18/05/2017

Getting Climate Risk On The Company Board Agenda

RenewEconomy - 


When it comes to mitigating the impacts of climate change, shareholder activism is not the only thing keeping company leaders awake at night.
There is now a rapidly growing realisation by company directors and executives that climate change risks really ought to be a major focus of a board's agenda.
This extends to detailed scenario planning and analysis of the physical impacts of a changing climate, as well as the transitional and reputational risks associated with rapidly evolving global expectations and commitments such as the Paris Agreement, which came into force last year.
But perhaps more worrying for some, it could also extend to a personal legal exposure stemming from a failure to disclose climate-linked financial risks to the share market.
Now is the time for boards and senior management to give thorough consideration to the risks (transitional, reputational and physical) posed by climate change, with a view to ensuring that these risks are incorporated into their strategic decision making. In particular, appropriate consideration needs to be given to the need for disclosure of any relevant financial-related risks.
The focus on these issues has been sharpened in recent months with the release of some influential opinions in legal and regulatory circles.
Barrister Noel Hutley SC caused waves in October last year with a paper on "Climate Change and Directors' Duties" for the Centre for Policy Development and the Future Business Council.
In it he argued that: "It is likely to be only a matter of time before we see litigation against a director who has failed to perceive, disclose or take steps in relation to a foreseeable climate-related risk that can be demonstrated to have caused harm to a company (including, perhaps, reputational harm)".
In February of this year, the Australian Prudential Regulation Authority's executive board member Geoff Summerhayes said in a speech that "the days of viewing climate change within a purely ethical, environmental or long-term frame have passed".
As Mr Summerhayes rather bluntly put it: "If entities' internal risk management processes are not starting to include climate risk as something that has to be considered – even if risks are ultimately judged to be minimal or manageable – that seems a pretty reasonable indicator there might be something wrong with the process".
"Similarly, if you're an investor and you're not already asking questions about how the companies you invest in approach these issues – perhaps you should be," he said.
Then in March, the Australian Securities and Investments Commission (ASIC) told a federal Senate committee hearing on climate change risk disclosure that it agreed with a view that directors must consider and disclose climate risks to fulfil their duties under corporations legislation.
Following those hearings, the Senate Economics References Committee reported last month [APRIL] in its paper titled "Carbon risk: a burning issue". Its recommendations included that ASIC review its guidance for directors on carbon risk and that the ASX give guidance on the circumstances in which a listed entity's exposure to carbon risk requires disclosure.
It's not just Australian legal and regulatory experts in the field that are raising the temperature.
The Task Force on Climate-related Financial Disclosures, part of global financial system advisory body, the Financial Stability Board (FSB), is developing recommendations for voluntary climate-related financial disclosures that are "consistent, comparable, reliable, clear, and efficient, and provide decision-useful information to lenders, insurers and investors".
The Task Force, set up following a request by the G20 for the FSB to examine these issues, is due to give a final report to the G20 this year.
Among its influential members from the global business community are its chair Michael Bloomberg, the prominent US businessmen and former New York mayor, as well as Australian member Dr Fiona Wild, vice president, climate change and sustainability at BHP Billiton.
Its draft recommendations included the advice that financial impact assessment should require senior management engagement; that disclosure needs to be useful; and that a claim that companies are waiting for better data tools should not be viewed as good enough.
Importantly, the Australian Senate's "Carbon risk: a burning issue" report urged the Federal Government to commit to implementing appropriate recommendations of the FSB's Task Force, including via law reform, along with a broader review of the adequacy of the Corporations Act to cover climate issues.
The forecast for executives and directors is clear: If they are not already worried about climate change risk planning and climate-related market disclosure – and the potential for costly litigation that might follow – then they should be.

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More Than 90 Scientists Release Report That Arctic Is ‘Unravelling’

Observer -  | 

The Arctic has been warming twice as fast as the rest of the planet for the past 50 years


The National Snow and Ice Center reported that Arctic sea ice in March 2017 was the lowest it has ever been for the month of March since satellites began recording sea ice extent 38 years ago.
NASA noted that between 1976 and 1996 average sea ice loss in the Arctic was 8,300 square miles per year.
Between 1996 and 2013, this number more than doubled to 19,500 square miles per year.
This rapid loss of ice in the Arctic contributes not just to rising sea levels, but it reduces the properties of sea ice that reflect the sun's radiation back into space rather than absorb it like the ocean does, contributing even further to global warming.
A recent report that boasts contributions from more than 90 scientists detailed the drastic impacts climate change is having on the Arctic, a region of earth that is warming more than twice as fast as the rest of the planet.
"The Arctic Ocean could be largely free of sea ice in summer as early as the late 2030s, only two decades from now," the Snow, Water, Ice, Permafrost report found, which is the latest assessment conducted by the Arctic Monitoring and Assessment Program.
"The recent recognition of additional melt processes affecting Arctic and Antarctic glaciers, ice caps and ice sheets suggests that low-end projections of global sea-level rise made by the Intergovernmental Panel on Climate Change (IPCC) are underestimated."
 The report cited that—best case scenario—sea levels will rise minimum almost two feet if reduction goals outlined in the Paris Climate Change Agreement are met.
"The take-home message is that the Arctic is unravelling," Rafe Pomerance, former deputy assistant secretary of state for environment and development under Bill Clinton and the chairman of Arctic 21, told Nature in an interview.
"The fate of the Arctic has to be moved out of the world of scientific observation and into the world of government policy." In an interview in October 2016 with Pacific Environment, Pomerance stated, "There is a big difference from saying 'change' and the word 'unraveling.'
The unraveling involves five elements: The loss of ice in Greenland, the loss of sea ice, the shrinkage of the Northern Hemisphere snow cover, the thawing of the permafrost, and the loss of the other glaciers in the Arctic that aren't in Greenland. If you look across the Arctic, you see the unraveling—no matter which system you look at."
The report cited that the Arctic region has been warming twice as fast as the rest of the world for the past 50 years, and the past few years have broken several temperature records since instrumental records first began in 1900.
Snow cover in the Arctic regions has significantly decreased as well. The report states, "In recent years, June snow area in the North American and Eurasian Arctic has typically been about 50 percent below values observed before 2000."
In addition to warning of the threat of climate change, the report cautions that ecosystems in the Arctic will continue to be stressed, threatening several species endemic to the region, such as polar bears, seals, walruses and ice associated algae.
Global weather patterns are expected to become increasingly impacted by changes in the Arctic because the region plays a significant role in atmospheric and oceanic circulation and global greenhouse gas concentrations.
The report cites that the point of no return for the Arctic has passed, but efforts to reduce greenhouse gas emissions can mitigate some of the predicted impacts of climate change on the Arctic and the rest of the world.
"The near-future Arctic will be a substantially different environment from that of today, and by the end of this century Arctic warming may exceed thresholds for the stability of sea ice, the Greenland ice sheet, and possibly boreal forests."

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US Signs Treaty To Protect Arctic, Giving Some Hope For Paris Agreement

The Guardian - 

Secretary of state, Rex Tillerson, signs a commitment to curb greenhouse gas emissions and to extend scientific cooperation in the Arctic region
US secretary of state Rex Tillerson at the Arctic Council meeting in Fairbanks, Alaska. Photograph: Alexander Shcherbak/TASS/Getty Images
Environmental campaigners were given some hope that the US may stick to its commitments under the Paris climate change treaty when Rex Tillerson, the US secretary of state, signed a commitment to protect the Arctic and extend scientific co-operation.
He was speaking at the end of a meeting of the eight-nation Arctic Council in Alaska, a consultative body dedicated to sustaining the Arctic.
The members signed a document “noting the entry into force of the Paris agreement on climate change and its implementation, and reiterating the need for global action to reduce both long-lived greenhouse gases and short-lived climate pollutants.”
The representatives also state that they recognise that “activities taking place outside the Arctic region, including activities occurring in Arctic States, are the main contributors to climate change effects and pollution in the Arctic, and underlining the need for action at all levels.”
Temperatures have been rising faster in the Arctic than elsewhere, revealing the acute threat to the region and leading to fears about a wider knock-on effect around the globe.
There have been fears that the council, which is not a formal decision-making body, would be unable even to agree a joint declaration.
Donald Trump, in his presidential campaign, described climate change as a Chinese hoax, but since then there has been a huge debate raging inside the administration about whether to pull out of the Paris treaty, signed in 2015, or to lower the level of US commitments.
Tillerson sought to reassure the international Arctic community, saying “we’re not going to rush” to make a decision, but that the American government would make “the right decision for the United States”.
“We are appreciative that each of you has an important point of view, and you should know that we are taking the time to understand your concerns,” Tillerson said. “The Arctic Council will continue to be an important platform as we deliberate on these issues.”
There were also fears that wider geopolitical tensions will develop in the Arctic as the US, Russia and China battle for oil and gas resources likely to be opened up by the melting of icecaps and unfreezing of waters.
But in their opening remarks, foreign ministers from the world’s eight circumpolar nations instead reaffirmed their commitment to keeping the world’s geopolitical tensions out of the forum’s work, which focuses on environmental issues and sustainable development.
“The Arctic Council is so valuable to all of us, and very much for Canada, [because] it’s where we, the Arctic nations, can set aside issues outside the Arctic and appreciate that we have shared stewardship of this region,” said Canadian foreign minister Chrystia Freeland.
“The US-Russia initiative will make it easier to move equipment, samples and data across borders in the north and facilitate scientific collaboration and sharing.”

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