Chapter 1 Flashcards
WEF global risks report 2023 placed which climate risks in the top 5 short-term risks?
Natural disasters and extreme weather events
And
Failure to mitigate climate change
Top four long-term risks?
Extreme weather events
Critical change to earth systems
Biodiversity loss and collapse
Natural resource shortages
Chance of breaching 1:5C by 2030 according to the IPCC?
50%
Current temperature rise?
1.2C
Definition of climate change
A persistent long-term change in atmospheric conditions, often referring specifically to the rise in global temperatures from mid 20th century to present
Most common GHG?
CO2
7 GHG covered by Kyoto Protocol and Doha Amendment under UNFCCC?
Carbon dioxide (CO2), Methane (CH4), Nitrous Oxide (N2O), hydrofluorocarbons (HFCs), Perfluorocarbons (PFCs), sulphur hexafluoride (SF6), nitrogen trifluoride (NF3)
Methane warming power over CO2?
28 times out of
Nitrous oxide (N2O) use and warming power over CO2?
Used in fertiliser and 265 times
HFC-23 use and warming power?
Refrigerant and 12,400 times
UNFCCC definition of climate change
A change of climate which is attributed directly or indirectly to human activity that alters the composition of the global atmosphere and which is in addition to natural climate variability observed over comparable time periods
Melting permafrost releases which gas?
Methane
TCFD identifies which transition risks
Market, technology, legal/regulatory, and reputation
3 reasons for scenario analysis and why difficult?
Historical data is insufficient
Does not rely on linear or historical trends but models integrated economic and climate effects
Interactions with many other issues and feedback loops
Which models does the insurance industry use?
Catastrophe models
Carbon neutral versus net zero
Scope 1 and 2 versus Scope 1-3
Country coverage of net zero?
90% of global GHG emissions covered by country net zero laws, but some limited to carbon
What is dynamic materiality?
Material issues may become relevant in the future, but these could either escalate or be mitigated
EU SFDR comes under?
EU action plan for financing sustainable growth
SFDR requires?
Disclosure by labelled finance product providers, including on alignment to EU taxonomy
Government bonds are what compared to municipal or corporate bonds?
Less sensitive to climate issues
What 3 considerations are there for Munis?
Whether municipality has considered climate risk issues and provides meaningful disclosure
The type of project in receipt of bond financing, e.g. adaptation,
And local climate impacts that make affect cost of underwriting, e.g. sea level rise attenuating cash-flows
Which taxonomies can help assess corporate bond alignment with Paris and WB2C?
Eu Taxonomy and Climate Bonds Taxonomy
Which issuance standard has built credibility for bond securities?
International Capital Market Association’s Green Bond Principles
What green bond product did the UK launch throigh the NS&I?
Sovereign green savings bond
Cash rich companies are doing what?
Inadvertently funding the climate crisis
On the current trajectory, global GDP could fall by what amount by 2050 compared to otherwise?
14% or $23tn
2022 natural disaster totalled what? And how much insured?
$275bn and 125bn
NZAOA requires what?
Interim portfolio-level targets, net zero by 2050, and engagement with investee companies. Encouraged to look for climate solutions opportunities.
What does PAII do?
Framework to align portfolios with net zero by defarbonising portfolios and increasing investment into climate solutions. Strategy should include targets, strategic asset allocation, asset class alignment, policy advocacy, and engagement
What did the SEC set up to scrutinise/mitigate mis-selling of ESG products?
ESG task force, which has set out key questions for investors to ask
The UK’s Investment Consultants Sustainability Working Group produce a guide for assessing investment consultants covering?
- Firm wide climate expertise and commitment
- Individual consultant climate expertise
- tools and software to support climate-related risk assessment and monitoring
- Thought leadership and policy advocacy
- Assessment of investment managers and engagement with them
