The DANGERS of underestimating the risks of CLIMATE CHANGE

  • As the effects of climate change increase, its impact on business will become more severe: altered rainfall patterns will affect Agriculture, floods will hinder supply chains, and heat waves will prevent employees from working.
  • In 2015, the Governor of the Bank of England, Mark Carney, warned in a speech to Llpyd’s in London on the «The Tragedy of the Horizon«, his way of calling the global risk that arises as a consequence of the inherent disparity between short thinking term of the financial markets and the long-term nature of the climate.
  • …. Awareness is growing rapidly: the number of companies that consider these risks «almost certain» or «very likely» increased from 34% in 2011 to 67% in 2016. However, self-indulgence persists worrying way 
  • Another problem that researchers found is that companies seem to be taking an extreme approach towards risks, by ignoring the potential indirect costs of interruptions in supply chains or changes in consumer behavior
  • It seems that Carney was right about the disdain of financial markets for the risks of climate change, which raises doubts about his ability to manage investments properly. When analyzing long-term risks, markets do not seem as efficient as we might expect.

SOURCE. Article Bloomberg, Mark Buchanan – Dial / Diario El Comercio 31.12.18

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