Climate Risk Podcast

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.

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.