ESG Essentials: Nature dependency, global heatwaves and uncertainty at G20

ESG CommsESG EssentialsLeave a Comment

Should investors consider nature dependencies in their portfolios?

Writing for Reuters, John Willis, Head of Research from Planet Tracker comments that investors need to start evaluating sovereign nature risk systematically in their portfolios. Saying that “Understanding the financial materiality of nature dependency enables investors to mitigate their risks while ensuring the long-term stability of those economies reliant on natural resources.” 

Planet Tracker’s recent research has found a link between a country’s dependency on natural resource exports and their long term credit ratings, and argues that this should be a relevant factor for investors going forward. 

John went on to write, “Investors in the fixed-income market would be unwise to ignore the implications of nature dependency on credit ratings, whether intentional or not, and potentially leaving their portfolios exposed.”

Worldwide heat wave has widely damaging effects on workers

As many areas of the world continue to suffer under an unprecedented heat wave, with many experiencing daily temperatures of over 40C, scientists have warned that these new temperatures could have negative effects on the economy well into the future. 

The FT has reported ‘this era of extreme heat is reshaping economies’, citing a new study that found heatwaves, which have become more prominent as climate change has grown more severe, have cost the global economy $16tn since the 1990s. Heat has a notable effect on outdoor workers, where productivity slows and health incidents rise.

These effects suggest that investors should be more mindful about the effects of extreme heat on their portfolios, especially in areas with high amounts of deforestation. Planet Tracker’s study, “No Rain on the Plain” for instance, found that areas of Brazil exposed to deforestation were much more likely to have extreme heat events, and the accompanying loss of worker productivity proportionally. These factors will become increasingly unavoidable in our heating world.

John Kerry and Xi Jinping agree to ‘revive’ climate discussions

This week, the US and China formally agreed to resume climate talks during a meeting between John Kerry and President Xi Jinping. These talks have largely been frozen since former House Speaker Nancy Pelosi’s visit to Taiwan which exacerbated already tense US-China diplomatic relations. 

Discussions between China and the US, the first and second largest global polluters respectively, will be vital for ensuring productive international climate discussions. The absence of this dialogue has been felt keenly this year, as the US and China have found themselves on opposite sides of many arguments including Deep Sea Mining and loss and damage. 

It remains to be seen whether the resumption of these talks will be permanent or another false start.

G20 conference ends with no commitment to cut fossil fuels

Joining the growing list of dispiriting failures at environmental conferences this year, including the Bonn climate conference last month, delegates at the G20 conference were unable to reach consensus on cutting fossil fuels. 

While many nations pushed strongly for a joint resolution on cutting down the ‘unabated’ use of fossil fuels, strong disagreements from producer nations prevented an agreement, according to The Guardian. To abate the effects of climate change, it will be vital for the G20 nations, which are some of the world’s largest economies and polluters, to curb their use of fossil fuels. 

Sultan Al-Jaber, President of this year’s COP28, recently called the phase down of fossil fuels ‘inevitable and essential’, but the progress of this year’s climate discussions gives reason to be pessimistic that such an agreement will be reached.

Leave a Reply

Your email address will not be published. Required fields are marked *