Climate Risk Podcast

Hear from Dr. Erica Thompson, as we examine the modelling ecosystem and when we need to escape it to make real-world decisions. Climate science – like many areas of our lives, such as economics or public health – is based upon models. These models are often used to justify certain courses of action, such as investments in climate mitigation or adaptation, or even lock downs during the pandemic. But what makes a ‘good model’?  Is it purely how well it forecasts?  Or are there other aspects that we need to consider, such as reliability, complexity, and how well it deals with uncertainty? And who gets to decide how good a model is? In this episode, we’ll take a closer look at these questions and explore some of the nuances of models, including: ·       How to judge how good a model is, ·       The vital importance of understanding the values which underpin models ·       And how models have the power to shape the very future which they forecast. To find out more about the Sustainability and Climate Risk (SCR®) Certificate, follow this link: https://www.garp.org/scr For more information on climate risk, visit GARP’s Global Sustainability and Climate Risk Resource Center: https://www.garp.org/sustainability-climate If you have any questions, thoughts, or feedback regarding this podcast series, we would love to hear from you at: climateriskpodcast@garp.com Links from today’s discussion: Praise for Escape From Model Land: https://www.ericathompson.co.uk/books/ IPCC Working Group III 2022 Mitigation of Climate Change report: https://www.ipcc.ch/report/ar6/wg3/downloads/report/IPCC_AR6_WGIII_SummaryForPolicymakers.pdf Yale’s William Nordhaus wins 2018 Nobel Prize in Economics: https://news.yale.edu/2018/10/08/yales-william-nordhaus-wins-2018-nobel-prize-economic-sciences   Speaker’s Bio Erica Thompson, Associate Professor of Modelling for Decision Making at UCL’s Department of Science, Technology, Engineering and Public Policy Erica’s book, Escape from Model Land: How Mathematical Models Can Lead Us Astray and What We Can Do About It, was published in December 2022 and was shortlisted for Best Maths Book of 2022 by Chaulkdust Magazine, a specialist magazine for mathematicians. Erica moved into her current role in April 2023, where she investigates the appropriate use of mathematical modelling to support real-world decisions, from mathematical and statistical questions about methodologies of inference from models, to psycho-social questions about the formation of confidence and the role of expert judgement. Erica is also a Fellow of the London Mathematical Laboratory, where she leads the research programme on Inference from Models, and is a Visiting Senior Fellow at the LSE Data Science Institute. Erica previously held a series of roles at the LSE’s Centre for the Analysis of Time Series, initially as a Senior Policy Fellow, and subsequently as Co-Director and Acting Director. Erica holds a BA in Experimental and Theoretical Physics and a Master of Mathematics degree from Cambridge University. She completed her PhD in Physics at Imperial College London.

Explore the intersection of climate science and risk management. The underplaying of extreme risks in climate change predictions, challenges of translating climate science into actionable financial risk data, implications of transition risk in investment strategies, limitations of climate science on projecting local impacts, and the importance of taking a holistic approach to evaluating climate risk.

The podcast explores the intersection of nature and finance, discussing the challenges and opportunities of incorporating nature risk into risk management. It highlights the importance of getting nature taken into account alongside the carbon agenda and the potential consequences of climate change. The chapter also offers advice and inspiration to risk professionals in the finance industry, emphasizing the need for education on sustainability and focusing on shaping the future.

Nigel Topping, Former UN Climate Change High-Level Champion for COP26, sets the scene for COP28 in Dubai. He discusses the successes and shortcomings of the COP mechanism, the complex ecosystem of stakeholders, and the headline issues to be resolved. The podcast explores topics such as the significance of the Paris Agreement, controversies surrounding oil lobbyists at COP conferences, missed opportunities in addressing climate change, and navigating exponential change towards net zero by 2030.

Hear from Ron Dembo, Founder and CEO of riskthinking.ai, as we apply stochastic thinking to the challenge of climate scenario analysis. One of the most difficult aspects of managing climate risk is its inherent uncertainty. Because we can’t know with absolute confidence what our future climate, economy or society will look like, we therefore can’t know exactly when, where, or how intensely climate risks will manifest. A technique commonly applied to this problem is scenario analysis. By building a picture of what the future might look like, firms can formulate risk management strategies appropriate for that scenario. However, today’s guest believes we’re only scratching the surface of what scenario analysis can do for our financial institutions. In today’s episode, we’ll home in on the idea of stochastic scenario analysis; what it is, how it works, and what makes it different to the traditional approach to scenario analysis. We’ll explore: ·       The difference between deterministic and stochastic scenario analysis; ·       The advantages of using large sets of scenarios generated by expert judgment; and ·       What stochastic scenario analysis means for risk professionals.   To find out more about the Sustainability and Climate Risk (SCR®) Certificate, follow this link: https://www.garp.org/scr For more information on climate risk, visit GARP’s Global Sustainability and Climate Risk Resource Center: https://www.garp.org/sustainability-climate If you have any questions, thoughts, or feedback regarding this podcast series, we would love to hear from you at: climateriskpodcast@garp.com Links from today’s discussion: ·       https://riskthinking.ai/   Speaker’s Bio Ron Dembo, Founder and CEO, riskthinking.ai Ron is an academic, author, entrepreneur, and consultant to the some of the world’s largest corporations and banks. He has had a distinguished academic career as a professor at Yale University and as visiting professor at MIT. He is a Lifetime Fellow of The Fields Institute for Research in Mathematical Sciences, and has received numerous awards for his work in mathematical optimization, finance, and climate change. Ron was previously the Founder and CEO of Algorithmics, an enterprise risk management software provider with over 70% of the world’s top 100 banks as clients. After Algorithmics was acquired by Fitch Group, Ron later founded riskthinking.ai, a company pioneering the use of stochastic analysis to accurately price climate risk into the financial markets.

This podcast discusses the UK government's controversial decision to grant new oil and gas licenses in the North Sea despite a commitment to reach net zero by 2050. It explores the need for solutions to manage risks during the transition. The speaker shares their career background in the oil and gas industry, climate reporting, and consultancy. Concerns over the decision to issue new licenses and backsliding in transitioning away from fossil fuels are highlighted. The importance of addressing climate-related risks for businesses and the urgency of action and effective communication for risk professionals are also discussed.

Explore the importance of risk taxonomies in managing climate risks. Understand the categories of climate risks, including physical risks and transition risks. Discuss the inclusion of natural capital risks, such as the depletion of water and topsoil. Examine the unsustainability of our economic model and subsidies in the fossil fuel industry. Highlight the significance of a climate risk taxonomy and the next steps for quantifying these risks.

Hear from Rohan Hamden, Co-Founder and CEO of XDI, as we examine how climate-related impacts are exceeding our models and why the need for adaptation has never been greater. Despite our best efforts to measure and model the physical risks from climate change, the impacts continue to outpace our expectations. Consequently, we are left dangerously unprepared for extreme weather events both now and in the future. This highlights the critical need for robust adaptation measures, as we move into decades of unprecedented physical risk. The recent wildfires in California and flooding in Europe serve as stark reminders of the risks that extreme events pose. Although governments and financial institutions are gradually getting to grips with these issues, we’re still on the back-foot in the race against climate change, and swift action is needed to regain control over our transition to a resilient, net-zero society. That’s why in today’s episode, we’ll explore some of the major gaps in our global response to climate change, including: Why the physical risks from climate change continue to exceed our predictions; How adaptation planning is being undermined by conservative risk modelling and short-term thinking; and The dangers of normalizing extreme weather events, which are becoming all too frequent. To find out more about the Sustainability and Climate Risk (SCR®) Certificate, follow this link: https://www.garp.org/scr For more information on climate risk, visit GARP’s Global Sustainability and Climate Risk Resource Center: https://www.garp.org/sustainability-climate If you have any questions, thoughts, or feedback regarding this podcast series, we would love to hear from you at: climateriskpodcast@garp.com Links from today’s discussion: XDI Homepage - https://xdi.systems/ XDI Article: Uninsurable Future - https://xdi.systems/uninsurable-future/ Intergovernmental Panel on Climate Change (IPCC) AR6 Synthesis Report – https://www.ipcc.ch/report/sixth-assessment-report-cycle/ Tim Lenton on the GARP Climate Risk Podcast - https://www.garp.org/podcast/complexities-climate-risks-cr-201102 Julie Pullen on the GARP Climate Risk Podcast - https://www.garp.org/podcast/ocean-climate-finances-cr-220505 Speaker’s Bio Rohan Hamden, Co-Founder and CEO of XDI: Cross Dependency Initiative XDI, the Cross Dependency Initiative, is an international data and analytics organisation specialising in the modelling and analysis of asset level physical climate risk. In 2017, Rohan co-founded XDI with a vision of mainstreaming climate information into infrastructure and financial decision making. Rohan began his career as a fire fighter before working in the Australian government for nearly 15 years. During that time Rohan held a number of sustainability and climate related roles, culminating in the directorship of the Climate Adaptation Program for South Australia, where he designed and led the implementation of the State’s multi-award-winning climate change adaptation program. Rohan has advised various state and national governments on their climate adaptation programs in Australia, Canada, the US and the UK.

Hear from Mike Azlen, Founder and CEO of Carbon Cap Management, as we explore the ever-changing carbon markets and the future of emissions trading. The carbon markets can be very confusing. Between offsets, credits, permits, and allowances, it can be hard to understand the many ways emissions can be traded, as well as the different mechanisms for pricing them. Furthermore, as these markets and their participants mature, different strategies are emerging for how firms can transition to net-zero in a safe and responsible way. In today’s episode, we’ll explain the fundamentals of the compliance and voluntary carbon markets, but also explore some key emerging trends, including: ·       The proliferation of emissions trading schemes across the world; ·       How firms are navigating the challenges of the voluntary carbon market; and ·       The advent of carbon as a fully-fledged asset class. To find out more about the Sustainability and Climate Risk (SCR®) Certificate, follow this link: https://www.garp.org/scr For more information on climate risk, visit GARP’s Global Sustainability and Climate Risk Resource Center: https://www.garp.org/sustainability-climate If you have any questions, thoughts, or feedback regarding this podcast series, we would love to hear from you at: climateriskpodcast@garp.com Links from today’s discussion: Carbon Cap Management’s (CCM) World Carbon Fund - https://www.carbon-cap.com/world-carbon-fund CCM’s research paper - Carbon as an Emerging Asset Class - https://www.cfainstitute.org/-/media/documents/article/industry-research/climate-change-analyis.ashx#page=36 CCM’s educational videos on carbon markets, carbon trading, and climate change - https://www.carbon-cap.com/educational-videos International Carbon Action Partnership (ICAP) ETS Map - https://icapcarbonaction.com/en/ets Climeworks’ direct air capture technology - https://climeworks.com/direct-air-capture JP Morgan’s recent purchase of carbon removal credits - https://www.reuters.com/sustainability/jpmorgan-chase-spend-200-mln-carbon-dioxide-removals-2023-05-23/ Speaker’s Bio Mike Azlen, Founder and CEO, Carbon Cap Management Mike is a senior investment professional with 25 years of industry experience. After a 15-year career spanning two Canadian banks and several alternative asset management companies, Mike founded Frontier Investment Management in 2005 and grew the business to profitability before selling the business to a public company in 2013 and completing his earnout in 2016. Mike formed Carbon Cap Management LLP in 2018 as an environmental asset manager focused on climate change and launched the World Carbon Fund in February 2020. The fund invests into multiple liquid and regulated carbon markets and aims to generate strong uncorrelated returns and a direct impact on carbon emissions. Carbon Cap’s mission is to raise awareness about climate change and to provide solutions directly related to the capping and reduction of carbon dioxide emissions. Mike holds a Sloan Masters Degree in Leadership and Strategy from London Business School and is a Chartered Alternative Investment Analyst (CAIA) and has completed the LSE’s Economics and Governance of Climate Change course. Mike is a regular speaker at investment conferences and has been a guest lecturer on the graduate degree programs at London Business School for more than 15 years.

Hear from Nicky Dee, Co-Founder of Carbon13, as we take a closer look at the climate startup ecosystem and how it’s changing the way we decarbonize. Many sectors, especially hard-to-abate ones such as steel and cement, are failing to align with a 1.5-degree world and still require fundamental change to become viable in a low carbon economy. Recognizing that there is no one-size-fits-all solution, we often turn to innovation as a way to find creative solutions to decarbonization challenges. Many entrepreneurs and innovators are turning their attention to climate and environmental issues, but given the scale and urgency of the challenges, more are always needed. Building on what we learnt about startups in the previous episode of this podcast, this discussion will dive into the world of venture builders which specialize in incubating climate startups, harnessing the creative power of entrepreneurs to tackle the climate emergency. We explore some key aspects of climate venture building, including: The process of creating a startup; How to build a team of the right people; and How these startups can help catalyse the transition to net-zero. For more information on climate risk, visit GARP’s Global Sustainability and Climate Risk Resource Center: https://www.garp.org/sustainability-climate If you have any questions, thoughts, or feedback regarding this podcast series, we would love to hear from you at: climateriskpodcast@garp.com Links from today’s discussion: Carbon13 – https://carbonthirteen.com/C Cambridge Institute for Sustainability Leadership – https://www.cisl.cam.ac.uk/ Entrepreneur First – https://www.joinef.com/ Kita – carbon insurance– https://www.kita.earth/ Kita CEO Natalia Dorfman on the Climate Risk Podcast - https://www.garp.org/podcast/powerful-risk-management-cr-050423 Blue Methane – removing methane from water – https://www.bluemethane.com/ Global Methane Pledge – https://www.globalmethanepledge.org/ Naturebound – measuring and monitoring biodiversity - https://naturebound.ai/ Preoptima – real-time carbon analysis for construction projects –  https://www.preoptima.com/ Biozeroc – carbon neutral construction materials – https://www.biozeroc.com/ Speaker’s Bio Nicky Dee, Co-Founder and Chief Innovation and Sustainability Officer at Carbon13 Nicky has over 20 years’ experience engaging with startups and a variety of stakeholders to promote sustainability. She co-founded Carbon13 to build and invest in companies to address the climate emergency. Over the last two years, this has included 46 pre-seed investments in cutting-edge net zero startups, including Kita, who’s CEO Natalia Dorfman featured in the previous episode of this podcast. Nicky has pioneered a range of activities including innovation prizes, low carbon investments, corporate engagement mechanisms and startup ecosystems. She has a PhD from the University of Cambridge, and is a Senior Associate with the Cambridge Institute for Sustainability Leadership.