Climate change

We assist our clients to enhance near-term and long-term organisational resilience,  by understanding and adapting to their climate change risks and opportunities.   We support them to:

  • Conduct scenario analyses to identify their material risks
  • Develop performance targets for emissions reduction or risk mitigation programs that are based on contemporary science
  • Report publicly on the performance of their climate change related activities
  • Keep abreast of key changes occurring in the science of climate change, as well the relevant policy and regulatory settings driving its containment.

The core threat being faced

A landmark publication was released on  by the United Nations International Panel on Climate Change (IPCC) that re-examined the science underpinning progression of global warming and its impacts.  It was delivered in three parts from August 2021 to March 2022.

The IPCC had previously released five scientific assessments over its 30 year history.   Each focussed on the importance of ensuring that the temperature at the surface of the Earth remained at less than 20C above that which prevailed in pre-industrial times.

But now the 6th Assessment confirms that the impacts would be catastrophic, and potentially irreversible, if the planet were to exceed the +20C threshold.   Urgent action is warranted instead to contain the temperature below +1.50C.  

Both the United Nations Environment Program (UNEP) and the International Energy Agency (IEA) have recently published reports stating, that to do so,  the current global level of emissions of carbon dioxide would need to be halved by 2030 –  a truly daunting concept noting the world’s fundamental and overwhelming reliance on the burning of coal, oil and gas across the planet.

They also show that the net level of anthropocentric emissions of carbon dioxide in 2030 will most probably be higher they were in 2021, which was 43 billion tonnes, unless strong action is taken.  A Heads of Government meeting will be held in late 2022 to consider options for an urgent global emissions decarbonisation strategy.

The business case for transparency

 The Global Carbon Project reiterated in late 2021 that the overwhelming cause of climate change was the emission of carbon dioxide from the burning of fossil fuels in the  energy and industrial production sectors. 

It is therefore not surprising that climate change risk is also acknowledged as a material issue for the international finance sector.  A major restructuring of debt and equity markets is well underway as a consequence, including significant changes to the way in which insurance cover is offered, to whom, where,  and at what price.

In the interim, there is growing demand for transparency around the carbon emissions footprint of energy-intensive organisations, and about the threats that climate change presents to the value-chain underpinning their core business.

Their initiatives for preserving productivity and resilience should then be disclosed to key stakeholders to demonstrate how potential losses will be minimised;  or perhaps how new business opportunities could also be captured.  

In fact, many leading investment houses are already demanding this data when assessing requests from exposed organisations for capital injections, and increasingly along their supply chain as well.

The Middle Way can assist by providing methods for setting carbon reduction performance targets and developing business resilience plans.  This includes conducting scenario analyses to identify cost-effective investment paths for each outcome.