 |
| Photo: AP/Ajit Solanki |
That was how Sarah Barker, a Minter Ellison international expert on climate change governance risks, opened an extraordinary presentation to the Adelaide City Council last night (being tongue-in-cheek).
Sure, the planet is likely heading for a rise in global temperatures more significant than the fall in temperature that characterised the last ice age – but ignore that for a moment, she said.
“Climate change isn’t an ethical or an environmental issue for council … it’s, clearly, a material, financial risk and one that has to be considered now,” she said.
“Of course, climate change presents one of the greatest threats to the ecology of the planet as we know it (but) it doesn’t matter whether or not this is a socialist conspiracy cooked up by China to harm the US manufacturing sector.
“It doesn’t matter what you believe, or I believe, or anyone believes when the markets believe it, when investors are making decisions, governments are making policy and when stakeholders have shifted their views.
“There’s a risk that needs to be mitigated.
“This is all about money. Markets have shifted, so we need to shift too.”
Unprecedented legal liabilities
Barker said the council – along with all levels of government around the world – faced unprecedented legal liabilities from the developments it approves, from the manner in which it maintains public infrastructure and from its growing role as “insurer of last resort” when natural disasters hit.
She cited a case in which another council rejected a development application from a homeowner – because the proposed renovation was at risk of going underwater.
The homeowner then appealed the planning decision and the council overturned it.
“The structure was then washed away,” she recalled.
“The homeowner then sued the council for allowing them to build it.”
Development approval policies
Barker warned there was “a significant potential for an uplift” in the amount of litigation directed against the Adelaide City Council unless it mitigates its risks.
“There’s a huge, widening gap between natural disaster damage and private insurance,” she said.
“When people lose money they look for someone to blame and someone to sue.
“There obviously needs to be changes to your mapping and to your development approval policies.”
She warned that if the council does not sufficiently maintain public infrastructure, impacted in new ways by climate change, and that infrastructure fails in a way that damages private property or assets, “that’s opening you up to legal challenge”.
“We’re already seeing a couple of challenges on that front in the US.”
The council’s credit rating – and that of all governments – was also under threat if it didn’t properly account for the new obligations created by climate change.
She said ratings giant Moody’s was in the process of re-assessing the credit ratings of governments and corporations around the globe, “starting with sub-sovereigns”.
“All the credit ratings of governments and corporations around the world (will soon) account for how susceptible they are to climate change risk, how prepared they are – from an adaptation and resilience point of view – to deal with the impacts, and also how quick they are to deal with any damage that does occur,” she said.
Preparing for climate change impact
Lord Mayor Martin Haese said the city council was overdue to audit its entire operations to make sure it is prepared for the impacts of climate change.
“The city council hasn’t undertaken any systematic (audit) of its corporate climate change risk,” he told InDaily this morning.
“Credit ratings agencies (… are) rating local governments on their climate risk exposure.
“It’s timely that we (undertake) a detailed audit.”
But he said the council was also a leader in climate change policy – including with its goal for the city and North Adelaide to be carbon neutral by 2025 – and that some of the risk mitigation work had already been done through normal infrastructure renewal processes.
Barker told last night’s meeting that the risks associated with climate change were matched by massive potential gains, she said, including favourable treatment by banks of organisations that can demonstrate sustainability.
Big financial opportunities for businesses and governments
“Private companies, only in the last couple of months, out of Europe and in Asia (… are) getting discounts on their interest rate, negotiated for if they achieve their sustainability targets,” said Barker.
“There was a Spanish insurance company that recently renegotiated a five-year loan (so that) if it hits its targets for each of the five years, it will be paying 30 per cent less interest.
“Here’s a great opportunity to renegotiate with your banks.”'
Green bonds
A new trend of funding infrastructure through “green bonds” rather than bank loans was taking off internationally.
“Green bonds” are government IOUs to investors that finance environmentally-friendly projects.
She said investors were accepting significantly lower interest rates on projects that show “green” credentials, because the market perceives them as lower-risk.
“Green bonds are it-and-a-bit in financial markets at the moment,” said Barker.
She said a multi-billion dollar bond issued by the French Government early last year, offering an interest rate lower than an average a savings account, was hugely popular among investors.
She said local governments could issue similar financial instruments to finance public transport and cycling infrastructure projects, adding that new technologies like electric cars and more efficient renewable technology also represented great potential economic benefit.
Links
- 'Vulnerable': Climate Change Threatens Wollongong Homes, WIN Stadium
- Local Councils Step Up Climate Change Action With CPP
- Climate Change Challenge Accepted By Group Of Local Councils
- Australian Local Councils Lead The Way In Tackling Climate Change As Federal Policy Stalls
- 'We Can't See A Future': Group Takes EU To Court Over Climate Change
- Can A City Really Sue An Oil Company For Climate Change?
- Four Climate Change Lawsuits To Watch In 2018
- Company Directors Can Be Legally Liable For Failing To Manage Climate Change Risks - Report
- Mark Carney Warns Of Climate Change Threat To Financial System
- Climate Change Will Affect Millennials’ Pension Prospects
- Climate Change: Three Of Australia’s Big Four Banks Reviewing Exposure To Fossil Fuels
- Curbing Climate Change Has A Dollar Value — Here’s How And Why We Measure It
- Cashing In On Climate Change
- Climate Change Could Spark The World’s Next Financial Crisis, Former Bank Of England Executive Warns
- Australia Takes Centre Stage On Global Green Climate Funds
No comments :
Post a Comment