Burns participated in a panel titled “Sovereign Credit Risks: Integrating Climate, Carbon and Natural Resource Risks,” which also featured Patrice Cochelin from Standard & Poor’s and Rodolphe Bocquet from Beyond Ratings. Others presenting at the event included representatives from Moody’s, Standard & Poor’s, FTSE, MSCI, Mercer, Carbon Tracker, the U.N. Environment Programme Finance Initiative (UNEP FI) and the World Resources Institute.
The fact that climate change is an increasingly prominent issue on the agenda of institutional investors and banks is an encouraging trend. In March 2015, more than 266 investors with over $20 trillion in assets under management had implemented some form of climate change strategy, according to event organizers. However, a survey by the Asset Owners Disclosure Project found that nearly half of the top 500 global asset owners did nothing to protect investments under their stewardship from the threat of climate change.
“The bond market has traditionally been an overlooked portion of the market when it comes to environmental risk, although it totals $41 trillion,” Burns noted. “But interest is growing in looking at decarbonization and climate change in this asset class as well.”
Beyond the societal challenge of transitioning to a low-carbon economy, the finance industry is growing aware of the potential associated financial risks, including stranded assets, such as coal, oil and gas operations, amid mounting pressures to become less reliant on fossil fuels. As the need for metrics and models to measure country risk exposure in this new environment is heating up, Global Footprint Network has been taking research on stranded assets a step further by analyzing which other sectors (in addition to fossil fuel extraction) may be exposed to climate change.
More News from Our Finance Initiative
Global Footprint Network researchers have been busy refining our ERISC (Environmental Risk in Sovereign Credit) methodology through a second phase of research, which focuses on the exposure of countries to food price shocks. Along with UNEP FI, we will be organizing one final workshop in June with our technical partner Cambridge Econometrics and our seven partners in the finance industry—Standard & Poor’s, HSBC, European Investment Bank, Caisse des Dépôts in France, Colonial First State in Australia, KfW in Germany and Kempen in the Netherlands—before starting to draft a final report on the methodology to launch this fall.
In the meantime, Global Footprint Network CEO Susan Burns gave a preview of our work in a short briefing at the end of the Ceres Conference in San Francisco May 14 that included opening remarks by Zoe Knight, head of the Climate Change Centre of Excellence at HSBC, one of our ERISC partners.
Policy Analyst Martin Halle also will be discussing our country risk research on July 1 at the fifth RICA (Responsible Investment Corporate Access) Zurich Conference, hosted by the SIX Swiss Exchange. Halle will be participating in a morning panel titled “Carbon emissions and other Environmental, Social and Government (ESG) Key Performance Indicators (KPIs) influencing business strategy.”
Like Governing magazine before it, Fast Company made much of the fact that former Maryland Governor and potential presidential contender Martin O’Malley is an enthusiastic supporter. “We are experiencing a shift in which we measure government not by its input, but by the benefit each service provides to communities. New tools like NPV+ enabled this transition and help make the economic case for sustainable choices in our budget decisions,” O’Malley wrote in an email to Fast Company.
Ecological Footprint in Action
The Ontario Ministry of Natural Resources and Forestry has turned to the Ecological Footprint as a natural resources accounting framework to build its biodiversity conservation strategy. The ministry asked Global Footprint Network to contribute to the second State of Ontario’s Biodiversity report by providing a technical time-trend analysis on the Ecological Footprint and Biocapacity of the Canadian Province, comparing data for 2005 and 2010.
Released this week at a special event held during the 2015 Ontario Biodiversity Summit in Niagara Falls, State of Ontario’s Biodiversity 2015 is designed to help the province’s decision-makers and residents understand the current state of Ontario’s biodiversity, the pressures that threaten it and the level of action underway to advance biodiversity conservation. We look forward to seeing what policies Ontario adopts to push that agenda forward.
From Our Partner Network
In collaboration with WWF Japan, Global Footprint Network recently released an eye-catching informational brochure that underscores the role individual behavior change can play in reducing the Ecological Footprint. For instance, almost 70 percent of Japan’s Ecological Footprint comes from daily activities. If food waste was eliminated, the country’s food Footprint could be reduced by 25 percent. The carbon Footprint accounts for 65 percent of Japan’s total Ecological Footprint. Breaking down the Ecological Footprint by components provides guidance on how to more effectively manage ecological resources, whether it is through national policies (for instance related to energy to reduce the carbon Footprint) or lifestyle choices at a local or household level. Be sure to take a look at the brochure, The Ecological Footprint for Sustainable Living in Japan.
From Our Blog
May 15 was the International Day of Families, a day marked annually by the U.N. General Assembly to “increase knowledge of the social, economic and demographic processes affecting families.” This year’s focus was gender equality, which we believe is directly linked to women’s empowerment through increased access to education and income-generation opportunities. Poverty aid programs have long understood that empowering women is the best available lever anywhere to lift families out of poverty. It is also a sure path toward smaller families. “Healthy and smaller families are core to creating a world that works for everyone,” says Susan Burns, CEO of Global Footprint Network. “We cannot ignore population growth if we are truly committed to people having secure lives in a world of finite resources.” Read more.