Time for climate action

Business has role to play in countering climate change. Key IPCC report spells out dangers

11 August 2021 Wai-Shin Chan, Head of HSBC’s Climate Change Centre

The latest report from the Intergovernmental Panel on Climate Change is yet another wake-up call for governments to set ambitious, credible climate targets that cover both mitigation and adaptation. Companies with high-carbon activities must rethink business models and strategies, and industry has to be more innovative in developing lower carbon solutions.

All segments of the global economy need to prepare for the impacts of climate change. Here we list 12 points business must consider:

  • Human influence is affecting weather and climate extremes in every region. The report says human influence is ‘extremely likely’ to be the main driver of warming in the upper ocean and ‘very likely’ the main driver of glacial retreat. But the influence on increased concentrations of greenhouse gases in the atmosphere is ‘unequivocal’.
  • Atmospheric concentrations of methane and nitrous oxide are the highest for at least 800,000 years, carbon dioxide the highest for 2 million years. But these concentrations do not reflect actual emissions because the land and oceans have absorbed 56 per cent of CO2 emissions since 1970. And as cumulative emissions increase, the proportion absorbed decreases.
  • Land is warming faster than oceans. Temperatures over the oceans are 0.88°C higher than in 1850-1900, over land they have risen 1.59°C. The IPCC says the Paris Agreement goals of limiting temperature rises to 1.5°C and 2°C will be exceeded this century without deep reductions in CO2 and other greenhouse-gas emissions. But temperature rises will vary: the Arctic will warm at twice the global rate.
  • Precipitation will become more frequent and more intensive as temperatures rise. Extreme daily precipitation events are projected to intensify by about 7 per cent for each 1°C of global warming. And warming will increase the variation in rainfall associated with the El Niño-Southern Oscillation.
  • Sea levels are rising faster than in the last 3000 years – up around 20cm globally since 1900. Half the increase is from thermal expansion, 42 per cent from glacial and ice sheet loss, 8 per cent from changes in land water storage.
  • Climate sensitivity is near-linear: if atmospheric concentrations of CO2 double from pre-industrial times, surface temperatures would likely increase 2.5°C to 4°C.
  • Extreme events: warming increases their frequency and intensity.
  • Carbon sinks. Although CO2 can be removed and stored, gradually reversing temperature increases on land, not all climatic effects would be reversed and sea level declines could take millennia.
  • Climatic changes cannot be reversed quickly. Permafrost may not re-form for hundreds of years.
  • Highly disruptive events. Some events have a low-likelihood of occurrence, but their effects could be catastrophic. The collapse of ice sheets or abrupt changes to ocean circulation, for example, cannot be ruled out.
  • The carbon budget is running out. The carbon budget is how much CO2 can be emitted while still limiting warming. Some 2,390 GtCO2 has been emitted since 1850 but only 400 GtCO2 more can be emitted to have a two-thirds chance of limiting warming to 1.5°C – roughly eight more years at recent emission rates.
  • Regional effects are a lot more nuanced, which has implications for economic and business planning in the affected locations.

First published 10 August 2021.

Would you like to find out more? Click here.

Disclosure and disclaimer

More, collapsed
EU pioneers carbon import tax
Countries outside Europe will oppose levy on carbon-intense imports – or copy it
Join the conversation?

Join our Linkedin group to get an unparalleled view of macro and microeconomic events and trends from a bank that is a leader in both developed and emerging markets.