234 scientists from 60 countries came together as signatories to the UN IPCC’s latest report, published Monday 9 August. The hard-hitting conclusions include an unequivocal judgement that climate change is manmade and that the globe is expected to reach a 1.5°C level of warming versus pre-industrial levels by 2040.
This estimate is based on the best-case scenario and is perhaps optimistic considering that the world was already 1.1°C warmer in the decade to 2020 than the period 1850-1900. These eye-catching statistics lead to one simple question – despite all the rhetoric and the wave of well-meaning targets from many of the world’s largest companies and governments, is anyone really doing anywhere enough to combat climate change?
The findings in the sixth and latest IPCC report contained other alarming observations including the prediction that even with significant cuts to emissions now, global temperatures would continue to rise at least until 2050. The effects of climate change are already with us; the last decade the world was likely hotter than at any time for 125,000 years whilst greenhouse gas emissions are now higher than at any time in the last 800,000 years.
The lead author, Professor Ed Hawkins commented:
“We’re already seeing the effects, and things just get worse with every little bit of warming”.
To put this in context, since the 1970s, the globe has warmed faster in a 50-year period than any period of similar length for the last 2,000 years.
Whilst the most benign global warming scenario sets a 1.5°C of warming prediction by 2040, the worst-case analysis is considerably more damaging: a 1.9°C increase by 2040, 3°C by 2060 and 5.7°C by 2100. There is almost not a place on the planet where 6°C of warming would remain habitable, whether that be in terms of temperature or sea level. Under this severe scenario, sea levels would rise by 1 metre by 2100 – but if all sea ice were to melt, sea levels would rise by 65 metres.
The challenge of bringing the world together behind tackling climate change is massive.
As a fitting illustration, it has been widely reported that Saudi Arabia sought to change the terminology from ‘carbon emissions’ to ‘greenhouse gas emissions’, a tactic that can only be viewed as a superficial PR strategy to confuse the root cause of the issue. This short-sighted, self-interested behaviour by so many of the globe’s most powerful leaders underlines how immensely difficult it will be to limit warming to that 1.5°C target.
Nevertheless, as the report points out, even 1.5°C of warming changes will have consequences for us all. The report predicts an increase in unprecedented weather events leading to a higher frequency of floods, heatwaves and accompanying phenomena like wildfires.
Looking around the globe this summer, it is clear that this increase is already with us, whether it be wetter summers in Germany, wildfires in Sweden, Australia, Southern Europe, heatwaves in US and Siberia or drought in South Africa. Indeed, it is important to bear in mind that the planetary warming will not be distributed evenly. For example, Australia has already experienced 1.4°C of warming since 1910 and sea levels are rising faster than the global average.
There are areas within the report that give hope amid the gloom. For example, with increasing precision around climate modelling, most of the IPCC scenarios suggest that if net zero is achieved and sustained, warming will plateau. Furthermore, decarbonisation could be accelerated by the scaling up of technologies, for example carbon capture and storage; although as yet, these solutions require significant investment to reach commercial viability.
In short, the latest IPCC report should shock us all. It delivers an important platform for leaders to rally around at the COP26 climate conference in Glasgow in November.
The climate challenge is not solely the responsibility of one stakeholder group but instead it lies with all of us: governments, finance, companies and individuals.
Whilst the awareness of manmade climate change and the acceptance of the need to combat it has grown immensely in the last five years, the large majority of countries and enterprises have so far only reached out for painless solutions to offset emissions; these tend to be relatively cheap and simple ways of claiming reduced or net zero emissions. It is clear that if the planet is to avoid those worst-case predictions, then more fundamental, and perhaps painful, choices will need to be taken in the future.
Individuals are free to make their own lifestyle adjustments; however, the greatest difference an individual can make is commonly within their investment portfolios.
Impact funds pursue a rigorous discipline of combining financial performance with environmental and social benefits by identifying fixers to the globe’s challenges. By supporting the science and innovation embodied in these companies, the impact investment movement can continue to catalyse change at scale.
In light of the IPCC report, the rationale for investors to increase their allocation towards impact funds is more powerful than ever.
Portfolio Manager Impact Equities & Co-Manager of the Positive Impact Equity strategy
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