The Effects of Climate Change on Financial Stability

  • Date:December 18, 2016
  • Time:11:00 - 16:00
  • Location:Kyoto TERRSA
  • Fee:Free
  • Registration:No


Climate change is a domino effect phenomenon that leads to damage to the ecosystem, society’s quality of life, and the financial sector. Negative effects on the environment include changes in the ecosystem, biodiversity, glacial retreat, global warming, flooding, intensifying extreme weather conditions. With the rise of environmental issues, human migration increases, thus unbalancing the local economy sectors. The phenomenon is gradual, nonetheless strong enough to have drawn the attention of investors and policymakers alike. The financial sector in averagely-rated economies is more susceptible to undergo severe losses. Businesses implement industrial sustainability and waste-management programs, while the number of climate-change deniers is decreasing.

The subtopics complemented the EcoBalance conference program by looking into causes and effects, showcasing the current programs of risk assessment and climate mitigation measures.

Effects of Climate Change on Financial Stability

Presentations Overview:

  • Agriculture is accountable for up to 25% of greenhouse gas emissions worldwide. The number is estimated to increase by a staggering 10% in the next decade. The release of CO2 by deforestation and natural disasters is one of the leading issues, followed by methane release in rice cultivation and cattle farms. Affected areas record bankruptcies and stock devaluation. Sustainable agriculture programs run across all continents, sponsored by private investors and supported by policymakers. They aim to regulate the human effect on landscapes.
  • Wildfires, flooding, natural disasters harm primarily the energetic sector and insurance businesses. Tourism is affected directly, and its decrease leads to dramatic changes in the transportation infrastructure. Furthermore, with a decline in the leading economic sectors, migration comes with severe implications for the local economy.
  • Climate change denial has diminished. Recent surveys show that around 73% of the worldwide population is aware of climate changes and their economic implications. Environmental lobbyists, mainly represented by oil corporations, are making efforts to deny it to their benefit. The biggest risk is that the cost of addressing climate change will be 20% higher 50 years from now. Currently, it would take 1% of the world GDP to prevent the most dramatic outcomes.
  • Sustainable consumption and production programs have proven effective. Industries benefit from strategic plans in waste-reduction and sustainable energy development. The Environmental Science & Technology Publications reported major differences in the Asia-Pacific Region, where the levels of carbon emissions decreased for the first time in the past 30 years.
  • Climate risk limits investment opportunities in the business sector. One of the tools used to address this concern is Quantitative easing (QE). To encourage domestic economic activity and increase the money supply, QE mainly operates on a local level. Globally, the International Finance Corporation (IFC) offers support in analyzing climate risks and creating more investment opportunities.

Key Takeaways:

  • Sustainable agriculture programs are running worldwide to mitigate the human-induced effects on the environment.
  • Natural disasters have a domino effect on inter-connected business sectors, leading to financial collapse in severely-affected areas.
  • Big oil companies deny climate change effects on the economy to their own benefit.
  • The Asia-Pacific Region recorded positive results of sustainable consumption and production programs.
  • QE and the strategies elaborated by the IFC contribute to mitigating the risks in climate change and encourage secure investments.

Special thanks to the contribution of the International Advisory Board in guiding the presenters.