly unlikely at present. Immediate, dramatic concentrations, setting out projections for average global and sustained reductions in greenhouse gas emissions surface temperatures, sea levels and other climate- are required to prevent further global warming and related variables. They do not, however, consider the potentially catastrophic climate change. socioeconomic drivers of climate change; to do this, ‘Shared Socioeconomic Pathways’ (SSPs) have been developed30. These are scenarios that include factors such as economic growth, population and technological development. They are used to develop different scenarios for emissions based on different speeds and scales of climate policy action – i.e. anthropogenic factors that impact climate change. The RCPs and SSPs 74 | Principles and Practice of Green and Sustainable Finance Unit 2: Climate Change and Our Changing World 2021 SHARED SOCIOECONOMIC PATHWAYS AND ESTIMATES OF GLOBAL TEMPERATURE RISES increase to 2oC by mid-century, and to 2.7oC by 2100. In the worst-case scenario (SSP 5-8.5), global warming 2021-2040 2041-2060 2081-2100 could reach 4.4 oC above pre-industrial levels by the end of the century. Under all except the two lower emissions Scenario (from scenarios (SSP 1-1.9 and SSP 1-2.6), global warming of Best estimate Very likely Best estimate Very likely Best estimate Very likely low to high 2°C looks likely to be exceeded unless dramatic and (oC) range (oC) (oC) range (oC) (oC) range (oC) emissions) sustained reductions in CO2 and other greenhouse gas SSP 1-1.9 1.5 1.2 to 1.7 1.6 1.2 to 2.0 1.4 1.0 to 1.8 emissions can be achieved. Extremes of temperature over land are likely to be higher SSP 1-2.6 1.5 1.2 to 1.8 1.7 1.3 to 2.2 1.8 1.3 to 2.4 than global mean temperature rises, meaning that some areas of the planet would become uninhabitable. As SSP 2-4.5 1.5 1.2 to 1.8 2.0 1.6 to 2.5 2.7 2.1 to 3.5 we have described earlier in this chapter, many parts of the world have already been experiencing increasing SSP 3-7.0 1.5 1.2 to 1.8 2.1 1.7 to 2.6 3.6 2.8 to 4.6 numbers of heat waves and heavy precipitation events, intensified by the impacts of human activities. Further warming will lead to more regular and extreme heat SSP 5-8.5 1.6 1.3 to 1.9 2.4 1.9 to 3.0 4.4 3.3 to 5.7 waves and droughts in some parts of the world, and periods of extreme temperatures will become more Source: IPCC (2021) Climate Change 2021: The Physical Science Basis – Summary for Policymakers (page 18). common. In some regions, warming will lead to increased precipitation, with very heavy rainfall or snow causing more frequent and more severe flooding. As noted earlier, Climate Change 2021 finds that global average surface temperatures have already risen by approximately 1.1o (in fact, 1.09oC) since the Industrial Revolution, an increase caused by anthropogenic factors. As also noted, sulphate Previous climate change research has shown that, pollution (which is being removed from the atmosphere because of its effects on health) means warming has been if global warming exceeds 2°C, the impacts of this - approximately 0.5oC lower than would otherwise be the case. Surface temperatures have risen faster between 1970 including melting sea ice and the release of methane and 2020 than in any other 50-year period over the past 2,000 years. They are likely to continue to rise by more than currently captured in permafrost - could lead to a 1.5o above pre-industrial levels by 2040, and by more than 2oC later in the century (within a wide range of variation, ‘tipping point’ of more rapid and irreversible climate depending on climate policy and emissions scenarios – the SSPs - as summarized in the table above). Each of the last four change, sometimes referred to as ‘Hothouse Earth’. The decades has been warmer than the preceding one, and the most recent five years have been the hottest since at least Stockholm Resilience Centre, for example, suggests 1850. that this could lead to long-term climate impacts where temperatures are some 4-5o higher than pre-industrial The IPCC concludes that global surface temperatures will increase until at least mid-century under all the SSPs. Under all temperatures, and sea levels up to 60m higher than today scenarios, temperatures will exceed the 1.5°C target, but will fall back below this level in the lowest emissions scenario – with devastating impacts for humanity31. (SSP 1-1.9). On the basis of current emissions levels and countries’ climate action plans (SSP 2-4.5), temperatures will 75 | Principles and Practice of Green and Sustainable Finance Unit 2: Climate Change and Our Changing World Observed and future projected changes in the increase is accelerating. Sea levels have risen faster since Observed and future projected changes in the atmosphere 1900 than over any preceding century in at least the last cryosphere Climate Change 2021 finds that increases in greenhouse 3,000 years. Anthropogenic factors are the likely cause of Global observations of the cryosphere over the last three gas concentrations in the atmosphere since pre-industrial this. decades show an overall decline in the total amount times are unequivocally caused by human activities. of ice over land and sea. Reductions in sea ice lead to According to the IPCC, it is virtually certain that sea levels In 2019, annual average concentrations were 410 ppm further warming. This is because the ice – which reflects will continue to rise during the 21st century and beyond. (parts per million) for carbon dioxide (CO2), 1866 ppb much of the incoming radiation from the sun back The extent to which this happens depends on the (parts per billion) for methane (CH4), and 332 ppb for into space – melts to reveal the less-reflective ocean emissions scenario, as set out in the chart below: nitrous oxide (N2O). To put this into context, the IPCC underneath. The melting of land ice has similar effects, has high confidence that CO2 concentrations are higher PREDICTED AVERAGE SEA LEVEL RISES but also contributes to rising sea levels. The Greenland than at any time in at least 2 million years, and very high and Antarctica ice sheets have been losing mass, glaciers confidence that CH4 and N2O concentrations are higher GLOBAL AVERAGE GLOBAL AVERAGE worldwide continue to shrink, and the extent of Arctic sea than at any time in the last 800,000 years. As noted SEA LEVEL RISE SEA LEVEL RISE ice has decreased. above, global CO2 emissions reached their highest ever (2100) (2150) levels in 2019, according to the IPCC. Scenario (from Climate Change 2021 concludes that anthropogenic low to high Likely range (m) Likely range (m) factors are very likely to be the main cause of shrinking As we explained previously increasing greenhouse emissions) glaciers, the decrease in Arctic Sea ice and the surface gas concentrations increases the greenhouse effect. melting of the Greenland Ice Sheet. There is only limited This leads to increasing global temperatures and other SSP 1-1.9 0.28-0.55 0.37-0.86 evidence, however, of human influence on the melting of changes to the climate and environment. the Antarctic Ice Sheet. The IPCC finds that in the period SSP 1-2.6 0.32-0.62 0.46-0.99 2011–2020, annual average Arctic sea ice area reached its Observed and future projected changes in the oceans lowest levels since at least 1850. Almost all of the world’s SSP 2-4.5 0.44-0.76 0.66-1.33 Climate Change 2021 finds that the average global ocean glaciers have been shrinking since the 1950s, which has temperature has increased by approximately 0.9o since SSP 5-8.5 0.63-1.01 0.98-1.88 not happened in at least the last 2,000 years. Melting ice pre-industrial times. It is virtually certain that the global sheets and glaciers combined contributed more than upper ocean (0–700 m) has warmed since the 1970s, and Source: IPCC (2021) Climate Change 2021: The Physical Science Basis – 40% to the increase in average sea levels in the period Summary for Policymakers 1971-2018, but were the main contributors to the rise in extremely likely that human influence is the main driver of this. It is also virtually certain that human-caused average sea levels during 2006-2018. CO2 emissions are the main driver of the current global Sea level rises above the likely range set out in the table acidification of the ocean. above cannot be ruled out due to deep uncertainty Much of this seems irreversible. The IPCC finds that around the melting of ice sheets. In the longer term, glaciers and permafrost will continue melting for decades Warming oceans cause sea levels to rise as a result of under all scenarios sea levels will continue to rise for or centuries under all emissions scenarios. Continued thermal expansion, in which warmer water occupies a centuries to millennia due to continuing deep ocean ice loss during the 21st century is virtually certain for the greater volume. Fresh water from melting polar ice caps warming and the melting of ice sheets. Over the next Greenland Ice Sheet, and likely for the Antarctic Ice Sheet. and glaciers also contributes to rising sea levels. Climate 2,000 years, average sea levels are expected to rise by Change 2021 shows that average sea levels increased between 2m to 3m if warming is limited to 1.5°C, 2m to Arctic sea ice coverage fluctuates with the seasons, with by 20cm between 1901 and 2018 and that the rate of 6m if limited to 2°C, and 19m to 22m with 5°C of warming. the maximum extent reached in the winter (February / 76 | Principles and Practice of Green and Sustainable Finance Unit 2: Climate Change and Our Changing World March) and minimum in the summer (September, at the end of the summer melt). Over the period 1979 to 2010, the extent of Arctic sea ice decreased at a rate estimated QUICK QUESTION: WHAT MIGHT BE THE IMPACT OF SOME to be in a range of 3.5 to 4.1% per decade. According to Climate Change 2021, the Arctic is likely to be free from sea OF THESE OBSERVED AND PROJECTED FUTURE CHANGES – ice in September at least once before 2050 under all five FOR EXAMPLE SEA-LEVEL RISES - ON THE CITY/COUNTRY/ emissions scenarios, with more frequent occurrences for REGION WHERE YOU LIVE AND WORK? higher emissions scenarios and levels of global warming. Write your answer here before reading on. 77 | Principles and Practice of Green and Sustainable Finance Unit 2: Climate Change and Our Changing World 2.2.4 Impacts of climate change on natural systems and Climate change also impacts human systems and agricultural, forestry and fishery sectors in those regions society society. Although climate change will affect everyone, most affected by the current impacts of climate change. According to the second part of the IPCC’s Sixth many of its effects may be felt disproportionately in the developing world, with the individuals and communities Aquaculture Assessment Report (AR6), published in February 2022 by the Working Group on Climate Change Impacts, most affected by climate change often being those who Aquaculture is another important sector in the Adaptation and Vulnerability (referred to as Climate are the least responsible for global warming. Oxfam’s developing world. Oceans and marine life are already Change 2022),32, anthropogenic climate change has Confronting Carbon Inequality Report (2020) finds experiencing large-scale changes at a warming of 1°C, caused a wide range of environmental and societal that the wealthiest 10% of the global population are with increased ocean acidification, and critical thresholds harms, including some irreversible impacts as natural and responsible for 52% of greenhouse gas emissions. are expected to be reached at 1.5°C and above. Coral human systems are pushed beyond their ability to adapt. By contrast, the poorest half of the global population reefs, which are already in substantial decline, are According to Climate Change 2022: are responsible for only 7% of emissions, but are the projected to decline by a further 70-90% at this level. most threatened by extreme weather events and other With global warming of 2°C, virtually all coral reefs will Some 3.3 to 3.6 billion people live in circumstances impacts of climate change. be lost. It is estimated that approximately half a billion that are highly vulnerable to climate change, including people rely on fish from coral reefs as their main source flooding, rising sea levels and food and water These impacts include, but are not limited to (according of protein. shortages; to the IPCC’s 2018 Special Report and Climate Change 2022): Biodiversity A high proportion of species are vulnerable to climate change; As already noted, global warming means that many land- Agriculture based, freshwater, coastal and marine ecosystems are Human and ecosystem vulnerability are Agriculture is an important sector in many countries, likely to suffer from a continued and significant loss of interdependent; and particularly in the developing world, with many biodiversity. Climate Change 2022 notes substantial, and Current unsustainable development patterns are individuals, families, and regions heavily reliant on the in some cases irreversible, damage to ecosystems caused increasing the exposure of ecosystems and people to sector for food and economic growth. Global warming by anthropogenic climate change, exacerbated by other climate hazards. scenarios of 1.5°C or above, particularly higher emissions factors including pollution, unsustainable land-use and scenarios, predict an increasing frequency and severity overconsumption. Further global warming will increase As we noted in the introduction to this chapter, the of extreme weather events, and an increasing frequency the rate of biodiversity loss, potentially by as much as UN’s Intergovernmental Science-Policy Platform on of drought and heat waves, leading to soil and water ten times if temperatures rise from 1.5°C to 3°C above Biodiversity and Ecosystem Services 2019 assessment degradation, reduced crop and livestock yields, and pre-industrial levels. The near-term risks for biodiversity estimates that some 1 million animal and plant species adverse effects on irrigation systems. The production loss are moderate to high in forest ecosystems and kelp are threatened with extinction. The IPCC’s Special Report of major crops such as wheat, rice and maize in both and seagrass ecosystems, and high to very high in Arctic on Global Warming of 1.5o (2018) estimates that a 1.5°C tropical and temperate regions is expected to be sea-ice and terrestrial ecosystems. average rise in global temperatures would place 20% to significantly impacted, although some select locations 30% of species at the risk of extinction. may benefit. A loss of biodiversity will impact many other natural and human systems, including agriculture and aquaculture, Climate Change 2022 finds that economic damage from food security, and animal and human health and climate change has already been experienced by the habitation. 78 | Principles and Practice of Green and Sustainable Finance Unit 2: Climate Change and Our Changing World Access to Water Flooding borne diseases such as malaria, spread by mosquitoes Nearly 2 billion people live in regions of the world where Drought, and other insects, are anticipated to become more clean, fresh water is scarce, and it is expected this prevalent and widespread as global temperatures Rising sea levels - in both the developing and increase. number will increase to nearly 3 billion by 2025. Climate developed worlds, large numbers of people live near change may significantly reduce access to fresh water due the coast Climate Change 2022 finds that global warming and its to the increased frequency of droughts and the drying Increasing land temperatures, causing parts of the impacts have indeed adversely affected the physical up/silting of lakes and other bodies of fresh water. world to become uninhabitable health of populations globally, and the mental health In addition, in some parts of the world, such as the of people in those regions most impacted by climate Himalayas, melting glaciers may have a significant impact Climate Change 2022 finds that rising sea levels change. The impacts include mortality from extreme heat - not just on the availability of fresh water, but more will continue to impact coastal communities and events, and an increased incidence of food-borne, water- widely. Himalayan glaciers and snowmelt supply water to infrastructure, with some coastal settlements and borne and vector-borne diseases. Higher temperatures, ten of the world’s most important river systems, including ecosystems vulnerable to submergence and loss. More increased rain and flooding have increased the incidence the Ganges, Indus, Yellow, Mekong and Irrawaddy, and than 1 billion people are at increased risk from the of diseases such as cholera and other gastrointestinal directly or indirectly supply nearly 2 billion people with impacts of rising sea levels. infections. water, food and hydroelectric energy, as well as clean air Some low-lying island nations, including the Maldives Property and Infrastructure and incomes. In the short term, an increased frequency of extreme weather events could cause severe flooding and the Seychelles, are particularly at risk from climate Rising sea levels will have a very significant impact and disrupt agriculture, homes, and livelihoods. In the change. Rising sea levels may cause significant, long- on coastal communities in both the developing and longer term, if the glaciers were to continue to reduce term flooding and contaminate freshwater aquifers, developed worlds, affecting poor smallholders in the in size or even disappear, an important source for these potentially making the islands uninhabitable. Research former and wealthy property owners, investors and major river systems would be disrupted, reducing access by Climate Central finds that by 2100 the homes of 200 tenants in the latter. In Florida alone, for example, it is to water for drinking, agriculture, and power downstream. million people could be permanently underwater33. This estimated, in high emissions scenarios, that more than risk is most concentrated in Asia, particularly in China, 10% of homes might become uninhabitable by 2100 Climate Change 2022 finds that with 2°C of global warming, Bangladesh, India, Vietnam, Indonesia, and Thailand. In due to flooding, creating an economic loss of more than the availability of water availability for agriculture, many cases, the individuals and communities who bear $400 billion. The US National Oceanic and Atmospheric hydropower, and human settlements in the mid to long the least responsibility for causing climate change face Administration predicts that Miami, a very low-lying city, term will diminish, with impacts projected to double with the greatest impact. will flood every year by 2070. This will affect not only 4°C of global warming. homes, but airports, businesses, logistics hubs, power Health stations, transport networks and many other aspects of Displacement and Migration Global warming can have a direct impact on health due to critical infrastructure. The IPCC estimates that, by 2050, up to 150 million heat waves and other extreme weather events. It can also individuals may seek to migrate due to the effects of have an indirect impact on mortality rates, for example The increased frequency and severity of extreme weather climate change on the areas, countries and regions where through reduced crop and livestock yields, reduced events will impact property and infrastructure in other they currently live. This will be caused by a combination of access to clean water, sewage overflows, and increases in ways; for example, buildings will need to be constructed, extreme weather events, such as: the rates of transmission of infectious diseases. Vector- retrofitted, or repaired to withstand higher impact 79 | Principles and Practice of Green and Sustainable Finance Unit 2: Climate Change and Our Changing World storms, heavier rainfall and other types of extreme weather. Both construction and insurance costs will need CASE STUDY: FOOD SECURITY AND CLIMATE The study analysed climate model projections to increase in response. CHANGE IN SUDAN for the 2040s. The climate change projections for Sudan indicate a substantial warming trend Security Food security is intricately linked to climate. In across the country. In contrast, rainfall projections Climate change can have a significant impact on many Sudan, agriculture accounts for around one third are mixed, with most models projecting small important aspects of human systems and society, of the country’s GDP and employs around 80% of increases in annual rainfall and some projecting including access to food and water, health, and the labour force. Climate change could have a large small decreases. However, increased evaporation property. When such necessities of human society are impact on agricultural production and livelihoods because of higher temperatures will have a negative threatened and communities must compete for scarce in Sudan, and the World Food Programme and the impact on water availability. resources, conflicts can arise or be exacerbated within Met Office undertook a study on the relationship or between nations and regions. This may be particularly between long-term climate change and future food Three scenarios that span the range of available significant when climate change also leads to substantial security. plausible future climates for Sudan were studied. All displacement and migration within or between countries the scenarios showed varying extents of increased and regions. Sudan lies at the northern-most extent of the heat and water stress, and year-to-year variability band of tropical rains known as the Inter-tropical in timings and amounts of rainfall. This will make Vulnerability to food insecurity increases in many Convergence Zone. This means it has a strong food production more challenging and increase countries as our world warms. The IPCC’s Special Report gradient of rainfall, ranging from extremely dry stresses on livelihoods and food security. The (2018) estimates that nearly 75% of countries will become conditions in the north to relatively wet conditions study recommends that adaptation measures more vulnerable if global warming increases by 2°C in the south. The climate is hot throughout the year, should focus on reducing sensitivity, improving rather than 1.5°C. but with seasonal rains, which can vary from year to resilience to variability and extremes, and improving year. heat tolerance and water efficiency in agricultural Many of the impacts of climate change on human production. systems and society are interlinked, as illustrated by the The large differences in rainfall across the country following case study. mean there is a wide variety of livelihoods and Source: UK Met Office/World Food Programme (2016) Food agricultural production systems corresponding to Security and Climate Change Assessment: Sudan (online). Available the climate in different regions. Pastoral farming at: https://www.metoffice.gov.uk/binaries/content/assets/ metofficegovuk/pdf/business/international/food_security_ dominates in the north, where rainfall totals are low climate_change_assessment_sudan.pdf [Accessed: 17 January and the onset of the rains is unreliable; cropping 2023] systems are more prevalent in the south, where the rainy season is reliably longer and heavier. However, agriculture is mostly rain-fed in Sudan, and is therefore sensitive to rainfall amounts and timings everywhere. This means that climate variability and change are key factors in the future of Sudan’s economy, livelihoods, and food security. 80 | Principles and Practice of Green and Sustainable Finance Unit 2: Climate Change and Our Changing World 2.2.5 Responding to climate change and to build resilience to, similar natural disasters. In As we saw in Chapter 1, responses to climate change take 2020, for example, the European Commission grant