Chapter 3 Flashcards
(70 cards)
1
Q
What can play a role in defining the preferences of investors in terms of risk, return and impact?
A
- Investment mandates
- Time horizons
- Ultimate beneficiaries
- Personal values
2
Q
What has established a shared framework for enterprises to communicate about their activities and impact?
A
- Task Force on Climate-Related Financial Disclosures (TCFD) and carried forward by the International Financial Reporting Standards Foundation (IFRS)
3
Q
How is climate change defined?
A
- change of climate, directly or indirectly attributed “to human activity, that alters the composition of the global atmosphere
- and which is in addition to natural climate variability observed over comparable time periods
4
Q
Describe how the planet warms (what areas warm more etc) and consequences
A
- the Arctic is warming more than three times faster than the global average
- and the land is warming faster than the sea
- The planet not warming uniformly means the atmospheric and ocean circulation patterns are being altered in complex and not fully understood ways
5
Q
Describe CO2 contribution to global warming:
A
- Carbon dioxide (CO2) is a significant contributor to the warming effect, because of its higher concentration in the atmosphere
- Now at levels not seen since long before Homo sapiens first appeared
- 2023 Average is 419.3 ppm
- Highest previous was 300 ppm
6
Q
What is transient climate response?
A
- scientific concept used to estimate how quickly and by how much the Earth’s temperature would rise in response to a gradual increase in greenhouse gases—specifically, a doubling of CO₂ concentrations over about 70 years.
- Such modeling has been used to estimate temperature impact of adding or removing a given ton of carbon from the atmosphere - policy changes
- For example, the International Energy Agency (2022b) estimates that “renewed policy momentum and technology gains made since 2015 have shaved around 1°C off the long-term temperature rise, assuming that countries meet their commitments.”
7
Q
What is climate sensitivity?
A
- attempts to describe what would happen to global temperatures if CO2 concentrations in the atmosphere were to double relative to the pre-industrial average.
- The likely range of global temp increase is 2.5°C–4.0°C (with a best estimate of 3.0°C)”
- There is still some uncertainty, especially about whether warming could reach the higher end
8
Q
Describe properties and impact of GHGs aside from CO2
A
- Average lifetime in the atmosphere of such gases is shorter than that of carbon dioxide
- They have a much higher “global warming potential”
- 30 times stronger in the case of methane
- over 23,000 times stronger for sulphur hexafluoride—when compared to the effects of carbon dioxide over a century (this is usually expressed as tons of CO2 equivalent (CO2e)
9
Q
Describe why interplay between impact and lifetime is important
A
- Sudden releases of methane—for example, from the melting permafrost or from damage to natural gas infrastructure—can have a significant shorter-term impact on the global climate
- it is estimated that methane is responsible for about 30% of the observed rise in temperatures since the Industrial Revolution
- However, methane has a short atmospheric lifetime, such that emissions released today will mostly disappear from the atmosphere after 12 years.
- This is the main reason why the world would cool notably by 2100 if all GHG emissions fell to zero.
- This would result in around 0.5°C of cooling compared to a scenario where only CO2 falls to zero”
10
Q
What is the biggest contributor to manmade CO2 emissions
A
- the burning of fossil fuels (e.g., in power plants, gas boilers, and vehicles)
- around two-thirds—of all GHGs
11
Q
What are planetary boundaries
A
- They describe boundaries to processes that regulate the stability and resilience of the Earth’s operating system, with concerns that we have pushed beyond the safe limits for life.
- 6/9 crossed
12
Q
What are the 6 crossed Planetary boundaries?
A
- Climate Change: The increase in global temperature due to anthropogenic greenhouse gas emissions (interrelated to all boundaries as they contribute or because it contribute to them e.g. Ocean acidification)
- Biosphere Integrity: The health and diversity of ecosystems and species on Earth
- Land-System Change: Changes in land use affecting biodiversity and ecosystem services
- Freshwater Use: The amount of freshwater used, affecting water availability and quality
- Novel Entities: New substances, biological organisms, or when naturally occurring substances exceed natural levels
- Biogeochemical Flows: The cycles of chemical elements like nitrogen and phosphorus.
13
Q
What are the 3 yet uncrossed planetary boundaries?
A
- Stratospheric Ozone Depletion: The reduction of ozone in the Earth’s stratosphere
- Atmospheric Aerosol Pollution: Tiny particles in the atmosphere that affect climate and living organisms
- Ocean Acidification: The decrease in pH of the Earth’s oceans, caused by CO2 uptake
14
Q
What was the boundary for Climate change and what is effect of crossing it?
A
- The crossing of the boundary in terms of climate change, 350 ppm (parts per million) of atmospheric carbon concentration (we are now at about 420 ppm)
- and the rapid rate of change—both of which are unprecedented
- are creating extreme weather patterns.
15
Q
ow is finance, policy and law evolving to consider environmental impacts?
A
- Finance is incorporating broader environmental externalities—positive and negative impacts that are not easily measured in money terms—into investment decisions
- E.g Carbon Allowances, Natural capital approaches and environmental lawsuits
16
Q
What are carbon allowances?
A
- Companies trade pollution permits to incentivize lower emissions.
17
Q
What are natural capital approaches?
A
- assigns value to ecosystems, helping guide policymaking by recognizing their economic and environmental importance.
18
Q
What is a carbon budget
A
- the amount of CO2 emissions that can be emitted while maintaining a chance of temperatures not exceeding a given level
- IPCC says constantly decreasing
- But probabilistic (expected warming by 2100 so no certainty) and path dependent
19
Q
What did the Indicators of Global Climate change estimate for a 67% chance of avoiding warming beyond 1.5 degrees?
A
- the world had a remaining carbon budget of only 150 billion tons of CO2 left to emit globally.
20
Q
What did the Indicators of Global Climate change estimate for a 50% chance of avoiding warming beyond 1.5 degrees?
A
- at 250 billion tons, or half the budget as of the beginning of 2020.
21
Q
What are the expected emissions of current policies?
A
- a wide range of warming outcomes centered around 3.2°C.
- The exhibit further illustrates that scenarios that achieve the target of the Paris Agreement to keep global temperatures in the 1.5°C–2°C range require rapid and sustained reductions in CO2 emissions, followed by other GHGs.
- In particular, reaching net-zero CO2 emissions by around 2050 has emerged as a key milestone, which is increasingly being adopted by governments worldwide as a policy objective.
22
Q
Describe the window for action:
A
- window for action is shrinking fast.
- At current rates of GHGs—of about 40–60 GtCO2e every year—there may be less than a decade before we exhaust the previously mentioned carbon budgets
23
Q
Give an example of a business as usual scenario:
A
- IPCC’s RCP8.5 scenario
- It represents a high-emission scenario, leading to 4°C–5°C of warming by 2100 and severely damaging climate impacts as a result.
- First developed at the time of China’s rapid coal-powered industrialization, when the costs of solar panels, wind turbines, and battery storage were much higher than today
- this scenario assumes that due to population growth and economic development, global coal use grows more than four-fold by 2100 compared to today’s levels
- seem increasingly unrealistic.
24
Q
What is RCP?
A
“representative concentration pathways,”
with the numbers describing the amount of heat trapped by the atmosphere by 2100).
25
What are the main candidates for Tipping Elements?
1. Loss of Arctic, Antarctic, or Greenland icesheets
2. Loss of summer Arctic sea ice
3. Permafrost thaw
4. Slowing of the Atlantic meridional overturning circulation
5. Stratocumulus cloud deck breakup
6. Loss of Amazon and other rainforests
7. Boreal forest shifts
8. Die-off of tropical coral reefs
9. Disruptions of tropical season monsoons
26
What is the global cost of climate change damage estimated to be per year by 2050?
1. between $1.7 trillion and $3.1 trillion
2. includes the cost of damage to infrastructure, property, agriculture, and human health.
3. This cost is expected to increase over time as the impacts of climate change become more seve
27
Describe Martin Weitzman: dismal theorem
1. Suggests that standard cost–benefit analysis is inadequate to deal with the potential downside losses from climate change.
2. However small their probability as long as we cannot completely rule out scenarios of climate-induced civilizational collapse, their expected value must be properly understood as being equivalent to negative infinity
28
What is climate change mitigation?
1. Climate change mitigation is a human intervention that involves reducing the sources of GHG emissions (for example, the burning of fossil fuels and wood for electricity, heat, or transport)
2. and simultaneously enhancing the sinks that store these gases (such as forests, oceans, and soil) in an attempt to slow down the process of climate change.
29
what are the aims of climate change mitigation?
1. “prevent dangerous . . . interference with the climate system”
2. stabilize GHG levels in a time frame sufficient to allow ecosystems to adapt naturally to climate change,
3. ensure that food production is not threatened, and
4. enable economic development to proceed in a sustainable manner.
30
how much additional investment in energy supply and demand will be needed by 2050 to limit warming to 1.5 degrees
1. The IPCC between US$1 trillion and US$4 trillion of additional annual investment in energy supply
2. around US$1 trillion in energy demand
31
What % of global of emissions of greenhouse gases, GDP and Population are in areas covered by net-0 targets?
1. 88% GHG emissions
2. 92% GDP
3. 85% Population
4. over 200 cities and over 850 (mostly listed) companies had similarly set net-zero targets.
32
What measures are included in adaptation strategies?
1. protecting coastlines and adapting to sea-level rise
2. building flood defences
3. managing land use and forestry practices
4. planning more efficiently for scarce water resources
5. developing drought-resilient crops
6. protecting energy and public infrastructure
creating clean cooling systems.
33
Talk about water risks in the mining sectors
1. requires sufficient water to convey or help separate the desired ores.
2. It is estimated that up to 50% of global production of copper, gold, iron ore, and zinc—metals with a key contribution to low-carbon energy technologies—is located in areas where water stress is already high
3. Too much water can also be a problem because floods can shut down mines and cause significant local pollution.
4. Close to half of the global production of iron ore and zinc is estimated to be in areas facing high flood risk
34
What % of global GDP do cities represent
1. 80%
35
What are the estimated costs of climate adaptation?
1. in developing countries alone: US$160 billion - US$340 billion by 2030
2. US$315 billion - 565 billion by 2050
3. These costs are expected to increase even further if greenhouse gas emissions continue to rise.
significant gap between the costs of adaptation and the available funding.
36
What is the Climate Resilience Principles?
provide a framework for developing location-specific climate resilience measures and financing them in the green bond market
37
What is natural capital?
the world’s stocks of natural assets, which include geology, soil, air, water, and all living things.
38
What are example ecosystem services?
1. Provisioning services. products obtained from ecosystems, including fresh water, food, and timber
2. Regulating services. including air quality maintenance, water purification, and climate regulation
3. Cultural services. including cultural diversity, spiritual and historic values, and recreational experiences
4. Supporting services. services necessary to produce other ecosystem services
39
What is the annual monetary value of ecosystem services estimated to be?
1. US$125 trillion to US$140 trillion, more than 1.5 times the global GDP
40
What is the world population and what is it expected to be in 2050 and 2100
1. 8.1 billion
2. 9.7 billion
3. 10.7 billion
41
Describe connection between economic growth and resource use
1. Technological innovation and shifting to a circular economy can reduce reliance on virgin resources.
2. Economic growth is becoming less tied to resource use
3. From 2010 to 2022, global GDP per capita rose by over 20%, while carbon emissions per capita fell by about 2%.
4. CO2 data reflects emissions from fossil fuels and industrial processes (e.g., cement and steel), excluding land use changes and deforestation.
5. a broader review shows that while relative decoupling of material use and emissions is common, absolute long-term decoupling is rare (Increased consumption of product but less resources in each product Jevons paradox)
42
Describe GDP growth and emissions data in UK
1. GDP per capita has grown by more than one-third since 1990
with carbon emissions per capita falling by 40%–50% (this includes adjustments to reflect the offshoring of production abroad).
43
How many countries does the IPCC report having achieved sustained reductions in GHG and CO2 emissions
18 countries have achieved sustained reductions in GHG and CO2 emissions
44
Describe water distribution:
1. 70% of the planet is covered by water,
2. only 2.5% of it is freshwater.
3. Global freshwater demand will exceed supply by 40% by 2030
4. reported that over 2 billion people experience high water stress in various countries
5. about 4 billion people experience severe water scarcity at least one month of the year.
45
What is the UN sustainability goal related to water?
1. The UN’s Sustainable Development Goal (SDG) 6 is the need “to ensure availability and sustainable management of water and sanitation to all” by 2030
46
What is needed to maintain global biodiversity and ecosystem resilience?
1. Effective and equitable conservation of 30% to 50% of Earth's land, freshwater, and ocean areas, including near-natural ecosystems (high confidence).
47
What have the WWF note about the wildlife populations
1. world’s wildlife populations have plummeted by 69% since 1970
2. with this trajectory likely to be further exacerbated by global warming
3. A major driver of this decline is loss of habitat linked to overexploitation, agriculture, and urbanization.
48
What challenges is biodiversity loss presenting
1. Around 75% of global food crop types directly rely on animal pollination; given the decline in natural pollinators due to pollution and pesticides, US farmers paid approximately US$300 million for artificial (sometimes manual) pollination in 2017.
3. Medicine and health: estimated 70% of cancer drugs being organic or derived from organic substances
49
What is estimated to be the cost of inaction on biodiversity by 2050
1. estimated that inaction on biodiversity may result in cumulative costs of approximately US$10 trillion by 2050
2. through changes to crop yields and fish catches, economic damages from flooding and other disasters, and the loss of potential new sources of medicine.
50
What are some ecosystem services that biodiversity underpins?
1. food,
2. clean water,
3. genetic resources,
4. flood protection,
5. nutrient cycling, and
6. climate regulation
51
What evidence shows conservation can be effective?
1. A study from 2009 found that conservation investments over more than a decade reduced extinction risk by almost a third for mammals and birds in 109 countries
2. Without existing conservation efforts, the extinction risk of mammals, birds, and amphibians would have been at least 20% higher
52
What is the GBF?
1. Kunming-Montreal Global Biodiversity Framework (GBF).
2. The establishment of the GBF marked a significant step in global efforts to halt and reverse nature loss, much as the Paris Agreement addresses climate change.
3. The framework consists of global targets to be achieved by 2030 to safeguard and sustainably use biodiversity
53
How much of world is forest?
approximately 30% of the world’s land area, or just under 4 billion hectares,
54
Describe what is happening to the rate of deforestation
1. Deforestation is accelerating
2. From 2001 to 2019, there was a total of 386 million hectares of tree cover loss globally, equivalent to a 9.7% decrease in tree cover since 2000 and 105 gigatons of CO2 emission
55
What material financial risks do Companies with exposure to deforestation in their supply chains face?
1. supply disruption,
2. cost volatility, and
reputational damage.
56
What relation does the ocean have to CO2 and O2
1. Storing 43 times more CO2 than the atmosphere, the ocean is the planet’s largest carbon reservoir.
2. It is also the second largest sink in terms of removing CO2 from the atmosphere
3. Photosynthetic microorganisms on its surface layer also produce over half of the world’s oxygen
57
What is estimated to be the global gross value added by ocean-based industries?
US$1.3 trillion
58
What % of fish stocks are harvested at unsustainable levels?
1. 33%
59
What % of fish stocks are fished to maximum capacity
60%
60
What % of fish stocks were harvested at levels lower than what can be sustainably fished
7%
61
How many international agreements governing regional fisheries management organizations are there but what is issue
66 but just 7 of them have a secretariat, a scientific body, and enforcement powers
62
How many deaths are indoor and outdoor air pollution responsible for?
1. 7 million each year
2. estimated 9 million premature deaths in 2015
63
How much of the population live in places where the WHO air quality is not met?
99%
64
What was agreed in the UN Environment Assembly in 2022?
1. heads of state and government representatives from around the world committed to develop by 2024 an international legally binding agreement to end plastic pollution
65
What did the European Strategy for Plastics in a Circular Economy agree in 2018?
1. requires that all plastic packaging must be reusable or recyclable by 2030.
66
If policymakers implement stricter recycling measures in response to ongoing public pressure how much investments in petrochemical facilities might become stranded
up to US$400 billion of investments in new petrochemical facilities might become “stranded,” unprofitable assets
67
What is the circular economy?
1. an economic model that aims to avoid waste and to preserve the value of resources (raw materials, energy, and water) for as long as possible.
2. It is an effective model for companies to assess and manage their operations and resource management
3. it is an alternative approach to the use-make-dispose economy
68
What are the 3 principles the circular economy is based on?
1. design out waste and pollution,
2. keep products and materials in use, and
3. regenerate natural systems
69
What country has developed a program for a circular economy?
1. The Netherlands has developed a program for a circular economy, aimed at “preventing waste by making products and materials more efficiently and reusing them.
2. If new raw materials are needed, they must be obtained sustainably so that the natural and human environment is not damaged
70
