The IPCC 1.5 special report cannot be ignored. Our current pace of environmental degradation will lead to disastrous consequences. Now is not the time to put our heads in the ground and pretend that climate change does not exist. You cannot deny that some force is taking place, changing the inventory of our resources. I remember as a kid growing up in Niagara Falls, the first snow would start early October. Now, snow does not fall in my childhood town until January. Niagara residents would say that rain in October was supposed to be snow and that global warming turned the snow to rain.
Climate change is based on fundamental principles of equilibrium. If a process uses too much of a single resource, nature cannot catch up to replenish what was removed. We experience this principle in our day-to-day activities. Fortunately, we can take action. Through the will of concerned countries, the Paris Agreement was adopted. Delegates from countries committed to the Paris Agreement have gathered at Katowice, Poland for COP24. This meeting of the minds helps push climate change forward, albeit at a slow pace. However, technical, policy and financial experts come together and get the opportunity to address the world their findings.
In the wake of the IPCC 1.5 special report, it is becoming clear that the costs to combat climate change is too great for governments and non-profit financial organizations to bear. Financial experts echo this point of view and call out to private investors to help close the financial gap. After all, we are all in this together.
Financial institutions cleverly developed multiple mechanisms where investors can participate and get good returns. For example, investors can invest in new technology designed to minimize waste or shift to a low-carbon fund portfolio and invest in companies with low carbon emission processes. Financial revolutions occur in numbers, similar to switching to another service provider because of bad customer service, you can choose investments or products with low carbon footprints. Companies must evolve with consumer preferences and will be forced to make changes to stay viable.
Furthermore, ignoring climate change as an investor could expose significant risk and negatively impact returns. The Economist estimated that climate change would incur $4.3 trillion of losses in privately held assets from extreme weather. This means that investing in companies that have not protected their facilities from the effects of climate change may suffer significant costs that directly impact the return on investment.
Traditional methods of investment are no longer the status quo. Consumer demands and market changes must include climate change analysis as part of investment decision making. Although the estimated total investment to meet the 1.5-degree scenario may require up to $3.8 trillion from all parties, market demand and investment strategies are naturally moving to an environmentally conscious economy. We are moving to a place where the environment and the economy are no longer competing forces but can work synergistically. Financial experts are helping to build the mechanisms where the economy can continue to grow and lower pollution at all levels of industry.