Chapter 3: Environmental Factors Flashcards
Why are “negative externalities” not priced and what would happen if they were?
It is difficult to value and measure natural resources, so the detrimental effects from depending on natural resrouces and properly functioning ecosystems has not been priced into the costs of doing business. There could be material disruption if they were to be priced.
What are “physical risks” in the context of climate change?
“Physical risks” refer to the risks incurred by not acting against climate change to prevent more frequent extreme weather events happening.
What are “transitional risks” in the context of climate change?
They are the trade-offs associated with action as the world shifts to a low-carbon economy. For instance, the potential reduction in value of investments held in sectors negatively impacted by the transition (ex: oil, coal, gas, financial institutions exposure to these assets). The BIS warned that climate change could be the cause of the next systemic financial crisis.
Provide examples of transition risks.
They are multiple and include:
1. Policy risks, such as increased emission regulation and environmental standards;
2. Legal risks, such as lawsuits claiming damages from entities believed to be liable for their contribution to climate change;
3. technology risks, such as low-carbon innovations disrupting established industries.
Define direct and indirect impacts of business activities on natural resources, according to the GRI.
A direct impact: the activities of the business affect directly biodiversity.
Indirect impact: caused by organizations in the supply chain of the business.
How important are supply chains GHG compared to those of direct operations?
They are estimated to be on average 5x+ as high.
What did the Non-Financial Reporting Directive introduce?
It introduced the concept of “double materiality” – in other words asking companies to report both the impact of climate change on their activities, as well as the impact of a company’s activities on climate change and the environment, stipulating that companies should consider their entire value chain, both upstream and downstream.
Illustrate the growth of environmental and climate policies.
The Grantham Research Institute database counted a total of 2092 climate laws and policies in countries across the globe, vs 1400 in 2017, which was already a 20x increase vs 1997.
What is the UNFCCC?
The UN Framework Convention on Climate Change (1992) is the overarching international treaty relating to climate change. All agreements, including the Kyoto protocol, are protocoles to this treaty. The UNFCCC secretariat is responsible for the annual Conference of the Parties (COP) where national governments can evaluate progress and establish new goals.
Why is the Kyoto Protocol important?
The Kyoto Protocol was adopted in 1997 and became effective in 2005 without US participation. It was the first international convention to set targets for emissions of the main GHGs.
Explain the significance of the Paris Agreement.
The Paris Agreement (2015) at COP21 established a long-term goals to keep the increase in global average temperature well below 2°C above pre-industrial levels and to limit the increase to 1.5°C, since this would substantially reduce the risks and effects of climate change. It not legally binding.
What are NDCs?
Nationally determined contributions (NDCs) are at the heart of the Paris Agreement. They capture voluntary efforts by each country to reduce national emissions and adapt to the impacts of climate change. Each country report on its NDCs, with updates to commitments every five years. Commitments tended to fall in the 25%-30% range of GHG emissions.
Why is the Glasgow Climate Pact (2021) notable?
It captures key outcomes of COP26, the first tiem since COP21 when countries updated their commitments. The Pact is notable for a commitment to phase down the use of unabated coal power and for the recognition of shorter-term emissions pathways (50%v reduction in CO2 emissions by 2030, net zero around mid-century) needed to reach the goal of limiting global warming to 1.5°C.
Where would the median projected level of global warming by 2100 fall if all Glasgow NDCs were met?
Analysis suggests that median projected levels of warming by 2100 would fall to around 2.4°C if all Glasgow NDCs were met, with the potential to reach 1.8°C if all other longer-term pledges were implemented on time
What are the UN SDGs and how do they relate to environmental factors?
The 17 UN SDGs,s et in 2015, see to address key global challenges. SDGs 7 (affordable and clean energy), 11 (sustainable cities and communities), 12 (responsible consumption and production), 13 (climate action), 14 (life below water), and 15 (life on land) are some of the most directly relevant to the environmental debate.
What is CORSIA and why does it matter?
Carbon Offsetting and Reduction Scheme for International Aviation) is a UN mechanism designed by the UN International Civil Aviation Organization (ICAO) to help the aviation industry reach its aspirational goal to make all growth in international flights after 2020 carbon neutral, with airlines required to offset their emissions. The scheme is important because domestic aviation emissions are covered by the Paris Agreement, but international flights—which are responsible for around two-thirds of the CO2 emissions from aviation—are under the remit of ICAO.
