Climate change poses a multitude of risks, from large-scale migration to water shortages. Recently, climate experts have increasingly focused on another aspect of the potential negative consequences of climate change – financial risks. Climate change can have a financial impact for companies and investors due to new government regulations, such as air pollution targets and carbon pricing, threats to infrastructure from climate conditions, or financial disclosure requirements.
In the oil sector, the ability to commercially produce resources from previously unreachable sources such as shale rock and ultra-deep waters has discredited concerns over oil supply shortages, and many analysts say global oil demand will peak within 10-15 years, in part due to climate and environment-related restrictions. Climate experts say the majority of fossil fuel resources must remain in the ground in order to reach the Paris agreement’s goal of limiting global warming to no more than 2 degrees Celsius. Energy majors are shifting their reserves from oil to natural gas, which emits less carbon, and questioning the economic viability of some capital intensive projects with long payback periods, such as drilling in the Artic. In the electricity sector, hydroelectric power is expected to become increasingly unreliable due to prolonged droughts related to climate change. Energy shortages and droughts would also have major implications for mining and agriculture. And in the transport sector, road, rail and shipping infrastructure will become more costly to protect from rising sea levels, flooding and extreme weather events.
In Latin America, where many countries are hugely reliant on export revenues from commodities, how should governments prepare for the potential economic impacts of climate risks? Are companies and investors in Latin America considering financial risk related to climate change and is pressure growing for more disclosure of climate risks?
Join us for a discussion on these questions with climate and energy experts and a presentation of the Inter-American Development Bank’s new report, “Stranded Assets: a Climate Risk Challenge.”
- Robert Litterman, Founding Partner, Kepos Capital
- Nancy Meyer, Associate Director of Climate Strategy, IHS
- Amal-Lee Amin, Climate Change Division Chief, Inter-American Development Bank
- Lisa Viscidi, Energy, Climate Change and Extractive Industries Program Director, Inter-American Dialogue