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The climate edition: The journey from denial to crisis

06 Mar 2020

  Aviva

Aviva Investors: The climate edition: The journey from denial to crisis

More than 40 years since a senior NASA scientist told US Congress of concerns about human activities disrupting the climate, experts are warning of an impending climate catastrophe and the financial sector is wrestling with the implications.

Think of the energy created from igniting 15,000 tonnes of TNT; that’s the size of the explosion made by the atomic bomb dropped on Hiroshima in 1945. Scale up the blast 400,000 times and you have the daily global energy imbalance that is causing the world to warm and threatens environmental breakdown.1
 
Grappling with this unsettled former NASA scientist Dr. James Hansen. After retirement, he joined Columbia University’s Earth Institute and has become a leading climate campaigner – but his message is not one everyone wishes to hear. He claims efforts have been made to silence him as he highlights the impact of humans on the planet.2 In particular, by burning coal, oil and gas to release energy, carbon locked up for millennia has been released, sending atmospheric carbon dioxide (CO2) to its highest level for 800,000 years.3

“Adding CO2 to the air is like throwing another blanket on the bed,” Hansen says. “It reduces Earth’s heat radiation to space, so there’s a temporary energy imbalance. More energy is coming in than going out, until Earth warms up enough to again radiate to space as much energy as it absorbs from the sun. So, the key quantity is Earth’s energy imbalance. Is there more energy coming in than going out?”4
 
Yes, is the short answer. The daily global energy imbalance is about six-tenths of a watt per square metre. “That may not sound like much, but when added up over the whole world, it’s enormous,” says Hansen. “It’s about 20 times greater than the rate of energy use by all humanity.”

With humans “throwing blankets on the bed” at some pace, the world is tending to warm5 and natural equilibria are being altered. Methane, an even-more powerful warming gas than carbon dioxide, has been increasing too, leaking from modern gas distribution networks, rotting food and ruminating animals. Fluorinated gases and nitrous oxide are also being emitted from various industrial processes, with a notable ability to warm.6
 
“The evidence that the climate is changing is overwhelming,” says Professor Richard Tol from the University of Sussex, a former member of the Intergovernmental Panel on Climate Change (IPCC) and joint winner of the Nobel Peace Prize for contributions to knowledge on global warming.7 “And the evidence that humans are a major – if not the main cause – is also overwhelming. We see that through different lines of evidence. We see it in the paleo record and in the instrumental record. We’ve seen it in well-calibrated, complicated climate models, and we see it in simpler models that are essentially based on the first principles of physics. All these lines of evidence indicate that climate is changing and that humans are the main cause.”

Just like Tol, most scientists dismiss the idea human-induced climate change is a hoax, as US President Trump once famously suggested.8 (Nevertheless, Tol rejects the widely-publicised claim that “97 per cent of scientists agree”9 on climate warming. He says that is “bogus”, because of the way the net for sample data was cast.)

The consensus view is that human actions have shifted the climate into a new era – the Anthropocene10 – where humans are in the driving seat. In this phase, atmospheric CO2 has reached “the dangerous zone”, according to Hansen, more than 15 per cent above the “long-term safe” level of 350 parts per million.11
The pace of change is startling. Although the earth has experienced phases of heating and cooling over millennia, atmospheric temperature is increasing around ten times faster than ever before, too fast for many plants and animals to adapt.12 And the processes triggered have some way to run, because so much of the Earth’s surface is covered in water.
 
“Most of the heat we have been putting in the atmosphere actually disappears into the ocean,” Tol explains. “Essentially, what we are doing is heating up the ocean very, very slowly. Even if we were to stop emitting CO2 now, the world would continue to warm for another 50 or 100 years. The same is true of the oceans. Sea level rise is essentially driven by the heating of the ocean, and the expansion of sea water. We have set something in motion that will take at least a millennium to work through.”

For now, the changes in the cryosphere are most obvious in shrinking sea ice and calving glaciers. Satellite images of Greenland suggest around 278 gigatonnes of ice is melting each year, releasing enough water to fill more than 110,000 Olympic swimming pools.13 As the Earth is exposed, it can absorb more solar energy than the ultra-reflective ice surface it has replaced.
 

1. Facing a warmer, more volatile world

With more energy in the atmosphere, circulation patterns are changing, bringing hotter and drier weather in places, but more extreme rainfall and flooding in others. Extreme temperature events have become about 20 times more likely since 1950,14 with a number of new records set in the last decade.15 The idea of temperatures literally reaching “off the charts” raises the prospect that current heat indices may need to be revised.16
 
With higher temperatures, hurricanes intensify more quickly, rapidly swelling with water vapour.17 US academics Michael Mann and Andrew Dessler say that made Hurricane Dorian “bigger, wetter and more deadly”, for instance, bringing a devastating storm surge and winds raging over 220 miles per hour.18
Meanwhile, population growth is changing the nature of the natural world, exacerbating the warming trend and contributing to “biological annihilation”19 (see Biological annihilation: The facts behind the threats to biodiversity and ecosystems). Felling forests and clearing peatlands release CO2 and reduce future uptake through photosynthesis, with less CO2 absorbed and less clean oxygen released. As we clear around one football pitch of forest every second,20 the Earth’s potential to self regulate is being diminished.
 
“We need to pay as much attention to how good the natural environment is at soaking up carbon as to how much we’re emitting,” says Dieter Helm, professor of economics at the University of Oxford. “When it comes to that, the climate change story is much worse than people are currently projecting. Until recently, you didn’t hear much discussion about the scale of destruction of rainforest, huge carbon sinks of natural sequestration. What’s going on in the Amazon, the Congo, the Mekong Delta and elsewhere is very, very serious.” Now the race is on to protect vast carbon stores like the Congo’s Cuvette Centrale peatlands, recently discovered to be much larger than first thought, holding the equivalent of 15 years’ worth of US fossil-fuel emissions.21

With ecosystems degrading, extinction rates are said to running more than one hundred times faster than the “background” rate, where one to five species are lost a year. Some estimates put the figure even higher.22 Erosion and soil degradation are widespread, with topsoil being lost around ten times faster than it is being replenished.23

So, multiple parts of the biosphere are being altered simultaneously, ringing warning bells for those watching the natural world.

Figure 1: Hotting up: Levels of atmospheric carbon dioxide
Source: NOAA NCDC Paleoclimatology Program, 2008, cited by Professor Chris Budd in The Mathematics of Climate Change, 2019. NOAA, reported in EarthSky, 17 June 2019
 

2. Assessing the environmental fallout

Several major impacts could follow. First, large parts of the globe may become so inhospitable that human ecosystems are disrupted. Rick Stathers, responsible investment analyst and climate change specialist at Aviva Investors, says signs of this are evident already.
 
“Think of the recent groups of migrants leaving Syria for Europe or the Central American migrant caravans heading to the United States that President Trump has been so vocal about. Drought is certainly not the only factor, but it has played a part,” he says.
 
Second, floodplains and coastal areas might be threatened if extreme weather events become more common and sea levels continue to rise. Vulnerable areas include those housing some of the world’s megacities – vast conurbations, each populated by more than ten million people. Low-lying areas of China, India, Japan, Indonesia, Bangladesh and the United States are all high-risk zones, with concentrated populations living close to today’s sea levels.24

Conversely, well-used waterways like the Rhine, one of Europe’s longest rivers, may decline and become impassable to shipping if the glaciers feeding them continue to shrink and European summer temperatures rise. (The impact has already slowed goods transport, hitting German GDP in 2018.) In fact, many areas of economic activity may need to be wholly rethought; the IPCC has called for “rapid, far-reaching and unprecedented changes in all aspects of society”.25
 
Significantly, not all climate impacts will be negative: that will depend where you are, what you are doing and what timeframe you are looking at. Professor Solomon Hsiang from the University of California, Berkeley, thinks the best way to visualise this is to imagine a U-curve, with temperature on the x-axis and impact on the y. In very cold temperatures, negative impacts tend to be elevated – for example, as people experience poor health in cold weather. Equally, very high temperatures tend to be problematic. The sweet spot is where the base of the curve falls away, in the mid-zone. Higher temperatures will shift the curve to the right; the outcome will vary in each case, depending on where the trajectory began.26
 

This is a crisis…

One uncomfortable thought is that the poorest are most vulnerable in periods of environmental upheaval. The UK’s Institute of Public Policy Research (IPPR) has declared, “This is a crisis”, something mainstream political debate has utterly failed to address.27 The language used by the IPPR marks a step change in the climate debate, where discussions were once carefully worded and laced with caveats. Like Extinction Rebellion, whose environmental campaigners have been gluing themselves to public transport and using drones to disrupt air transport, the IPPR believes the time for tiptoeing around the issues is over.

“We are not alone in using increasingly bold, but perhaps more truthful, language now,” Luke Murphy, head of the IPPR’s Environmental Justice Commission, says as he flags the policy vacuum. “In the past, the messages were not so strong, and there was a sense that people did not wish to scare. The idea was that we might be able to make incremental changes to address environmental issues, and that was the best way to move forward. Not anymore. People need to be aware of the fundamental risks, and we need urgent and transformational change to address them.”

For some, the only solution is a less growth-driven world, where aspirations are modest and excessive consumption is frowned on. Is the way forward “bottomup”, where billions make small-scale changes, eating food produced locally to reduce unnecessary energy consumption, insulating buildings to prevent heat loss, and recycling? Or will the human tendency to focus on the present scupper change? (see Apathy, anger, action: The psychology of climate change).

The alternative response would be strongly top-down, through state-imposed price or quantity controls such as carbon quotas or taxes, to internalise the externalities (see ‘Sticking’ it to carbon: The pros and cons of taxing emissions). Past experience suggests market-based systems could trigger green innovation as well.

“The introduction of the European Emissions Trading Scheme (ETS) led to a 30 per cent rise in clean-patent filings from companies impacted by the policy,” assistant associate professor Antoine Dechezleprêtre from London’s Grantham Institute of Climate Change and the Environment points out. “The policy is EU-wide, only impacting selected industry sectors. There is no uncertainty about its future; the only uncertainty is the carbon price. At the beginning it was around €30 a tonne, and that drove lots of innovation. Then it fell to €5-10 a tonne, and filings dropped because at that level companies don’t feel it. But it shows economic incentives work.”

Where carbon taxes have been introduced, most governments have pitched way below the “severe mitigation” scenario set out in the Paris Agreement, intended to cap temperatures at below two degrees Celsius above pre-industrial levels. (The “severe mitigation” scenario gives a 50 per cent chance of meeting that two-degree cap.)

“The Paris Agreement was made on the basis of countries making voluntary commitments,” says Steve Waygood, chief responsible investment officer at Aviva Investors. “When you add up all of those commitments, they do not get us anywhere near two degrees; they get us nearer to 3.2 degrees.” Meanwhile, policy conflicts abound: it is not unusual for an administration to negotiate a carbon tax, but have fossil-fuel subsidies running alongside.

With the outlook rather opaque, some are hoping new technologies will emerge to reverse or counter the impact of the build-up of warming gases. There are discussions around geoengineering – deliberate, large-scale interventions in natural systems to counter climate change. They range from using space reflectors to block incoming solar energy28 to compressing and injecting CO2 deep underground. (The latter has already been carried out at small scale by the Norwegian energy company Equinor,29 but there are fears that scaling up might trigger earthquakes,30 ultimately allowing the gas to leak back out.)
This is the minefield policymakers must navigate. Although human-induced climate change has been described as “the greatest market failure that the world has seen”,31 initiatives to find solutions are far from consistent or co-ordinated. Witness the events at the 2019 United Nations Climate Change Conference (COP25), where UN climate expert Alden Meyer reported an “almost total disconnect” between the science and what negotiators delivered.32

 

What happens next?

Meanwhile, academics are grappling with the processes that drive the climate to improve insights into what might happen next. In the last four decades, the models and variables being considered have developed enormously, as shown in Figure 2.

Figure 2: Thinking connectedly: climate modelling
Source: Moss et al. 2013, cited by Budd in The Mathematics of Climate Change
 
“The climate is very complex,” says Professor Chris Budd, a mathematician at the University of Bath, whose interest in using partial differential equations for problem solving has taken him deep into the operations of the Met office.33 “It is hard to get good data, especially of the initial states. The equations for climate are hard to solve and may have multiple solutions. Chaotic behaviour is always present, and it can be hard to distinguish natural effects from human intervention.” Nevertheless, progress is being made, using supercomputers that carry out around 14,000 trillion arithmetic operations per second.

“In a typical forecast, there are about a billion discrete equations,” Budd explains. “Errors can arise in the way that the physics is represented, the algorithms used to solve that physics, the coding up of those algorithms, the data that is fed in to the calculation, and the initial conditions used to start the whole system off.”

The undertaking is riddled with uncertainty, and that includes anticipating the way in which companies and consumers might adjust their choices. So far, comparatively few in developed economies have changed their high-carbon ways, something psychologist Per Espen Stoknes blames on people’s inability to handle doom-laden visions of the future.34 The problem, he believes, is “apocalypse fatigue” – we are simply exhausted by the prospect of disaster. But if large numbers perform a volte-face, the equations could change radically.
Combine this mega-unknown with how climate might vary anyway, and the differences in the way individual climate models function, and you can appreciate why the range of potential outcomes is large (see Figure 3).

Figure 3: What do we know? Uncertainty in mean temperature projections
GCM: General Circulation Model. Source: Sources of uncertainty in CMIP5 projections, Ed Hawkins, 2013
 
Furthermore, as climate science evolves, large numbers or ensembles of simulations are being used to address the problem of climate attribution. This is a comparatively new field, designed to disentangle the drivers of natural disasters. “A dice may be loaded to come up six,” explains Dr. Friederike Otto from the Environmental Change Institute at the University of Oxford. “But it might have come up six anyway without the loading.”35

The question is: what exactly have we, as humans, done? This is a sensitive area, with major implications for companies, governments and others with a duty to plan.

Probabilistic event attribution involves modelling how often an extreme weather event might occur in experiments representing the world as it is, then comparing it to a scenario with human impacts removed (allowing for uncertainties).

“Since I have been working on this, it’s changed from being something that people had suggested you could do theoretically to actually doing it at scale,” Otto says. “The main thing that was necessary for that to happen was that computing power has become available, so you can run large ensemble simulations of climate models; not just once or twice, but several hundred times to actually look at weather.”

Recent findings show there are certainly cases where human actions have contributed to “loading the dice”. For example, Otto’s work suggests human actions made the 2019 heatwave that saw the temperature hit 45 degrees Celsius in France near Nîmes at least five times more likely.36 With European summer heatwaves, her work shows human activities have been a game changer. Conversely, there are situations where human actions seem to be making extreme events less likely; less spring-time flooding associated with snow melt, for instance.37 In others, it is simply not possible to say.
 

The blame game: Acts of God or acts of man?

Given what we know now, is it possible to allocate blame, if human actions contribute to more extreme weather and losses follow? The answer from climate modellers – where researchers have looked at both country and company-level attributions – is a qualified yes.

“When we did the study looking at different countries, you could use all the emissions since the beginning of the Industrial Revolution,” Otto explains. “Or you could say, ‘Well, you can’t say that people really knew about climate change at the time. Are they really responsible for it? Maybe we only take the emissions from 1990, when the first IPCC report was published.’ You can do that as well, and of course you will get a different number. There is a large difference between the two. Scientifically you can do both, and both make sense, but which one is the one you might want to use in court, or for any other purpose?”.

Proposals are now being developed for the allocation of climate-related damages. The first of these suggested damages might be allocated by market-share theory (i.e. CO2 contribution, multiplied by the damages caused by the climate-related event). This approach assumed CO2 emissions and climate events have a linear relationship. In fact, climate events may have other kinds of relationships to atmospheric CO2 levels; they may be more extreme, so the impacts increase rapidly or exponentially, or sigmoidal in shape (like a stretched out ‘S’).38

Analysis of these relationships is quite new, and the implications of integrating non-linear relationships in emissions and impact profiles are significant.39 For example, if you take an S-shaped emissions profile, the impacts change markedly through time. Depending when the calculation is carried out and when emissions are released, the attributable damage liability might be lower than that calculated from a linear profile or more than three times greater.
 

Deep impact

Tracking and understanding these sensitivities is becoming increasingly important for decision makers around the world. The implications run deep for insurers and other asset owners: there are specific physical risks associated with the changing climate; there are litigation risks that might come from those who believe they have suffered losses; and there are transition challenges that will come from the shift to a lower-carbon economy.

Transition risks might be especially acute in a rapid-change scenario – the “too late, too sudden” shift European regulators are concerned about.40 A wholesale reassessment of prospects could destabilise markets and spark a sell off, bringing a “climate Minsky moment”, as the outgoing Governor of the Bank of England Mark Carney has warned.41 It is not unreasonable to imagine a rapid shift in attitudes could see the value of carbon-heavy investments change quite substantially (see Stranded! When assets become liabilities).

“If we take the Paris targets seriously, the implication of that is massive destruction of capital,” Tol points out. “Coal-fired power plants have a lifetime of 40 to 60 years; for gas-fired power plants it’s 20 to 40 years. Chemical plants – their lifetime is also measured in decades. If we are serious about getting emissions down, it means a whole lot of existing capital will have to be prematurely retired, long before the end of its technical or economic life.”
In financial markets, bond investors have already changed the frame of reference for assessing earnings prospects for oil exploration and production companies, as renewables have become more competitive.

“They used to talk about cash flows ‘at some point’,” says Tom Chinery, investment-grade credit portfolio manager at Aviva Investors. “Now they’re talking about free cash flows. There is much less focus on the future and what might happen because of the uncertainty derived from people’s thoughts on climate change and new technology. The production cost of renewables makes oil in five years’ time a little less certain. The way people look at it has changed. It doesn’t mean they’re not buying, but the confidence further out is diminished.”
 
In the new environment, the number of institutional investors committed to cutting fossil-fuel assets out of their portfolios has risen more than six-fold, from around 180 in 2014 to more than 1,100 in 2019.42 Among the major asset owners changing course is Norway’s sovereign wealth fund, which will divest from oil and gas explorers but retain exposure to clean-energy technologies.43
 

Adapting to the transition

These changes imply there is detailed work to be done by financial institutions around Value-at-Risk, as they seek to understand what the changing environment will mean. How might assets be impacted, and how might institutions’ actions influence others?

There are several companies, like Carbon Delta, working on granular analysis, designed to establish how climate change could affect asset values, security-by-security. “Carbon Value-at-Risk (CVaR) tends to capture Scope 1 emissions only at the moment,” says Aviva Investors’ Stathers. “That’s the emissions generated by a company directly; there is no consideration of the risks in the value chain.”
 
Sensitivity varies quite considerably – according to a company’s footprint, sector and business mix, based on a 15-year horizon. The data is not comprehensive, but it is a start.

Carbon Delta has back-tested notional portfolios of shares differentiated by CVaR to see whether there are performance implications from following lower-carbon strategies. It took buckets of global equities, divided by their sensitivity to a two-degree policy environment, then compared cumulative returns with a MSCI World exchange-traded fund. With regular rebalancing, the lowest-carbon strategy outperformed strongly between 2013 and 2018, by around ten per cent over five years (see Figure 4).44

Figure 4: Might a low carbon strategy pay off? Back testing 2°C CVaR
Note: Returns from bucket 1 (with the lowest 2°C Scenario Policy CVaR) outperformed the other four buckets and the whole portfolio, indicating an investor who would have invested in the lowest CVaR securities in 2013 (and rebalanced annually) could have generated ten per cent cumulative outperformance. Buckets are ordered by increasing levels of climate risk – i.e. bucket 1 contains the securities with the lowest levels of risk and bucket 5 contains those with the highest levels of risk. Source: Carbon Delta, April 2019

This suggests investors may already be re-evaluating the earnings potential of companies with carbon-heavy assets, but the results also conceal important underlying market trends. In Carbon Delta’s study period, oil and commodity prices were under pressure (not wholly related to the climate debate), while technology, a sector that tends to score well on carbon metrics anyway, performed strongly.

“Some investors are already comparing the oil and gas sector to the tobacco situation,” says Frédérique Nakache, European equity portfolio manager at Aviva Investors. However, she believes that excluding these companies from investment portfolios – as some have – could be overly simplistic. “In my view, the sector will play a key role in the energy transition as it brings knowledge and resources to bear in key areas, including the transition from thermal coal to gas, and from conventional energy to renewables and to bioplastics.”

“Excluding fossil fuels will not make as much difference as you might expect,” says Jaime Ramos Martin, global equities portfolio manager at Aviva Investors. “The carbon intensity in other parts of the economy is also quite high.” Instead, he advocates an approach that does “much, much more” than exclusion, concentrating on companies providing solutions to reduce carbon emissions or helping other parts of the economy to adjust.
 
This means appreciating the dramatic shift in orientation being flagged by academics like Dechezleprêtre at the Grantham Institute to meet the IPCC’s target. “The change will have to be massive,” he says. “We need to reduce the carbon intensity of the global economy by at least 60 per cent by 2050. That will require a seismic shift. It’s not the direction we’ve been taking so far. There isn’t a single country where there has been that large a drop in emissions; it’s not been done anywhere yet.”

Equity market valuations of some “climate transition” players are already quite elevated, like small European independent power producers. “They are not cheap,” admits Françoise Cespedes, equities portfolio manager at Aviva Investors. “We need to bear in mind they are project companies, with a huge backlog of projects. We can’t talk about a bubble in valuations yet, given there is a backlog and these companies are growing very fast indeed. But part of the re-rating of these stocks has been driven by massive inflows coming from the recent development of climate equity strategies – hence some caution is needed when considering new investments.”


Finding hope

Climate change feels like the proverbial elephant in the room: something everyone is aware of but no-one has managed to tackle. Beyond the deniers, it has suffered from the tragedy of the commons and bystander problems: why act when others will hopefully act for you? But as evidence builds of how painful – or even impossible – “business as usual” might be, it cannot be ignored.
 
There is now a sense of urgency, with complex models being used to explore questions of human action and causation and detailed mapping to track risks under various scenarios. Opportunities to reshape the inner workings of the economy, to create a world where growth is achieved with a lighter environmental footprint, are also vast.

AIQ has previously covered the need to think more intelligently about the role of public and private institutions when tackling big social and environmental challenges. And while we know markets can fail (climate change perhaps being the most severe example), when guided in the right direction, the creative powers of markets are nothing short of staggering. By fusing this with a deeper understanding of the psychology behind human behaviour, as well as more transparent data collection and effective insight generation, there is still cause for hope.

“Make no mistake, this is without question the biggest issue we need to contend with this century,” says Waygood. “Our whole society is at risk; it is only by harnessing the powers of capitalism that we stand a fighting chance”.

References
  1. ‘Why I must speak out about climate change’, TED lecture by James Hansen, February 2012
  2. Andrew C. Revkin, ‘Climate expert says NASA tried to silence Him’, New York Times, 29 January 2006
  3. Cook et al., ‘Quantifying the consensus on anthropogenic global warming in the scientific literature’, IOP Publishing Ltd, 15 May 2013
  4. ‘Why I must speak out about climate change’, TED lecture by James Hansen, February 2012
  5. Cook et al., ‘Quantifying the consensus on anthropogenic global warming in the scientific literature’, IOP Publishing Ltd, 15 May 2013
  6. ‘Overview of Greenhouse Gases’, United States Environmental Protection Agency
  7. ‘The Nobel Peace Prize for 2007’, The Nobel Prize, 12 October 2007
  8. Jeff Mason, ‘Trump, on climate, says he won't jeopardize U.S. wealth on 'dreams'’, Reuters, 26 August 2019
  9. Cook et al., ‘Quantifying the consensus on anthropogenic global warming in the scientific literature’, IOP Publishing Ltd, 15 May 2013
  10. ‘Results of binding vote by AWG’, Working Group on the ‘Anthropocene’, Subcommission on Quaternary Stratigraphy, 21 May 2019
  11. James Hansen, ‘Irreversible climate change, fee and dividend and the fossil fuel industry’, Climate Science, Awareness and Solutions, Earth Institute, Columbia University, 27 June 2019
  12. Professor Dame Julia Slingo, ‘Climate change: A defining challenge for the 21st Century’, Gresham College, 14 June 2018
  13. Kelly Levin and Eliza Northrop, ‘4 things to know about the IPCC Special Report on the ocean and cryosphere’, World Resources Institute, 25 September 2019
  14. Laurie Laybourn-Langton, Lesley Rankin and Darren Baxter, ‘This is a crisis. Facing up to the age of environmental breakdown’, IPPR, 12 February 2019
  15. Jeff Masters, ‘October 2019: Earth’s second warmest October on record’, Scientific American, 18 November 2019
  16. Stephen Leahy, ‘Off-the-charts’ heat to affect millions in U.S. in coming decades’, National Geographic, 16 July 2019
  17. Michael Mann and Andrew E Dessler, ‘Global heating made Hurricane Dorian bigger, wetter - and more deadly’, The Guardian, 4 September 2019
  18. Gabriella Borter, ‘‘Monster’ Hurricane Dorian pummels Bahamas, forecast to threaten Florida’, Reuters, 1 September 2019
  19. Paul Ceballos, Paul R. Ehrlich and Rodolfo Dirzo, ‘Biological annihilation via the ongoing sixth mass extinction signaled by vertebrate population losses and declines’, Proceedings of the National Academy of Sciences, July 2017
  20. Damian Carrington, Niko Kommenda, Pablo Gutiérrez and Cath Levett, ‘One football pitch of forest lost every second in 2017, data reveals’, The Guardian, 27 June 2018
  21. ‘Vow to protect massive African peatland a huge win for planet’, UN environment programme, 19 March 2019
  22. Laurie Laybourn-Langton et al., ‘This is a crisis. Facing up to the age of environmental breakdown’, IPPR, 12 February 2019
  23. Laurie Laybourn-Langton et al., ‘This is a crisis. Facing up to the age of environmental breakdown’, IPPR, 12 February 2019
  24. ‘Cities and Climate Change: An urgent agenda’, The World Bank, December 2010, Vol. 10
  25. Christophe McGlade and Paul Ekins, ‘The geographical distribution of fossil fuels unused when limiting global warming to 2 °C’, Nature 517, 187–190, 2015
  26. ‘Climate Winners and Losers’, climate one, 29 May 2018
  27. Laurie Laybourn-Langton et al., ‘This is a crisis. Facing up to the age of environmental breakdown’, IPPR, 12 February 2019
  28. ‘What Is Geoengineering?’, Oxford Geoengineering Programme
  29. Nathalie Thomas, ‘Carbon capture schemes urged to be more ambitious’, Financial Times, 1 July 2019
  30. Jeff Hecht, ‘Earthquake risk for carbon capture and storage schemes’, 20 June 2012
  31. Alison Benjamin, ‘Stern: Climate change a 'market failure'’, The Guardian, 29 November 2007
  32. Alden Meyer and Rachel Cleetus, ‘World’s nations take immoral stance at COP25, side with Trump, Bolsonaro rather than youth across the globe,’ Union of Concerned Scientists, 15 December 2019
  33. Professor Chris Budd OBE, ‘The mathematics of climate change’, Gresham College, 13 November 2018
  34. Per Espen Stokes, ‘How to transform apocalypse fatigue into action on global warming’, TED, September 2017
  35. Friedereike Otto, Rachel James and Myles Allen, ‘The science of attributing extreme weather events, and its potential contribution to assessing loss and damage associated with climate change impacts’, Environmental Change Institute, School of Geography and the Environment, University of Oxford
  36. Damian Carrington, ‘Climate change made European heatwave at least five times likelier’, The Guardian, 2 July 2019
  37. Friedereike Otto, Rachel James and Myles Allen, ‘The science of attributing extreme weather events, and its potential contribution to assessing loss and damage associated with climate change impacts’, Environmental Change Institute, School of Geography and the Environment, University of Oxford
  38. Luke J Harrington and Friederike E.L. Otto, ‘Attributable damage liability in a non-linear climate’, Climatic Change 153, 15-20, 2019
  39. Luke J Harrington and Friederike E.L. Otto, ‘Attributable damage liability in a non-linear climate’, Climatic Change 153, 15-20, 2019
  40. ‘Too late, too sudden: Transition to a low-carbon economy and systemic risk’, ESRB Advisory Scientific Committee, Reports of the Advisory Scientific Committee. No 6, February 2016
  41. Mark Carney et al., ‘Open letter on climate-related financial risks’, Bank of England, 17 April 2019
  42. Billy Nauman, ‘Sharp rise in number of investors dumping fossil fuel stocks’, Financial Times, 9 September 2019
  43. Adam Vaughan, ‘Norway to sell off fossil fuel stocks worth more than $8 billion’, New Scientist, 12 June 2019
  44. ‘Backtesting climate value-at-risk yields 10% outperformance against developed markets equity index’, The Emission, Issue 5, 2 April 2019

Important information
Except where stated as otherwise, the source of all information is Aviva Investors Global Services Limited (Aviva Investors) as at 27 January 2020. Unless stated otherwise any view sand opinions are those of Aviva Investors. They should not be viewed as indicating any guarantee of return from an investment managed by Aviva Investors nor as advice of any nature. Information contained herein has been obtained from sources believed to be reliable but has not been independently verified by Aviva Investors and is not guaranteed to be accurate. Past performance is not a guide to the future. The value of an investment and any income from it may go down as well as up and the investor may not get back the original amount invested. Nothing in this document, including any references to specific securities, assets classes and financial markets is intended to or should be construed as advice or recommendations of any nature. This document is not a recommendation to sell or purchase any investment.
In the UK & Europe this document has been prepared and issued by Aviva Investors Global Services Limited, registered in England No.1151805. Registered Office: St. Helen’s, 1 Undershaft, London, EC3P 3DQ. Authorised and regulated in the UK by the Financial Conduct Authority. Contact us at Aviva Investors Global Services Limited, St. Helen’s, 1 Undershaft, London, EC3P 3DQ. Telephone calls to Aviva Investors may be recorded for training or monitoring purposes. In Singapore, this document is being circulated by way of an arrangement with Aviva Investors Asia Pte. Limited for distribution to institutional investors only. Please note that Aviva Investors Asia Pte. Limited does not provide any independent research or analysis in the substance or preparation of this document. Recipients of this document are to contact Aviva Investors Asia Pte. Limited in respect of any matters arising from, or in connection with, this document.  Aviva Investors Asia Pte.  Limited, a company incorporated under the laws of Singapore with registration number200813519W, holds a valid Capital Markets Services Licence to carry out fund management activities issued under the Securities and Futures Act (Singapore Statute Cap. 289) and Asian Exempt Financial Adviser for the purposes of the Financial Advisers Act (Singapore Statute Cap.110). Registered Office: 1Raffles Quay, #27-13 South Tower, Singapore 048583.In Australia, this document is being circulated by way of an arrangement with Aviva Investors Pacific Pty Ltd for distribution to wholesale investors only. Please note that Aviva Investors Pacific Pty Ltd does not provide any independent research or analysis in the substance or preparation of this document. Recipients of this document are to contact Aviva Investors Pacific Pty Ltd in respect of any matters arising from, or in connection with, this document. Aviva Investors Pacific Pty Ltd, a company incorporated under the laws of Australia with Australian Business No. 87 153 200 278 and Australian Company No. 153 200 278, holds an Australian Financial Services License (AFSL 411458) issued by the Australian Securities and Investments Commission. Business Address: Level 30, Collins Place, 35 Collins Street, Melbourne, Vic 3000


The name “Aviva Investors” as used in this presentation refers to the global organization of affiliated asset management businesses operating under the Aviva Investors name. Each Aviva investors’ affiliate is a subsidiary of Aviva plc, a publicly- traded multi-national financial services company headquartered in the United Kingdom. Aviva Investors Canada, Inc. (“AIC”) is located in Toronto and is registered with the Ontario Securities Commission (“OSC”) as a Portfolio Manager, an Exempt Market Dealer, and a Commodity Trading Manager. Aviva Investors Americas LLC is a federally registered investment advisor with the U.S. Securities and Exchange Commission. Aviva Investors Americas is also a commodity trading advisor (“CTA”) and commodity pool operator (“CPO”) registered with the Commodity Futures Trading Commission (“CFTC”) and is a member of the National Futures Association (“NFA”).  AIA’s Form ADV Part 2A, which provides background information about the firm and its business practices, is available upon written request to: Compliance Department, 225 West Wacker Drive, Suite 2250, Chicago, IL 60606.


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