On the heels of the entry into force of the historic Paris agreement on climate change, a legal opinion declares that directors who don’t properly consider the material impacts of climate change on their business risk personal liability for breach of duty. With this, business leaders are inexorably confronted with the need to consider climate change and sustainability risks for their companies, and to price, mitigate, and manage them accordingly. Is your business ready to bring climate change and sustainability to the board?
This past month the world celebrated the ratification of the historic Paris climate change agreement, years sooner than expected, particularly given that is the single largest piece of climate change legislation ever enacted. The agreement, signed by 196 attending parties, achieves a legally binding and universal agreement on climate, with the aim of keeping global warming below 2°C compared to pre-industrial levels. It was the outcome of the 21st meeting of the Conference of Parties (COP) to the United Nations Framework Convention on Climate Change, held in Paris from 30 November to 12 December 2015.
A new white paper has been released today by Meteo Protect demonstrating the importance of unseasonal weather on the sales performance of UK retailers, and the growing need to actively manage its financial consequences. The extent to which retail companies are exposed to climate variability is likely to be an eye-opener for many banks, regulators, analysts and investors. As climate variability is increasing, the risk to which they are exposed requires urgent action.
The research report thoroughly investigates the relationship between monthly sales and climate variability. For the first time, for each season, retail sectors are ranked according to their sensitivity to temperature, precipitation, humidity rate and wind speed.
The authors provide retail managers with a methodology to calculate the contribution of weather to sales performance and to evaluate sales at risk caused by climate variability. They also provide analysts with rankings that classify retail sectors according to their sensitivity to climate variability.
To mitigate the exposure to climate risks, the idea that geographical diversification is a natural efficient hedge is wrong, and the scientific evidence exposed in this report is unequivocal. Climate variability is a risk that needs to be managed like any other financial risk. One way to become more resilient to climate risks is to use weather-index products that are designed to pay in case of unfavorable weather. If companies are resilient to climate variability on an on-going basis, they will, by definition, become resilient to climate change.
The contribution of this research paper is of course not limited to the UK as the methodology is reproducible to other countries and sectors. A must-read for finance executives and business managers ahead of COP21.
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DOI: 10.15200/winn.144524.45408 provided by The Winnower, a DIY scholarly publishing platform
Where government have failed and the private sector remains oblivious, new voices propose innovative solutions ahead of Cop21
Is your company prepared for the consequences of climate change in 2100? Even in 2050? Of course not. Annual reports and five-year planning cycles do not contemplate such timelines, any more than the profit-rewarding bonus system of the c-suite does. However, the private sector continues to be inundated with reports and studies providing projections for events that may affect enterprises in this distant future, themselves based on current projections of macro-trends. These terrifying but irrelevant (and unreliable) statistics are of little use to the current planning cycles of the average business, yet the public sector is providing them in the hopes that the private sector will be motivated to step in and take the lead in responding to climate change, making the practical and timely changes that cumbersome and intractable bureaucracies have not been able to do. We now have the tragedy of the commons meets the tragedy of the timelines.
However, where governments and international bodies have missed the mark, and the private sector remains struggling to understand its role, a dark horse has emerged in the climate change crisis. Weather risk management specialists reveal the relevant data, the financial consequences and the risk management solutions that could finally successfully join the public and private sector together in the fight against climate change and make an international agreement within our grasp. The only question now is, is it too late for Cop21?
DOI: 10.15200/winn.144361.10683 provided by The Winnower, a DIY scholarly publishing platform
A ground-breaking new research report has been released today by the analysts at Meteo Protect demonstrating that despite the best efforts of government leaders and international organizations to lead the response to climate change, they have not been able to galvanize the key players who can make a difference. In fact, not only are they not engaged, they do not even know they are already at risk.
A new White Paper from Meteo Protect modelling the impact of climate variability on the private sector finds that climate change is already making a significant impact in the profits of companies operating in sectors exposed to weather. Directly challenging the direction of present empirical research, and the consensus of how to respond to climate change, it identifies how and why private industry, including companies and investors, must act immediately to manage the consequences of climate change.
Indeed, the extent to which the vast majority of companies are presently exposed to climate variability is likely to be a revelation for many analysts, investors and even companies executives themselves. Demonstrating that billions of dollars are at risk each quarter, continuing to go unreported and unmanaged, the researchers call for the provision of actionable and objective indicators to measure the exposure to climate risk and the implementation of mitigating weather hedging strategies to protect financial performance.
A must-read for finance executives, investors, asset managers and business analysts, the White Paper takes a new approach to tackling a long-standing and unresolved problem, making it understandable, relevant and manageable.
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DOI: 10.15200/winn.144179.94962 provided by The Winnower, a DIY scholarly publishing platform