Climate Risk Podcast

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.

Hear from Alan Smith, First Church Estates Commissioner, about the culture and capabilities that asset owners look for in the companies they invest in. Asset owners have a fiduciary duty to act in the best interests of their ultimate beneficiaries, which often forces them to take a longer-term perspective than many other types of financial firms. So, it’s not surprising that many of them are concerned about the systemic nature of climate risks.  Many are proactively engaging with firms in the real economy to encourage the right culture and capabilities to steer their companies to net zero.  In this episode we talk about some of the key dilemmas currently facing asset owners: How should they assess firms’ commitments to net zero and their underlying purpose and values? How should they decide when and how to engage with firms? And when is it best to divest? Links from today’s discussion: IPCC Sixth Assessment Report: Impacts, Adaptation and Vulnerability Engine NO.1 Coalition for Climate Resilient Investment Glasgow Financial Alliance for Net-Zero GARP Climate Risk Podcast with Meryam Omi GARP Climate Risk Podcast with Sir Dieter Helm Speaker’s Bio Alan Smith – First Church Estates Commissioner, Church of England Alan Smith’s career spans 35 years in risk management, finance, investment banking and advisory roles at HSBC and KPMG.  He held various positions at HSBC, including Global Head of Risk Strategy, and helped shape the bank’s global approach to sustainability and climate risk management. He was recently appointed First Church Estates Commissioner – an appointment that is approved by the Queen herself.  In this role, he chairs the Church Commissioners' Assets Committee, which is responsible for the strategic management of a £9.2 billion investment portfolio.

Hear from Mark Campanale, Founder of the Carbon Tracker Initiative, as we dive into the strategies being used to align financial markets to a net-zero economy. Global financial markets play a major role in addressing the challenges of climate change. But is the financial system equipped with the right tools to progress the net-zero transition with the urgency that is required? Are current strategies, such as the TCFD disclosures framework and the EU Taxonomy likely to get us to net-zero, or do we need to think more radically? In this episode of the Climate Risk Podcast, guest Mark Campanale shares his thoughts on the latest developments in the world of sustainable finance, including: Why focusing on disclosures only addresses one part of the sustainable finance issue The limitations of demand-side policy interventions and the need for supply-side restrictions What McKinsey & Co. got wrong about the cost of the net-zero transition Links from today’s discussion: The Beyond Oil and Gas Alliance The Fossil Fuel Non-Proliferation Treaty Carbon Tracker: A Tale of Two Share Issues McKinsey & Company: Net-Zero Transition Report INET Oxford: Going Big and Fast on Renewables Could Save Trillions BloombergNEF: ‘Green’ Hydrogen to Outcompete ‘Blue’ Everywhere by 2030 InfluenceMap: Lobbying on the EU Taxonomy’s Green Criteria Carbon Tracker: ‘Flying Blind’ Report – Look out for GARP’s upcoming webcast with the report’s author, Barbara Davidson. Speaker Bio Mark Campanale – Founder and Executive Chairman of the Carbon Tracker Initiative Mark is the Founder of the Carbon Tracker Initiative and author of the “unburnable carbon” thesis. More recently, Mark has co-founded Planet Tracker, focusing on natural resource-based industries, and Industry Tracker, focusing on the materials sector. Prior to forming these groups, Mark had 25-years’ experience in sustainable financial markets, working for several major asset managers.  He is a co-founder of some of the earliest responsible investment funds, firstly at Jupiter Asset Management in 1989 with their ‘Ecology Funds’, and then with Henderson Global Investor’s ‘Industries of the Future’ Funds. Mark has also served on many different sustainable finance forums, including the World Business Council for Sustainable Development, leading up to the 1992 Earth Summit. Mark is also a Visiting Lecturer at the University of Cambridge’s Institute for Sustainability Leadership.

Amidst growing concerns over the sustainability of space-based technologies, Chris Geiger explains his firm’s strategy for overcoming the many challenges at this frontier of engineering. Space-based technologies are an increasingly important part of the global infrastructure and — like all of Earth’s resources — should be managed sustainably. This episode serves as a prime example of how firms can embed long-term thinking, resilience, and adaptability into their corporate structure, and how this can help reduce the impact of risks from climate change and environmental degradation. Today’s episode will explore: The challenges facing space-based technologies today and in the future The role of resilient engineering design in environmental sustainability The importance of effective governance structures for sustainable business strategies Links from today’s discussion: Article on Lockheed Martin tech innovations Details of Chris Geiger’s paper on space sustainability For more information on climate risk, visit GARP’s Climate Resources Hub: https://climate.garp.org/ If you have any questions, thoughts, or feedback regarding this podcast series, we would love to hear from you at: climateriskpodcast@garp.com ------------------ Speaker’s Bio Chris Geiger – Internal Audit Director at Lockheed Martin Over his 20-year career with Lockheed, Chris has held leadership positions across Engineering, Enterprise Risk Management, and Sustainability. In his current role, he leads the global internal audit function, evaluating corporate risk exposure and governance strategies. Chris is also a board member for the MidFlorida Credit Union and is a vice-chair of the International Astronautical Federation Enterprise Risk Management Committee. He has also served on governmental advisory boards relating to emergency planning and housing in Florida.

As we head into 2022, Jo and Maxine look back at the past year of Climate Risk Podcasts, reviewing key learnings from our guests and discussing recent trends in climate risk management. From lawyers to professors, regulators to entrepreneurs, we’ve had a great variety of guests talk about a wide range of topics over the last year. This episode re-examines the rich knowledge that has been shared on the Climate Risk Podcast over the last 12 months, creating a narrative of climate risk wisdom to guide our listeners through this fast-moving field. So, today’s episode will explore: What we’ve learnt about the scale and nature of climate risks How mitigation and adaption strategies are evolving, and what capabilities risk professionals must develop to manage these risks more effectively What to expect as a sustainability and climate risk professional in 2022   Links from today’s discussion: Net Zero Article: https://climate.garp.org/insight/making-sense-of-cop26-a-short-guide-to-the-why-when-and-how-of-reaching-net-zero/ Sustainable Bonds Article: https://climate.garp.org/insight/sustainable-bonds-understanding-this-growth-area/ Sixth IPCC Report: https://www.ipcc.ch/report/sixth-assessment-report-working-group-i/   For more information on climate risk, visit GARP’s Climate Resources Hub: https://climate.garp.org/ If you have any questions, thoughts, or feedback regarding this podcast series, we would love to hear from you at: climateriskpodcast@garp.com   ------------------   Speaker Bios Jo Paisley, President, GARP Risk Institute (GRI), has worked on a variety of risk areas at GRI, including stress testing, operational resilience, model risk management and climate risk. Her career prior to joining GARP spanned public and private sectors, including working as the Director of the Supervisory Risk Specialist Division within the Prudential Regulation Authority and as Global Head of Stress Testing at HSBC. Maxine Nelson, Senior Vice President, GARP Risk Institute (GRI), currently focusses on climate risk management. Previous roles have included operational risk modelling at NAB, leading KMPG London’s credit risk team, senior consultant at Oliver Wyman, responsibility for counterparty credit risk at the UK Financial Services Authority, and Global Head of Wholesale Risk Analytics and Head of Capital Planning at HSBC.

By their very nature, it can be extremely difficult to capture the truly disastrous potential of the tail risks associated with climate change. Additionally, the growing complexity of human and natural systems means that tail risks will continue to arise in unexpected and novel ways. In today’s episode, we’ll explore a new perspective on understanding and assessing tail risks, and how we can build resilience to these threats within organizations and at the societal level. So, today’s episode will explore: Why the risks associated with even 2.0oC warming are greater than you might think How climate risks are transmitted through, and amplified by, our interconnected economy How risk professionals can best prepare for the complex and unpredictable risks of climate change Links from today’s discussion: Climate change risk assessment 2021: Chatham House’s research publication detailing the consequences and systemic cascading risks likely from climate change - https://www.chathamhouse.org/2021/09/climate-change-risk-assessment-2021 UK Climate Risk Independent Assessment (CCRA3) Technical Report: The UK Climate Change Committee’s independent analysis of the risks and opportunities for the UK - https://www.theccc.org.uk/publication/independent-assessment-of-uk-climate-risk/ For more information on climate risk, visit GARP’s Climate Resources Hub: https://climate.garp.org/ If you have any questions, thoughts or feedback regarding this podcast series, we would love to hear from you at: climateriskpodcast@garp.com ------------------ Tim Benton, Research Director, Chatham House and Professor of Population Ecology, University of Leeds Tim joined Chatham House in 2016, where he now leads the Environment and Society Programme. He also holds active roles as a both a professor and as Dean of Strategic Research Initiatives at the University of Leeds. His research focuses on global food security, food systems and resilience, and natural resource management. From 2011 to 2016, Tim was the ‘champion’ of the UK’s Global Food Security programme. He has also been a contributing author for the IPCC and has more than 150 published academic papers to his name.