Carbon Tracker has released the following response to the Task Force
on Climate-related Financial Disclosures (TCFD) report, published by the Financial Stability Board.
The full report can be found here: https://www.fsb-tcfd.org/wp-content/uploads/2016/12/TCFD-Recommendations-Report-A4-14-Dec-2016.pdf
Making a market in climate-related financial risk
• Mark Carney, the Bank of England’s Governor and Chair of the Financial Stability Board (FSB), warned of the “tragedy of the horizon”, where the future impacts from climate change are felt beyond the traditional horizons of most financial actors.
• The FSB’s Task Force on climate-related financial disclosures (TCFD) has examined how greater transparency of climate-related risks would bring that horizon forward and, in Mr. Carney’s words “make the market” in climate-related financial risk.
Welcoming its publication, Mark Campanale, Founder & Executive Director of Carbon Tracker said: “The Task Force’s recommendations are the strongest signal yet that climate-related risk is financial risk. Bringing together years of essential work, the principles underlying the Task Force’s recommendations provide the foundation for climate-related financial disclosures that should be incorporated into financial reporting.”
Aligning business models with 2°C
• Even before last year’s watershed Paris Agreement, climate risk was high on the agenda of the world’s largest institutional investors and asset managers. Record-high shareholder support (over board opposition) for resolutions asking oil and gas companies to stress test their business models against a 2°C-consistent climate outcome demonstrates that this is squarely a financial concern.
Mark Campanale said: “Many of the great companies of our past have fallen victim to technological transitions that they could not see coming. The Task Force’s recommendations highlight the importance of companies’ boards engaging with the realities of climate-related risks and opportunities, in order that our fossil fuel companies do not tread the same path to extinction as Olivetti, Kodak and Blockbuster.”
Robert Schuwerk, Senior Counsel, at Carbon Tracker said: “Carbon Tracker’s work has highlighted the trillions of investors’ dollars at risk if fossil fuel companies continue to plan for business-as-usual while the rest of the world heads in the opposite direction. The Task Force’s recommendations provide the basis for simple, forward-looking disclosure of the degree to which companies business models are aligned to the targets agreed in Paris, a source of significant investor interest.”
Addressing the most critical sectors
• The report contains forward-looking recommendations for publicly traded companies and asset managers. It provides a template for best practices and a road map for better disclosure mandates to be taken forward by financial policymakers and market regulators.
• Most importantly, the TCFD has established a framework for fossil fuel companies to conduct and disclose scenario analysis to evaluate the impact of a pathway limiting warming to well below two degrees and provide some mechanism for evaluating sensitivity to commodity prices.
Robert Schuwerk said: “Carbon Tracker’s work has pointed to significant ‘group-think’ among fossil fuel companies, who typically foresee a future at odds with our globally-agreed climate targets and the development of low-carbon technologies. Utilising tools such as forward-looking scenarios and sensitivity analysis, the Task Force’s recommendations critically connect climate-related risks and financial reporting.”
Mark Campanale said: “Once taken up, the Task Force’s recommendations will significantly increase the transparency of companies’ assumptions around climate risk. But investors need to understand how the climate targets will impact companies, not whether the board believes those targets will be met. If they understand the potential impact they can then price the risk. The Task Force recommendations provide a useful step in generating such disclosure.”
The World’s Top Cities for Owning a Green Home
Demand for green homes has risen sharply in recent years. Dodge Data & Analytics’ SmartMarket Report stated that over half of homebuilders project that 60% or more of the homes they build will be green within the next three years.
While the outlook for green home is surging throughout the world, growth is far from uniform. The outlook in some cities remains much stronger than others. Here are some of the best cities in the world for building or buying a green home.
Vancouver has a population of nearly 650,000 people. It has a surprisingly low levels of pollution for a city its size. According to research from Siemens, air quality is significantly better than most other communities of the same size. The city government has expressed a desire to improve air quality and reduce CO2 emissions even further. They expect to cut air pollution by 30% by 2020. Many people in the community have green homes and the government is likely to offer new incentives for green homes in the future.
Philadelphia is rated as the best city in the United States to own a green home. Within a 12-month period, over one in three homes that were sold were environmentally friendly. Demand for green homes in Philadelphia is higher than other homes. The average green home costs 45% more than homes that lack green features.
Australia has begun making substantial progress on the green energy front in recent years. According to one company that offers house and land for sale near Townsville, a growing number of houses are built around sustainability.
Brazil is not known for its commitment to green energy. The city of Curitiba is an exception. Despite being surrounded by communities that lack its vision of a green renaissance, the Siemens report shows that the city is outperforming the global green living index.
Some indexes rank the city even higher. Grist ranks it as the third greenest city on earth.
“As a whole, the green urban areas in Curitiba are among the largest in the world and every inhabitant of the city has approximately 52 m² of nature to romp about in. Brazil’s green capital makes a tremendous effort to preserve the city’s natural environment and is regarded by many as one of the world’s best examples of green urban planning.”
When most people picture Boston, they usually envision a city filled with smog. This stereotype arises among people that have visited the city off and on over the last 50 years. However, it has made tremendous progress over the past decade and has started to become one of the greenest cities in the United States.
The changes are being driven in Fenway. This is one of the least developed areas of the city, so most new construction is focused on creating green building structures. Older parts of the city have existing housing, which is often decades old. After these buildings need to be replaced, the city will try to focus on green initiatives. This will help the city receive even more attention as a green city.
Denmark as a whole is an incredibly green country. Few people own cars and homes are minimalistic, which reduces CO2 emissions. Copenhagen leads the charge in the country’s commitment to green living, so it is rated as the cleanest city in all of Europe.
Copenhagen hasn’t needed to make nearly as much effort to earn this title as most other cities, largely due to the culture that rejects decadence and embraces sustainability. Citizens have coordinated with the government to boost green living, but most of these conditions are driven by free market ideals. They haven’t needed to rely nearly as extensively on central planning as San Francisco and other Western cities.
Cultural Nodes Are Driving the Green Housing Market
Some of the largest cities in the world are embracing a cosmopolitan view that encourages green living. This is propelling demand for green housing in their areas and the rest of the world. People that want to buy a green home should consider investing in one of these areas.
China Unexpectedly Emerging as Global Leader in Green Technology
In the late 20th century, China underwent an amazing industrial revolution. However, in the process, it produced far more pollution, which raised concerns about global warming. The United Nations Environmental Council placed a lot of pressure on China to reduce its carbon footprint. It is clearly making headway now and may actually be a shining example for the rest of the world to follow.
China is Taking Environmental Concerns More Seriously than Ever Before
In recent years, China has made tremendous progress. In 2014, the World Bank praised the Chinese government for integrating forest development, biodiversity conservation and carbon reduction strategies. According to the World Bank analysis, china increased its forest cover by nearly 50% between the late 1980s and 2005. While analysts stated that those levels were still significantly below the global average, they stated that China is clearly headed in the right direction.
“China has long been a forest-poor country. Though its forest cover increased from 13 percent in the 1980s to 18.2 percent by 2005 thanks to an extensive plantations program, the hectare per capita of 0.13 remained significantly below the world average of 0.6. With rapid economic growth, China’s forests came under intense pressure due to the growing demand for timber and pulpwood. The logging ban introduced by the government in 1998 further aggravated the wood shortage. This challenge was more acute in Guangxi, where combined with weak forest resources protection resulted in a threat to its unique biodiversity including one of the largest and most important representatives of karst ecosystem in the world.”
The government’s policies to improve forest area and reduce carbon emissions are highly encouraging, but their new focus on green energy is even more impressive. In May, Premier Li Keqiang announced that the country is tapering steel production and relying less on coal-powered electricity. They have made substantial investments in wind and energy power, which are beginning to make a difference all over the world. They are also investing more heavily in solar. In fact, they developed the world’s largest floating solar plant.
Many environmental experts feel that the country has gone from being one of the worst contributors to climate change to a shining role model in the quest to save the environment.
What drove China to make these changes? The biggest incentive was the need to save it so when people from pollution. National Geographic reports that approximately 1.1 million people die from air pollution in China every year. The government needed to institute massive changes to reverse this epidemic.
Additional progress it is still needed
Nations around the world should applaud China for making such revolutionary changes to save its own citizens in the rest of the world. However, the country still needs to implement more changes to set itself on the right track.
The government has passed a number of regulations to improve air quality. However, many businesses have been reluctant to follow them.
The Ministry of Environmental Protection surveyed nearly 20,000 companies across northern China. They found that 70% of those companies or nearly 14,000 failed to meet environmental standards.
Some of the violations were fairly benign and easy to rectify. Others were far more severe. According to the report, which was published on a state new site, nearly 5,000 companies were operating in on off the rise locations or fail to secure the right environmental permits. The ministry of environmental protection states that stricter enforcement is necessary.
Despite the fact there are still areas for improvement, China is still headed in the right direction. It simply needs to examine some of the ongoing challenges and find new ways to save money.
China May Lead the World in the Fight Against Climate Change
Li Keqiang and other Chinese officials are taking environmental concerns far more seriously than their predecessors. The country is expected to roll out new policies in the future and may be one of the global leaders in the fight against climate change.
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