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Why Carbon Matters? | 15Rock

Increasing Carbon emissions are significant when assessing future public policies, the health and safety of communities and i

Carbon emissions effects governments, communities and financial institutions. Today, Earth is 1.2°C warmer than pre-industrial levels, because of increasing carbon levels in the atmosphere.

2020 marked the year when nations submitted their plans to reduce emissions, to comply with the Paris agreement. World Resources institute says Japan, Brazil and Russia contribute 2.56%, 2.79% and 4.84%, respectively, towards global emissions. These nations submitted Nationally Determined Contributions (NDCs) but the planned reduction in emissions are not enough to meet the global warming goals set in accordance with the Paris Agreement. US, India and China made no formal commitments.

Photo by Marek Piwnicki on Unsplash

The Intergovernmental Panel on Climate Change predicts that under business as usual the global mean temperature increasing by 1°C within the next ten years and by 3°C till the end of this century. Central North America and Southern Europe will have above average temperature increases. Increasing the volatility of weather patterns, reduce summer precipitation and soil moisture. The rise in sea levels is 20 cm by 2030. Communities all over the world will face disasters such as the Australian, Californian and Arctic wildfires. Currently, record breaking temperature have been recorded, causing a heatwave over northwestern US and Canada. Rising temperatures and sea levels expose major cities, a report by the Organisation for Economic Co-operation and Development has identified Miami and New York to be susceptible of coastal flooding by 2070, this will expose future assets of $5660.30 billion. In the recent past, over 628 lives were lost, more than 94 houses were severely damaged and according to WWF, 3 billion animals killed because of Hurricane Eta and the Australian bushfires.

The Global Investors Coalition on Climate Change (GICCC), a joint initiative of four regional climate change investor groups which represent more than US $24 trillion in assets, stated that the investors committed to several steps, including to “work with the companies in which we invest to ensure that they are minimizing and disclosing the risks and maximizing the opportunities presented by climate change and climate policy.” Similarly, The 2015 UN Paris Agreement on Climate Change commits governments to “Making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development.

Increasing Carbon emissions are significant when assessing future public policies, the health and safety of communities and investing pathways for excess capital. Therefore, its extremely important to introduce Carbon Analysis in the investment management process, not only to make more socially responsible decisions, but for protection against significant risks and to identify opportunities available in this ever growing market.

  1. https://www.carbonbrief.org/analysis-which-countries-met-the-uns-2020-deadline-to-raise-climate-ambition
  2. Policymaker Summary of Working Group I (Scientific Assessment of Climate Change)
  3. http://investorsonclimatechange.org/portfolio/global-investor-statement-climate-change/
  4. https://unfccc.int/process-and-meetings/the-paris-agreement/the-paris-agreement/key-aspects-of-the-paris-agreement

Mahin Ali

Head of Financial Engineering & Data

Former: Credit Risk Analyst, CIBC Education: University of Toronto, University of London, University of Oxford

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