Jupiter March Climate News Wrap-Up
The top climate risk news highlights for March
The latest climate news for March emphasizes the urgent need for immediate action. Every day, scientists, governing and standards bodies, and financial agencies warn that climate change poses severe threats to global economic stability, and reporting on those risks is key to building resilience.
#1. The Intergovernmental Panel on Climate Change (IPCC) published the synthesis report of its sixth assessment report (AR6)
On March 20, the IPCC published the final installment of its massive report, called the synthesis report, and the picture isn’t pretty according to the hundreds of scientists who spent 8 years compiling the report.
According to the latest report, it is highly unlikely we will remain below a 1.5C increase in global mean temperature and instead should now expect to hit that unfortunate milestone soon. This “final warning” about our world’s climate crisis called for immediate action. The Guardian wrote a great summary of the report.
Jupiter’s point of view is that with even more significant, climate-related impact happening once that threshold is reached, every business needs to adapt and become more resilient. Those organizations that act now will be the ones capitalizing on the opportunities of tomorrow vs reacting when things fail, losses mount, or shareholders mandate.
#2 Mortgage Industry to Tackle Climate Risks
The damage we are witnessing due to climate change is extending to the housing market having profound implications for the U.S.’s 12 trillion dollar mortgage market. As more severe weather events hit our nation including heavier storms, strong hurricanes and an increase in wildfires and drought, homes in these high risk areas may be overvalued and the mortgage industry has not yet begun pricing these risks into underwriting. Fannie Mae, with 4.3 trillion in assets, is mounting an effort to understand the threat climate risk poses to the firm's balance sheet, so it can incorporate that into underwriting.
The company currently leverages data from Jupiter ClimateScore™ Global to help assess that risk. The full article can be viewed at CNBC.
#3 Canada’s Office of the Superintendent of Financial Institutions (OSFI) issues final guidelines for banks to manage climate-change risks
On March 7, Canadian banking regulator, OSFI, published its guidelines requiring more transparency in the country's financial institutions' disclosures related to climate-related risks starting next year.
The two-chapter framework will apply to domestic banks and internationally active insurance groups with headquarters in Canada and will be effective at the end of the 2024 fiscal year. The very timely announcement comes just before The Security and Exchange Commission (SEC) plans to roll out their final Rule on climate-related and greenhouse gas emissions (GHG) reporting and disclosure requirements in April. For more details on the OSFI guidelines, you can read the full Reuters article.
#4 Yellen: Losses From Climate Change Could Cascade Through Our Financial System
In early March, Treasury Secretary, Janet Yellen, warned that climate change and its impacts could cause asset-value losses throughout the country’s financial system in the coming years.
During her first meeting with the Climate-related Financial Risk Advisory Committee, Yellen highlighted that delayed transition to a net-zero economy could lead to shocks to our financial system. “As climate change intensifies, natural disasters and warming temperatures can lead to declines in asset values that could cascade through the financial system,” she said during the meeting. CNBC covered the news with a great summary.
At Jupiter, we think about this everyday and collaborate with our customers to help them assess their physical climate risk and build resilience so that together, we can help advance global economic stability.
#5 International Accounting Standards Board’s (IASB) Unveiled a New Project Aimed At Understanding
This month, The International Accounting Standards Board (IASB) launched a new project looking for ways to enhance the reporting of climate-related risks in financial statements - barring the effects of those risks are material to investors. The kickoff of the project is in response to feedback from the Agenda Consultation for the IASB to enhance the reporting of climate-related risks in financial statements.
The project will explore whether and how companies can provide better information about climate-related risks in their financial statements and will commence with research and outreach to understand stakeholder concerns about the reporting of climate-related risks in their financial statements.
IASB has said they will not be seeking a new standard at this time but that the outcomes of the project may drive minor adjustments or enhancements to the standards.