Ecological debt and the G8 - Editorial

As the July G8 summit approaches, the UK"s New Statesman magazine publishes a provocative editorial by Andrew Simms in its latest issue.

A few highlights:
"It is rarely understood this way, but climate change is really a problem of debt. Not a cash debt, but an ecological one. Environmentally, we're living way beyond our means, spending more than the bank of the earth and the atmosphere can replace in our accounts. It is this debt - not the hole in the nation's public spending plans - that ought to have been the subject of the election campaign. And it is this debt - not the financial debts of poor nations to rich - that should guide the thinking of the Chancellor and other western leaders as they approach the G8 summit in July."

"Even the Financial Times commented that the IMF "probably ruined as many economies as they have saved". Yet we still expect poor countries to repay most of their debts, despite the effects on their people's lifestyles. Rich countries, faced with ecological debt, will not even give up the four-wheel-drive school run."

"The widening global gap in wealth was built on ecological debts. And today's economic superpowers soon became as successful in their disproportionate occupation of the atmosphere with carbon emissions as they were in colonial times with their military occupation of the terrestrial world. Until the Second World War, they managed this atmospheric occupation largely through exploiting their own fossil-fuel reserves. But from around 1950 they became increasingly dependent on energy imports. By 1998, the wealthiest fifth of the world was consuming 68 per cent of commercially produced energy; the poorest fifth, 2 per cent."

Read the whole article (pay per view)

Businesses urged to list climate risks

By Fiona Harvey, Financial Times
Companies came under pressure to disclose the risks to their businesses from climate change yesterday as leading institutional investors called for tough action. A group of 26 institutional investors with more than $3,000bn in assets urged the US Securities and Exchange Commission to force companies to disclose the risk as part of their securities filings.
Risks to companies include rising sea levels, regulated reductions in carbon dioxide output and greater variability in the weather. The group, including the states of California and New York, the Teamsters Affiliate Pension Plan, the London pensions funds authority, also pledged to invest $1bn in the next year in companies with technologies to combat climate change. Fiona Harvey, New York

Pension funds face climate-change risks, says report

IPE.com
UK- The pensions industry needs to recognise the long-term impact of climate change and adapt their asset and liability management strategies accordingly or they face an uncertain future, according to a report by UK merchant banking group Climate Change Capital.
The report ‘Impacts of climate change on financial institutions' medium to long term assets and liabilities’ argues that current financial models and assumptions do not adequately budget for climate change, leaving investments exposed to “significant” risks in the long term.
It also says that climate change might influence the obligation on trustees and fund administrators to be prudent investors and suggests that the definition of their fiduciary duties be extended to incorporate climate change and related issues.
Pension funds will face risks such as “direct physical impact “ on assets; while catastrophe reinsurance and insurance claims will worsen, the study says.

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Climate Change is Risk and Business Opportunity - Swiss Re

The insurance industry believes climate change represents a huge risk for its sector but a business opportunity as well, Christopher Walker of Swiss Re told an audience of public health experts at the Harvard Medical School today.
Mr. Walker’s lecture concentrated on climate change as a financial issue from the point of view of the insurance and reinsurance industry’s potentially rising costs and risks. Carbon is becoming a tradable commodity, allowing companies to hedge their risks, profit from emissions assets and turn this new discipline into a competitive advantage, he said. Walker added that the insurance industry can be a facilitator of emissions reduction activities, acting as a catalyst for the development of renewable, emission reduction and energy-efficient technologies.
Swiss Re also aims to reduce its own greenhouse gas emissions footprint through improved energy management in its buildings and through the promotion and use of resource-preserving energy systems such as renewables, he said.

More on the Harvard lecture