Many of the world’s population are aware of the climate change threat to ‘life as we know it’, but do you realise and accept that, as The Guardian wrote this week, “Earth is already becoming unliveable. Will governments act to stop this disaster from getting worse?”
But it is already your problem if you have been flooded, suffering from forest fires, etc. and you will be as flash floods, fires grow out of control.
THE COST of Climate Change
On this topic, BofA Global Research wrote this week that the cost:
- is frankly mind-boggling and at times seems so farfetched that net-zero might never be achieved. It’ll certainly be expensive, but we believe that it can be done with technology, the economy, markets and ESG joining forces.
- From today, we’ll have to invest $5 trillion every year for the next 30 years – more than the US tax base. That's $150 trillion in total or 3x the COVID-19 stimulus bill this decade.
- We estimate decarbonization could increase global inflation by up to 3% a year as central bank balance sheet funding rises by $500 billion per annum.
- In our net-zero scenario, CO2 prices may need to hit nearer $200/t if the International Energy Agency assumes nearly $5 trillion of annual investments from now to 2050.
However, the cost of inaction could be more significant: over 3% of GDP could be lost every year by 2030, growing to $69 trillion by 2100. Around 5% (approx. $2.3 trillion) of global equity stock market value could be wiped out permanently by climate policy re-pricing, with a potentially extreme hit to corporate earnings for certain sectors.
The need for energy transition investment to rise to over $5 trillion per year will create opportunities. This is a net positive for enablers like utilities, industrials, renewables, industrial gases & batteries deployed at scale, such as green hydrogen, green mining, and carbon capture.
And finally, what kind of companies look set to benefit the most today. See our stock picks ‘26 companies to buy ahead of COP26’ – a selection of companies with over $1 trillion of market exposure that will be impacted here and now from the COP26 outcomes.
This week Etihad Airways raised $1.2 billion in the first sustainability-linked loan (SLL) tied to environmental, social and governance (ESG) targets in global aviation which is part of their global strategy:
- Adam Boukadida, chief financial officer at Etihad Aviation Group, said: "Financing our operations in a way that supports both our planet and the people in our local communities is the natural next step of our financing strategy.” He continued, "Our goals will have a real-world impact, and to underscore our accountability, we have committed to penalties and incentives of up to $5.5 million linked to our progress against key performance indicators.”
- Last year, Etihad committed to purchasing carbon offsets to completely neutralise the CO2 emissions of its flagship Greenliner 787-10 aircraft for a full year of operations in 2021.
But they haven’t committed to reducing their number of flights and/or changing their business model to really reduce their global impact.
Greta Thunberg has stopped flying altogether.
Corporate treasury impact
Corporate treasury departments can have an impact on the whole company level and on a personal level.
On a company level the department can:
- Influence investment decisions, e.g. only in eco-friendly investments
- How the company operates and manages its supply chains
On a personal level the department can:
- travel less
- have more virtual meetings
Every aspect of our business and personal lives needs to undergo fundamental change.
CTMfile take: But what has CTMfile done to fundamentally change our climate change impact? Almost nothing, apart from cutting out travelling to meetings – but that was mainly due to the COVID-19 pandemic. Just like most of the rest-of-the-business world. Conclusion: MANKIND IS IN TROUBLE. We need to do much more NOW.
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