Climate Risk Podcast

Hear from William McDonnell, COO of the Integrity Council for the Voluntary Carbon Market, as we discuss the role of carbon credits in the transition to net-zero, and what changes are needed to ensure that the voluntary market can function correctly. Sign up for GARP’s 2022 Climate Risk Symposium here! Part I: Nov 22, 1:00 - 2:30 pm GMT Part II: Dec 1, 1:00 - 2:30 pm GMT As firms’ climate ambitions steadily rise, many are looking towards carbon credits to help ease themselves into the transition to net-zero. According to the Ecosystem Marketplace, the global voluntary carbon market (VCM) has quadrupled in value since 2020. However, not all carbon credits are created equal, and this is causing significant harm to the VCM’s integrity. Because the quality assurance of carbon credits relies on a patchwork of standards set by independent organizations, many are of poor quality and can even be net-carbon positive. This immaturity in the market has even allowed for such irrational practices as deliberately cutting down forests, only to sell their regrowth as offsets. In this episode of the GARP Climate Risk Podcast, we’ll examine the voluntary carbon markets, exploring: The key differences between the mandatory and voluntary carbon markets; The challenge of scaling up the voluntary market whilst ensuring credit quality; and How the newly formed Integrity Council for the Voluntary Carbon Market plans to address it. Links from today’s discussion: Integrity Council for the Voluntary Carbon Market (ICVCM) homepage GARP’s first Climate Risk webcast, featuring William – The Heat is On: A CRO’s Perspective on Climate Change CRO Forum’s Emerging Risk Initiative 2022 update Voluntary Carbon Market Integrity Initiative (VCMI) homepage Science Based Targets initiative (SBTi) homepage Speaker’s Bio(s) William McDonnell, COO, Integrity Council for the Voluntary Carbon Market William is COO for the ICVCM, the new global governance body to set and enforce threshold quality standards for the voluntary carbon market. Prior to that he had a 25-year career in financial services. Most recently he was Group Chief Risk Officer and member of the Group Executive Committee for RSA Insurance Group plc for 7 years, responsible for Risk, Assurance and Compliance groupwide. Prior to RSA he held roles at HSBC Investment Bank, Aviva, the UK Financial Services Authority and Deloitte. William is a leading voice on climate risk in the financial sector, having served as a member of the ClimateWise Council and of the UK’s Climate Financial Risk Forum, and as chair of the Emerging Risks Initiative of leading global insurers, publishing a major climate study ‘The Heat is on – Insurability and Resilience in a Changing Climate’. 

Hear from Bruce Usher, Professor of Practice at Columbia Business School, as we examine the investment opportunities and strategies that have emerged in response to the challenges of climate change. We know that we need to rapidly reduce global greenhouse gas emissions in order to avoid catastrophic levels of climate change. This will require considerable private capital. Thankfully, there are significant investment opportunities today to support this transition, including renewable energy, electric vehicles, and battery storage, to name just a few.  Today’s discussion is all about the investment opportunities arising from climate change and the strategies that investors are using to pursue them. We’ll explore three key themes: The trends that are accelerating the flow of capital into transition investments; The pros and cons of different investment strategies, such as divestment and ESG investing; And what lies ahead for those who are investing in the era of climate change. Links from today’s discussion: Bruce’s research and academic profile on Columbia Business School’s website Bruce’s new book, Investing in the Era of Climate Change Mark Carney’s 2015 speech, “Breaking the Tragedy of the Horizon” Bill Gates’ impact first initiative, Breakthrough Energy Speaker’s Bio Prof. Bruce Usher, Columbia Business School Bruce is a Professor of Practice at the Columbia Business School, and Faculty Director for the Tamer Center for Social Enterprise, where he teaches on the intersection of finance, social and environmental issues. He is also a member of the Executive Committee of the Earth Institute, and chairs the University’s Advisory Committee on Socially Responsible Investing. Prior to joining Columbia University, Bruce was CEO of EcoSecurities Group plc, which developed greenhouse gas emission reduction projects in developing countries. Bruce’s latest book and the topic of today’s discussion, Investing in the Era of Climate Change, has just been published.

Hear from Prof. Emily Shuckburgh OBE, Director of Cambridge Zero, as we explore the potential for machine learning to help us navigate an increasingly difficult transition to net-zero. Time is fast running out to limit end of century warming to 1.5oC. With significant European energy insecurity in the wake of the Ukrainian war, and increasing diplomatic tension between the world’s largest emitters, it is increasingly uncertain whether global emissions will fall rapidly enough to secure a 1.5oC warming scenario. Without doubt, we’re at a crossroads, and tough decisions need to be made about what level of climate risk we’re willing to accept for future generations. At the same time, we’re also on the cusp of a revolution in our capacity to understand and tackle climate change through data and analytics. With the proliferation of satellite and remote sensing technologies, comes the potential for a complete paradigm shift in climate modelling through AI and machine learning. This opens up many exciting opportunities for both mitigating and adapting to climate change. We will discuss: How machine learning can greatly improve the power of climate models; Whether the 1.5 degrees warming limit is still alive; And how to better communicate the urgency and complexity of climate-related issues. Links from today’s discussion: Emily’s research and academic profile on the University of Cambridge website; The Ladybird Book on Climate Change, co-authored by Emily, King Charles III, and Tony Juniper (Ladybird Expert Series); Cambridge Zero Homepage (University of Cambridge’s climate initiative). Speaker’s Bio(s) Prof. Emily Shuckburgh OBE, Director of Cambridge Zero Emily is a climate scientist and mathematician, holding several research and leadership positions at the University of Cambridge, where she has worked for almost 22 years. A polar expert, she previously led a UK national research programme on the Southern Ocean and its role in climate. In 2016 she was awarded an OBE for services to science and the public communication of science. As Director of Cambridge Zero, the University’s climate initiative, Emily leads on cutting edge research, education, and collaboration related to the transition to a climate-resilient, zero-carbon future. Emily is also a Professor of Environmental Data Science at the Department of Computer Science and Technology.

Hear from Prof. David Victor and Dr. Danny Cullenward, as we dive into the political forces that mould the climate policy landscape. Designing climate policies that are effective in achieving climate change mitigation and adaptation is a major challenge. Most economists argue for a carbon tax, which helps align incentives appropriately. But the costs can be all too visible to consumers, prompting protests and undermining their political acceptability.  Indeed, when it comes to climate policy, you will often find that there is a trade-off between what is effective, and what is realistic. Today’s discussion is all about how politics shapes the plausibility and effectiveness of different climate policies. We discuss how the interests of consumers, firms, and political parties play a major role in determining not only what climate policies work best, but which ones are even possible. In this episode, we explore: Why policies with highly visible costs tend to be avoided by politicians; How politically organized groups can resist the implementation of market-based policies; And the surprizing difference in mitigatory power between market-based and regulatory policies. Links from today’s discussion: David and Danny’s 2020 book, Making Climate Policy Work The historical, political, and economic phenomenon of Potemkin villages Severin Borenstein et al.’s research paper on the relative mitigatory efficacies of market-based and non-market-based climate policies Martin Weitzman’s research paper on price-based vs. quantity-based policies in the context of emissions uncertainty

Hear from Prof. Brian Fagan, Distinguished Emeritus Professor of Anthropology at the University of California, as we dig up lessons in climate risk from the ancient world of our ancestors. Humanity has been subject to extreme weather and natural climate change for millions of years, and we can trace its impacts back to even our most ancient civilizations. A recent revolution in climate archaeology offers us a window into the climate risk management practices of the past. Just as contemporary risk management relies on historical data, ancient humans relied on the knowledge of their ancestors to deal with the risks of climate change. Although much of this ancient risk management tradition has been lost to time, powerful archaeological techniques allow us to piece together stories of how humanity has dealt with the social, economic, and political consequences of climate change over the last 30,000 years. That’s why in today’s episode, we’ll explore the history of humanity’s relationship with climate change, including insights on: What the past can teach us about risk management in the modern era; How climate change has shaped (and sometimes devastated) human societies in the past; And the scientific breakthroughs that have allowed archaeologists to bring this knowledge into the present. Links from today’s discussion: Brian’s bibliography - https://www.biblio.com/brian-m-fagan/author/5110 The 1997-98 El Niño event - https://en.wikipedia.org/wiki/1997%E2%80%9398_El_Ni%C3%B1o_event Brian on The Daily Show with John Stewart - https://www.cc.com/video/9jg7ty/the-daily-show-with-jon-stewart-brian-fagan Brian’s article on Hubert Lamb’s ‘church steeple meteorology’ - https://www.jstor.org/stable/3986152  Speaker’s Bio(s) Prof. Brian Fagan, Distinguished Emeritus Professor at the University of California Brian is Distinguished Emeritus Professor of Anthropology at the University of California, Santa Barbara. Brian studied archaeology and anthropology at Cambridge University, before spending seven years in East and Central Africa, where he became a pioneering scholar of African history. A prolific author, many of Brian’s books explore the history of Earth’s climate, examining the impacts the environment has had on human civilization (and vice versa) since the dawn of time. These works include “Floods, Famines, and Emperors”, “The Little Ice Age”, “The Great Warming”, and the topic of today’s discussion, “Climate Chaos: Lessons on Survival from Our Ancestors,” which he co-authored with fellow archaeologist Dr. Nadia Durrani.

Hear from Sean Kidney, CEO of the Climate Bonds Initiative, as we explore the many ways finance is going green, from the phenomenal growth of the green bond market, to the ongoing revolution in investor sentiment, to the growing financial risks from climate change… and much, much more! There are few challenges facing humanity as important as the transition towards a resilient, net-zero global economy. The mitigation and adaptation required will need great deal of both public and private investment. In this context, green bonds are an exciting opportunity for long-term investors, who are increasingly incorporating climate risk into their financial decision-making. Today’s episode starts off with the remarkable growth of the green bond market, before moving onto a wide range of topical issues, including: Broader market trends, including transition finance, and the growing convergence of climate science and transition policy; The relationship between food and energy security, the transition to net-zero, and Russia’s war on Ukraine; In response to comments by Stuart Kirk, why investors really do need to worry about the financial risks from climate change. Links from today’s discussion: Climate Bonds Initiative (CBI) homepage: https://www.climatebonds.net/ International Finance Corporation’s (IFC) green bond page: https://www.ifc.org/wps/wcm/connect/corp_ext_content/ifc_external_corporate_site/about+ifc_new/investor+relations/ir-products/grnbond-overvw Grantham Research Institute on Climate Change and the Environment – The Stern Review: https://www.lse.ac.uk/granthaminstitute/publication/the-economics-of-climate-change-the-stern-review/ Climate Bonds Initiative Steel Criteria: https://www.climatebonds.net/standard/steel Suspended HSBC employee Stuart Kirk’s comments on climate risk: https://www.bbc.co.uk/news/business-61519111 European Commission’s Platform on Sustainable Finance: https://ec.europa.eu/info/business-economy-euro/banking-and-finance/sustainable-finance/overview-sustainable-finance/platform-sustainable-finance_en   Speaker Bio Sean Kidney, CEO, Climate Bonds Initiative Sean is CEO of the Climate Bonds Initiative, an international NGO working to mobilize global capital for climate action. Their work includes a green bond definitions and certification scheme with $34 trillion of assets represented on its Board and some 200 organizations involved in its development and governance. Sean is a member of the European Commission's Platform on Sustainable Finance and is a Professor in Practice at SOAS University of London, and for the past three years, he has been voted GlobalCapital magazine’s “Most Influential Champion” of the sustainable finance market.

Hear from Eila Kreivi, Chief Sustainable Finance Advisor at the European Investment Bank, as we take a closer look at the EU Taxonomy, including what it is and isn’t, how it developed, and what it means for the future of sustainable finance. A key challenge with tackling climate change is how to channel the vast amount of private sector investment towards activities that are ‘green’ or transitioning to green.  Taxonomies are potentially useful, setting out definitions and thresholds for activities to count as green. But although taxonomies have the potential to improve market clarity and reduce ‘greenwash’, they are resource intensive to construct and are open to misuse. The EU Taxonomy for Sustainable Finance is one of the most ambitious green taxonomies in the world, and has been the subject of much debate (and confusion) since its ratification in 2020. That’s why in today’s episode, we’ll set the record straight on what the EU taxonomy does, what it doesn’t do, and how what it means for financial professionals, including: The history of the Taxonomy and its high-level objectives, How the Taxonomy’s implementation is shaped by both science and politics, How the Taxonomy may evolve in the future.   Links from today’s discussion: European Investment Bank (EIB) homepage: https://www.eib.org/en/index.htm International Capital Markets Association (ICMA) homepage: https://www.icmagroup.org European Commission – The High-Level Expert Group on Sustainable Finance’s reports: https://ec.europa.eu/info/publications/sustainable-finance-high-level-expert-group_en ‘Do no significant harm’ - Technical Guidance by the EU Commission - https://ec.europa.eu/info/sites/default/files/2021_02_18_epc_do_not_significant_harm_-technical_guidance_by_the_commission.pdf Mark Campanale on the Climate Risk podcast (discusses the EU Taxonomy at 00:16:08) - https://www.garp.org/podcast/net-zero-supply-side-issue-cr-220303 European Banking Authority on bank reporting standards for environmentally sustainable activities - https://www.eba.europa.eu/eba-advises-commission-kpis-transparency-institutions%E2%80%99-environmentally-sustainable-activities European Commission – Platform on Sustainable Finance: https://ec.europa.eu/info/business-economy-euro/banking-and-finance/sustainable-finance/overview-sustainable-finance/platform-sustainable-finance_en European Commission – International Platform on Sustainable Finance: https://ec.europa.eu/info/business-economy-euro/banking-and-finance/sustainable-finance/international-platform-sustainable-finance_en Speaker Bio Eila Kreivi, Chief Sustainable Finance Advisor, European Investment Bank (EIB) Eila took up her current position at the EIB in February 2022. Over her 27-year career at the EIB, she held numerous positions, including most recently as Director of its Capital Markets Department. Previously, Eila has chaired the Executive Committee of the Green Bond Principles and she represented the EIB at the EU High-level Expert Group on Sustainable Finance. In October 2020, she became a member of the Platform on Sustainable Finance, an advisory body created by the European Commission.

Hear from Fathom’s Matthew Jones and Andrew Smith as we discuss the challenges and opportunities created by climate change for modellers of physical risk. Modelling physical risks, particularly from natural catastrophes, is challenging, requiring specialist knowledge and complex data sets. Additionally, with climate change affecting the frequency and severity of many natural catastrophes, these models need to start incorporating future risk from climate change. Today’s episode will explore this growing need for new and sophisticated climate analytics providers in the financial sector, with a particular focus on flood risk. We’ll uncover lessons for risk professionals from: The evolution of natural catastrophe modelling in the (re)insurance industries The development of the current physical risk modelling ecosystem, including the establishment of industry-syndicated data and modelling standards The importance of a transparent and diverse model vendor market, and how this has fostered a culture of collaboration and innovation. Links from today’s discussion: Fathom flood risk intelligence homepage: https://www.fathom.global/ Oasis Loss Modelling Framework (LMF) homepage: https://oasislmf.org/ Oasis LMF on GitHub: https://github.com/OasisLMF/OasisLMF Nasdaq Risk Modelling for Catastrophes platform: https://www.nasdaq.com/solutions/nasdaq-risk-modelling-for-catastrophes Oasis LMF, Open Exposure Data Standard homepage: https://www.nasdaq.com/solutions/open-exposure-data-oed Climate Biennial Exploratory Scenario (CBES) explained on the Bank of England website: https://www.bankofengland.co.uk/stress-testing/2021/key-elements-2021-biennial-exploratory-scenario-financial-risks-climate-change FEMA Flood Maps (US Department of Homeland Security): https://www.fema.gov/flood-maps Speaker Bios Andrew Smith, Co-Founder and Chief Operations Officer at Fathom Andy is one of the co-founders and directors at Fathom. He completed a PhD under Professor Paul Bates, and it was whilst undertaking his PhD that the idea of founding a company first emerged. This quickly led to a change in his research focus, from climate change impact studies, to the development of large scale flood models, leading to numerous publications in this field. Since completing his PhD in 2014, Andrew undertook a post-doctoral research position at the University of Bristol before becoming Chief Operations Officer at Fathom full-time in 2016. Matthew Jones, Chief Product Officer at Fathom Matt joined Fathom in 2022, leaving his position as Head of Catastrophe Risk Product at Nasdaq, where he led the development of Nasdaq’s Oasis-based multi-vendor catastrophe risk modelling platform. Prior to joining Nasdaq, Matt has held several roles linked to catastrophe modelling, including founding Cat Risk Intelligence, a UK based company providing catastrophe risk management consultancy to the (re)insurance industry, and as Global Head of Catastrophe Management for the Zurich Insurance Group.  Matt has a PhD in Oceanography and Remote Sensing from University College London and is a co-author of ‘Natural Catastrophe Risk Management and Modelling: A Practitioner’s guide’.

Hear from Julie Pullen, a leading expert in ocean-atmosphere interactions, on how our oceans are being affected by climate change, what we stand to lose, and how we can restore them whilst building resilience. The world’s oceans are critical to all life on Earth. They have also buffered us against the worst impacts of climate change, absorbing about a third of all of our carbon emissions, and around 90% of the temperature increase from global warming. However, ocean ecosystems are undergoing huge changes, and if we don’t act soon, we may lose the many benefits that oceans bring to our economies and societies.  In this episode, we will explore: The wide range of impacts that climate change and environmental degradation have on the world’s oceans How changes in our oceans and ocean ecosystems become risks in our economies and societies The proliferation of blue carbon projects, and how they preserve the benefits of the oceans while tackling climate change We learn that there are increasingly effective channels for financial institutions to intervene in the degradation of the oceans, whilst building resilience to climate risk. Links from today’s discussion: Julie’s article on the connection between climate risk and climate solutions: https://sustainablebrands.com/read/defining-the-next-economy/how-climate-risk-can-inform-climate-solutions Julie’s marine oxygen story in Scientific American: https://www.scientificamerican.com/article/marine-oxygen-levels-are-the-next-great-casualty-of-climate-change/ National Academy of Sciences Ocean CDR report: https://www.nationalacademies.org/our-work/a-research-strategy-for-ocean-carbon-dioxide-removal-and-sequestration WEF Ocean Resource page: https://www.weforum.org/friends-of-ocean-action/mangroves-working-group Woods Hole Oceanographic Institution’s sustained research the "twilight zone": https://twilightzone.whoi.edu/ Blue Carbon Buyers Alliance: https://scalingclimatesolutions.org/wp-content/uploads/2021/11/Blue-Carbon-Buyers-Alliance.pdf Open Source-Climate: https://os-climate.org/   Speaker’s Bio Julie Pullen is a climate scientist specializing in ocean-atmosphere interactions, and serves on the Executive Committee of the American Meteorological Society. As a former engineering professor, she has held leadership roles in academia, government, non-profit organizations, and the private sector. Julie is an Adjunct Research Scientist at Columbia’s Earth Institute, and up until recently was a Climate Strategist at Jupiter Intelligence. She’s now embarking on a new venture in ocean climate tech. She is also a member of the GARP Advisory Committee for our very own Sustainability and Climate Risk Certificate.

Hear from Kevin Dooley, Distinguished Professor of Supply Chain Management, as he talks to us about how managing the sustainability of your supply chain is the best approach to risk management. Supply chains are an absolutely integral part of the modern global economy.  But as they grow in complexity, they become more fragile. They are also often opaque to companies wanting to decarbonize through their value chain – that is, covering their so-called scope 3 emissions.    In this episode we look at three main issues: How are companies are analysing their supply chains and adapting them to make them more sustainable and resilient The capabilities that risk professionals should look for when lending or investing in companies that have complex supply chains And the lessons on risk management that we can glean from case studies of supply chain disruptions. We learn that understanding the risks in the supply chain and considering its sustainability are two sides of the same coin.  Links from today’s discussion: The Sustainability Consortium (TSC) - https://sustainabilityconsortium.org/ THESIS Supply Chain Sustainability Index - https://sustainabilityconsortium.org/thesis/ Responsible Businesses Alliance (RBA) - https://www.responsiblebusiness.org/ Science Based Targets - https://sciencebasedtargets.org/ Details of Weike & Sutcliffe’s research on high reliability organizational cultures Speaker’s Bio Kevin Dooley is Distinguished Professor of Supply Chain Management at Arizona State University, and a Senior Sustainability Scientist in the Global Institute of Sustainability and Innovation. As Chief Scientist of The Sustainability Consortium, Kevin leads a global research team that works with over 100 of the world’s largest retailers and manufacturers to develop tools that measure and track progress on critical product sustainability issues. He has published more than 100 research articles and co-authored an award-winning book, ‘Organizational Change and Innovation Processes’. Kevin has consulted over 200 companies in the areas of sustainability, supply chain management, technology, and innovation. He obtained his Ph.D. in mechanical engineering at the University of Illinois.