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26th November 2021
Can we litigate our way out of a climate catastrophe? Grantham Research Institute on Climate Change and the Environment are monitoring the growing number of climate litigation - more than 1,000 were filed since 2015 alone. See in the news for more. Image: Gavel by Tingey Injury Law Firm on Unsplash.
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As we look ahead to our next book club, we also reflect on our most recent discussion: The Ministry for the Future. This book is a well-balanced mixture of science/climate fiction and real-life climate change issues. It takes the reader into a fictional near-future which consists of existing real-world technologies, economics, and societies, where the actions and inactions of the characters decide their fates. The book is packed with fresh ideas and perspectives on sustainability, as well as solutions to combat the climate crisis such as geoengineering and the ‘carbon coin’.
A recent survey amongst respondents in 10 high income countries found that while it is consensus that something needs to be done about climate change, very few people are willing to make lifestyle changes to make that happen. All individuals consider themselves to be doing more than their local community does in the sustainability direction and 9 out of 10 country's respondents gave their own country the highest score for commitment to fighting climate change.
The citizens of high-income countries are the ones whose engagement is important. Developing countries like India and China, while may have a large overall carbon footprint, are much lower on a per capita basis. With families in India that can barely afford to have washing machines or air conditioners, it is no surprise that the carbon footprint of an individual in India is a seventh that of an American, even though it results from lack of choice than conscious effort.
Canada's Trudeau Vows Flood Aid, Climate Action After Third Election Win
Canadian Prime Minister Justin Trudeau vowed to help British Columbia rebuild after the devastating floods last week, and said it was time to ramp up the fight against climate change. "British Columbians are facing immeasurable challenges as their homes, their communities, and their well-being are impacted by terrible flooding," Trudeau wrote in the speech, saying the government will continue to support them. He added that action to fight climate change "must go further, faster."
Last week's floods forced the closure of the Trans Mountain oil pipeline and cut two critical east-west rail lines. The flooding underscored the vulnerability of Canada's supply chains to climate change and looked set to be the costliest natural disaster to hit Canada.
Are Clothing Manufacturers’ Green Initiatives Just Window Dressing?
The fashion industry is the second-largest polluter in the world, just after the oil industry, thanks to its intensive use of chemicals, fossil fuels, and water. Some brands are now releasing as many as 20 collections per year and people are buying 60% more clothes than 15 years ago but wearing them for half as long. Global fashion production is also expected to leap from 62m tonnes in 2015 to 102m tonnes in 2030.
A new report by Greenpeace asserts that the voluntary sustainability commitments adopted by many fashion firms are nowhere near enough to “change the destructive trajectory of fast fashion”. Another major source of water contamination is the use of fertilisers for cotton production, which heavily pollutes runoff waters and evaporation waters. Major manufacturers have introduced pledges and initiatives to reduce their carbon footprint.
Many of these sustainability initiatives either are inadequate or an attempt at ‘greenwashing’ ‑ where corporations celebrate their ethical and environmental initiatives in advertising and PR to placate consumers and divert attention from more dubious activities.
An alternative to coal bailout is that governments should apply a price to carbon, mandate closure, change regulations, remove subsidies, and make border adjustments as ways to close facilities. Many of these approaches would raise funds that western governments could use to support clean energy in the developing world, which would give those countries an additional incentive to close their polluting industries.
The impact of this approach:
This managed decline would lead to financial loss but there will be no bailouts and the assets of oil and gas sectors will be stranded.
The approach is to raise money which could partly fund worker retraining and relocation.
The coal generation assets should move to a separate entity like special purpose vehicles to encourage incumbents and state-owned generators to focus on low carbon alternatives.
By doing all this governments will avoid moral hazard, delays due to empire building, rising taxpayer costs, public perception issues and a host of other issues that make bailouts an undesirable option.
Can We Litigate Our Way Out Of A Climate Catastrophe?
The recent COP26 climate summit made it painfully clear that averting catastrophe will require finding new means to hasten progress. In response, an increasing number of people are turning to litigation. About 1,800 cases were filed around the world, raising issues regarding climate change science, mitigation, adaptation, or policies since 1986, according to data compiled by the Grantham Research Institute on Climate Change and the Environment. More than 1,000 were filed since 2015 alone.
Most cases have been in the US, though Australia and Europe are also seeing significant numbers. An expanding portion of them are systemic and go well beyond a particular complainant’s grievance to fundamentally challenge government inertia. For example, last month, a court in France ordered the government to repair the damage caused by its inaction on cutting emissions, after 2.3m people added their names to a petition as part of what’s been dubbed the “case of the century.”
Companies have also been the targets of climate litigation. Many of these cases seek to establish corporate liability for contributions to climate change. Others zero in on greenwashing or have been filed to hinder climate action. Ultimately, however, litigation aimed at spurring climate progress isn’t a “panacea.” It is unlikely it can act as a substitute for sustained policy actions.
Amid a year of unprecedented change, we are all the more aware of the impact of climate change, and the growing pressure on businesses, investors and governments to act now. As more data and research becomes available on the rapidly worsening effect climate change is having on the planet, companies need to realize the implications of their actions.
Join the panel of experts for a discussion around the outcomes of COP26, to hear about some of the strategy’s companies have put forward so far to incorporate climate change into their business strategies, and the opportunities and challenges they face in becoming Net Zero.
CICERO Report: Climate Modelling Is Hard, But We Are Heading For Disaster
The latest study from CICERO, the Center For International Climate Research in Oslo, suggests that predicting what the Earth’s climate will be like in 10 years from now is immensely difficult and trying to predict into the middle future — 2100, for instance — is an incredibly daunting task.
Plugging in the numbers based on the pledges made before and during COP26, temperatures are projected to rise 2.2-2.7°C by 2100. The range expands to 1.7-3.8° C when it includes the uncertainty in the climate response. At the upper end of that range, global average temperatures will be high enough to wreak unimaginable destruction on the environment and humanity.
Despite finding a wide range of emissions by 2050, nearly all the scenarios have median warming of less than 3°C in 2100. However, the most optimistic scenario is still insufficient to limit global warming to 2 °C. We furthermore highlight key modelling choices inherent to projecting where emissions are headed.
Big Banks Want To Act On Climate Change — So What's Stopping Them?
Pressure has been building on the financial sector in recent years to do more; COP26 only drew further scrutiny on the industry. Despite the scrutiny, there are still obstacles the finance sector faces in funding a transition to cleaner energy.
One of the challenges is the risk-averse nature ingrained in many of the banks. Since early-stage green technologies are inherently risky and resist investing until the sector has matured. Second, whether the companies involved in these projects will be financially successful is still far from certain given a lot of technologies are required for the transition and we are still at the front-end of the risk curve. Third, dealing with the fact that there is a limited number of low-carbon projects to support and how best to judge how "green" a company or project really is.
There are also societal and economic considerations that banks may weigh. The world requires reliable electricity and various communities could be impacted as nations shift away from certain polluting industries. As RBC’s John Stackhouse said, “We have to be really careful not to see all of this as black and white — it's full of grey”.
Communication is at the heart of shifting mindsets on climate and sustainability issues, and is vital in highlighting and understanding steps we can take as finance professionals to implement positive change.
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The weekly newsletter summarises information from different sources for the benefit of subscribers. While we take care to select articles, papers and opinions from reputable sources, we do not perform independent verification and hence these summaries should not be relied upon for any purpose. Further, the statements, opinions and conclusions that are summarised within the newsletter do not necessarily represent the views of the IFoA nor the newsletter authors and their employers.
This initiative is brought to you by the Institute and Faculty of Actuaries (IFoA) Sustainability Board (formerly Resource & Environment Board). The Sustainability Board is a group of voluntary actuaries working with the IFoA to encourage change within finance. We work alongside - but separately to - the IFoA and as such this is not an IFoA communication. Find out more about the IFoA Sustainability Board here.
