IBKR Podcasts From the Intern Desk: Climate Risk
Aug 8, 2025
In this insightful discussion, Michael Penn from ASR Research returns to share his expertise on climate risk and its impact on financial markets. He delves into how climate-related tipping points, like rising sea levels, influence global GDP estimates. Penn also highlights the economic consequences of climate change, using droughts affecting the Panama Canal as a case study. Additionally, he examines the vulnerabilities of various sectors, including agriculture and real estate, while exploring how markets respond to the uncertainty stemming from climate risks.
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What Is A Climate Tipping Point
- A climate tipping point is a critical threshold that causes irreversible, self‑reinforcing environmental change.
- Michael Penn warns ice‑sheet collapse or Amazon dieback would accelerate sea‑level rise and carbon release.
1.5°C Is The Key Threshold
- Scientists focus on 1.5°C above pre‑industrial as the threshold where nonlinear damage accelerates.
- Michael Penn notes last year's global average reached about 1.6°C, signaling faster-than-expected warming.
Climate Raises Inflation Via Food And Shipping
- Climate shocks reduce food supply and can trigger sustained price spikes that feed inflation.
- Michael Penn also links drought‑hit chokepoints like the Panama Canal to broader supply‑chain inflation.