Climate Change and Risks to Food Security
The Intergovernmental Panel on Climate Change (IPCC)’s Fifth Assessment Report reaffirmed that warming in the climate system is unequivocal and that it is “extremely likely” that human influence has been the dominant cause. The climate is changing already1 – and, as the World Bank’s Turn Down the Heat report explains, failure to limit warming to 2°C will create a high risk of that change becoming catastrophic.2 There is growing realization that failure to act, quickly and effectively, could reverse many of the advances of the 20th century.
Risks to Food Security: Analysis
The risk to food security is especially great because agriculture is already straining to meet a rapidly growing demand from a finite resource base. The combined impact of a rising population and growth of the middle class – wealthier people eat more cereal-intensive meat – is set to drive a demand increase of 60% by 2050.3 Yet the global average yield growth for cereals has slowed in recent years; it already lags behind demand growth. This gap cannot be covered by an expansion of cropland because of the need to protect forests and other areas of high value for conservation and carbon sequestration. Agriculture is increasingly competing with other uses for land – such as urbanization, transport, bioenergy, forestry and mining – and so crop production is pushed towards ever more marginal soils.4
Yet more worrying is the fierce competition for water, the lifeblood of agriculture. Water withdrawals have increased threefold over the last 50 years, and demand is anticipated to rise by a further 40% by 2030.5 With a shift in global production towards intensive systems that rely on groundwater resources for irrigation, along with the current growth in demand for water-intensive animal products, agriculture becomes even thirstier. At the same time, urbanization and industrialization in emerging and developing economies are also driving up demand for fresh water in energy production, mineral extraction, and domestic use, further stretching the already tight supply.6
Against this backdrop of tightening constraints, climate change seriously threatens food security in two ways. First, it will harm agricultural production: rising temperatures and changing rainfall patterns will slow yield gains, contributing to higher food prices and an increasingly precarious supply-demand balance that will make markets more prone to volatility. Second, it will increasingly disrupt food systems: more extreme weather will destabilize tighter markets and exacerbate volatility, imperil transport infrastructure and trigger local food crises. As a result, the risks of humanitarian emergencies, national or regional instability and mass migration will increase. In the words of a former Executive Director of the World Food Programme, “without food, people have only three options. They riot, they emigrate, or they die.”7 The security implications will be felt by developing and developed countries alike.
Climate Impacts on Agricultural Production
Climate change will slow global yield growth because higher average temperatures result in shorter growing seasons and lower yields. Shifting rainfall patterns can also reduce yields because lower rainfall reduces soil moisture or increased rainfall waterlogs soils. Climate trends are already believed to be diminishing global yields of maize and wheat.8
As climate change gathers pace, the negative impacts on yields will become more pronounced.9 This is unlikely to be a steady deterioration. Yield responses to biophysical stresses are highly non-linear – once critical thresholds for temperature or water are breached, plants suffer severe damage and yields can fall precipitously. If climate change is allowed to reach a point where these biophysical thresholds are exceeded routinely, crop failure will become the norm.
A global temperature increase of 4.7°C – consistent with what might be expected by the end of the century on current emissions trajectories – would see sharp increases in the risk of critical temperatures being exceeded. The risk of failure will vary by crop and location. For example, researchers estimate that for maize in Illinois, in the Midwestern United States, the likelihood of temperature exceeding a critical threshold currently has a recurrence interval of 1 in 100 years; this would increase to a 1 in 6 year return period. For single-variety rice in Jiangsu on the eastern coast of China, the return period would increase from 1 in 100 years today to as often 1 in every 4 or 5 years.10
At lower levels of warming, yield losses may be offset by higher concentrations of atmospheric carbon dioxide, resulting in a beneficial CO2 fertilization effect. However, the extent of this effect has recently been questioned.11 Other factors associated with climate change – such as elevated tropospheric ozone,12 as well as increased biotic stress from weeds, pests and disease – represent further downside risk to yields.13
Some of the most severe risks are faced by countries or regions with high levels of existing poverty and food insecurity, which are highly dependent on agriculture for livelihoods. Even at low levels of warming, the most vulnerable countries will suffer serious impacts. In Sub-Saharan Africa, for example, 1.5°C of warming globally by the 2030s could bring a 40% loss in maize cropping areas. A world warmer by 2°C would bring unprecedented heat extremes in summer across 60–70% of South-East Asia. Warming of 4°C would likely bring increasing extremes in rainfall patterns in South Asia – up to a 30% decline in the dry season and a 30% increase during the wet season – increasing the risk of both flood and drought.14
Figure 3.2.1: Projected Impacts on Crop Yields in a 3°C Warmer World
Source: WRI 2013.
Note: –50% change = half as productive in 2050 as in 2015; +100% change = twice as productive in 2050 as in 2015.
As the map in Figure 3.2.1 indicates, the most severe yield impacts are not confined to poor and food-insecure countries. Agricultural productivity is also at risk in key exporting breadbasket regions such as North America, South America, the Black Sea area and Australia. The same is true for India and China – the two most populous nations on Earth, both currently committed to self-sufficiency (in practice, trade neutrality) in cereals. Should they have to abandon these policies of self-sufficiency, the consequences will be felt globally in the form of tighter international markets and higher prices. Reducing the risk of climate change to crop yields will necessarily encompass adapting agriculture to new regions (Box 3.2.1).
Box 3.2.1: Adaptation and Its Limits
The adaptation of agriculture is critical to reduce the risk climate change poses to food systems. A number of strategies and technologies have emerged to increase resiliency in individual livelihoods and the systems supporting agricultural value chains. These can be exercised at the farm level through techniques such as changing the cropping calendar, breeding plants that have increased tolerance to extreme conditions, or shifting crop production to new regions – however, such approaches are not without their challenges. Plant breeding takes time and is ultimately subject to biophysical limits that exhibit little genetic variation within or across crops; it is hard to selectively breed for tolerance to extremes. In addition, the limited availability of suitable land means crop production cannot always migrate as desired (for example, the poor quality of soils to the north of Russia’s wheat crop means production cannot simply track northwards as temperatures rise).
Therefore adaptation is also critical at the landscape level through economically viable strategies that protect biodiversity and enhance land and forest management. Market systems have a critical role to play too, especially through products such as index-based weather insurance or information systems. Finally, enabling policies for the careful management and use of food reserves, early warning systems, open trade arrangements and price stabilization can help address volatility in the system.
Several attempts have been made to model the impact of climate change on future food prices.15 The modelled impacts vary considerably, depending on the underlying model parameters, climate scenarios, adaptation responses, and data employed. However, in the vast majority of cases the models find higher prices with climate change than without. Taking the mean of nine different models all using the IPCC “business as usual” emissions pathway finds that global crop prices will be 20% higher in 2050 than they would have been without climate change.16 These models show that oil seed prices typically increase the most under climate change (up to 89% above a scenario with no climate change), though the largest single climate-induced price increase modelled is for coarse grains, at 118% above the 2050 baseline.17
Extreme Weather and Disruption of Food Systems
Some of climate change’s most serious risks to food security arise from more frequent and extreme weather events such as droughts, heat waves and floods. These can trigger local food crises, disrupt trade infrastructure and have cascading systemic consequences – for example, crop failure in a major breadbasket region can precipitate international food price spikes.
Food Crises and Humanitarian Emergencies
Droughts or floods can have catastrophic localized consequences in regions where food insecurity is already high and markets do not function well. Recent history provides some tragic examples. The 2010 Pakistan floods, caused by a wetter monsoon consistent with climate change predictions, devastated croplands and led to a collapse in rural incomes and sharp deterioration in food security. One year later, a drought in East Africa – since linked to climate change18 – triggered a regional food crisis affecting 13 million people; in war-ravaged Somalia, over a quarter of a million people died in the resulting famine.
Distribution and Transport Infrastructure
Extreme weather events pose a risk not only to the production of crops but also to the distribution of globally traded supply. Critical transport infrastructure in many of the world’s largest cereal exporters is increasingly at risk of disruption from acute and chronic climate stresses.19
In July 2012, for example, Russia’s Black Sea ports were struck by flash floods, damaging key grain export infrastructure and interrupting trade in a year when drought had already brought a 25% drop in production.20 In the United States, the ageing network of locks and dams along the Mississippi River – a key artery for wheat, maize and soybean exports – has struggled to cope with rainfall extremes: in 2011, flooding led to delays in barge traffic and rerouting of freight via road and rail; the following year a severe drought saw water levels fall to levels that were almost unnavigable.21 More frequent heatwaves and floods are also exerting increasing stress on the country’s railways and roads.22 If sea levels rise by 4 feet by 2100 as projected in recent climate models,23 around two-thirds of port facilities along the US Gulf Coast – out of which 20% of the world’s maize and soy exports are shipped24 – will be at risk of water damage or inundation.25
Damage to port infrastructure following an extreme climate event further exacerbates disaster situations, hindering the delivery of critical food supplies to affected populations and limiting the rate of economic recovery in the longer term. When Cyclone Pam hit Vanuatu in March 2015, maritime services to the islands were interrupted for 10 days and 80% of the country’s roads were blocked by debris.26
Preparedness for disruption to transport infrastructure along food supply chains is often low. Climate proofing transport infrastructure brings higher maintenance costs while diverting investment away from the expansion of network capacity.27 Yet as competition for capacity heightens, and just-in-time business models favour cost-efficiency over system redundancies,28 the potential impact of climate events on transport infrastructure will rise, signalling an ever more severe risk to food security in import-dependent regions.
Systemic Crises
Although developed economies may be largely untroubled by food price spikes, they are vulnerable to knock-on effects – such as instability and migration – arising from the impacts of price spikes in less resilient countries.
Recent years have witnessed a series of spikes in international cereal market prices triggered by extreme weather since linked to climate change – most notably the 2010 Russian heatwave and 2012 US Midwest drought.29 Price rises can be amplified if governments prioritize domestic food security at the expense of global food security by panic-buying, hoarding and unilateral export controls. In 2008, international cereal markets reached a crisis point when 40 governments imposed export restrictions on their agriculture sectors in a vicious circle of collapsing confidence and escalating prices.30 Global governance was found wanting: while trade rules exist to limit restrictions on imports, there is nothing comparable to prevent limits on exports.
Once again, the poorest countries are most at risk. The 2008 crisis meant 33 net food-importing developing countries saw an increase in their total food import bill of 0.8% of GDP, contributing to deteriorations in the balance of payments and inflation.31 Because of a high reliance on unprocessed staples, the poorest households are particularly exposed to rises in primary commodity prices. The World Bank estimates that the 2008 crisis put 100 million more people into poverty globally.32 Among these households, food expenditures may account for more than half of income, leaving families in a very difficult situation if prices spike.
High food prices in turn increase the risk of riots and instability, particularly in countries that are politically fragile.33 During the 2008 food crisis, protests erupted in 61 countries and riots in 23.34 Such events can lead to cascading risks that move rapidly through markets and polities with near- and long-term consequences. The spike in international wheat prices after the 2010 Russian heatwave was felt keenly in North Africa – the largest wheat-importing region in the world – where the price of bread was the subject of initial protests that became the 2011 Arab Spring.
In the same year, a prolonged drought in Syria – since linked to climate change – contributed to rural-urban migration that heightened tensions in the nation’s cities before conflict erupted, leading to a civil war that remains in progress.35 The long-term consequences of the sequence of events, beginning with extreme weather and ending with the Arab Spring and Syrian civil war, are still playing out through ongoing conflict, mass migration and increased risk of terrorism.
Droughts, floods and heatwaves will become increasingly severe as climate change accelerates. Extreme El Niño events, which can wreak havoc with harvests in breadbaskets and food insecure regions alike, are expected to become more common.36 The risk of production shocks with systemic consequences is increasing, with profound implications for the stability of international markets: one recent study found that what would have been a 1-in-100 year global production shock over the second half of the 20th century may have become a 1-in-30 year event by 2050 – a more than threefold increase in risk.37 A double breadbasket failure, in which two critical harvests are lost, now represents a plausible worst-case scenario that could precipitate a systemic crisis of unprecedented magnitude.38
Conclusions
Climate change presents a profound threat to food security because biophysical stresses mean it will become increasingly difficult for agriculture to meet demand, and more extreme weather increases the risk of both local and systemic food crises. The poorest countries are most vulnerable, but crop failures in systemically important production regions will have global consequences that may extend beyond food systems.
Trade will be critical to managing short-term production shortfalls and matching long-term changes in supply and demand as the impacts of climate change on production accelerate and demand for food increases in developing countries. However, as markets become increasingly vulnerable to destabilizing production shocks in breadbasket regions, they will become a source of risk as well as a means of managing risk.
Adaptation of agriculture is a priority for both public and private sectors, but it is not a panacea (see Box 3.2.1). Agriculture is only one part of the global food system. Transport infrastructure must also be climate-proofed. System resilience requires new rules to militate against export controls and may necessitate efficiency trade-offs such as increased strategic storage.
More fundamentally, there are limits to what agricultural adaptation can achieve and significant uncertainty about where, and when, these limits will be reached. The longer climate change continues, the more likely it is that these limits will be found. According to the IPCC, “there may be a threshold of global warming beyond which current agricultural practices can no longer support large human civilizations.”39 Without ambitious, determined action to reduce emissions and contain climate change at manageable levels, long-term food security cannot be guaranteed.
Spheres of Action to Mitigate the Climate Risk on Food Security
This section addresses three spheres in which action can be taken. These include the use of big data to boost the efficiency and specificity of climate-risk information; the provision of insurance innovations that can reduce risk to small farmers, who are an essential and fundamental aspect of agricultural success; and the incentivization of climate-resilient, low-carbon investments.
1. Big Data and Improved Climate-Risk Information Services
Timely, accessible and actionable climate and weather information enables farmers, communities and local authorities to identify their specific vulnerabilities to climate variability and to develop response strategies. This information is also key to any design of the kind of efficient and effective insurance schemes further explored below, which could help reduce exposure to economic losses.
Tailored information is critical, given the complexity and geographic specificity of climate change impacts. One example is high-resolution topographic data, which will be made available by the US Geological Survey following a White House announcement last September. The data, generated from NASA’s Shuttle Radar Topography Mission (SRTM) in 2000, previously covered only the United States; it is now also available for Africa, and next year will expand to include Latin America and the Caribbean. This kind of topographic data could greatly enhance agricultural planning for drought, glacial retreat, inland flooding, landslides and coastal storm surges.40
However, enhanced information alone is not enough. Equally essential is the capability to model potential impacts on interconnected environmental, social and economic systems if vulnerable communities are to develop the better capacities and integrated policies needed for long-term resilience. It is challenging, however, to develop actionable information from a large range of data gathered from different sources. Data are mostly insufficient to meet the information needs for evidence-based climate adaptation, especially in vulnerable developing regions that have large agricultural sectors exposed to increased climate risk.
Consequently, attention is increasingly turning towards broad-based partnerships that bring together information services, policy resources, technological and modelling skills and capacity building and training. Many of these partnerships cut across public and private sectors to leverage increased data analysis and modelling capabilities. For example:
- For many least-developed countries and small island developing states, improved early-warning systems for natural disasters are a key enabler of sustained and climate-resilient growth and development. Responding to that need, the government of France proposed at the Third UN World Conference on Disaster Risk Reduction in March 2015 in Sendai, Japan, to mobilize the international community to improve the climate resiliency of vulnerable countries, namely Small Island Development States and Least Developed Countries. During the COP21 meetings in Paris, the Climate Risk Early Warning Systems (CREWS) initiative was officially launched by the governments of Australia, Canada, France, Germany, Luxembourg and the Netherlands. Collectively, the six countries pledged over US$80 million to scale up improved climate-risk early warning systems across 80 countries.
- UN Pulse is the response to a call from the United Nations’ High-Level Panel on the Post-2015 Development Agenda for data to “improve accountability and decision-making, and to meet the challenges of measuring sustainable development progress.”41 Labs in New York, Jakarta and Kampala are bringing together government, UN agencies, academia and the private sector to pioneer new approaches to using big data for development.
- The Climate Services for Resilient Development Partnership was launched by the United States during the Climate Summit in partnership with the United Kingdom, the Asian Development Bank, the Inter-American Development Bank, Google, the Skoll Global Threats Fund, the American Red Cross, and the GIS software company Environmental Systems Research Institute (ESRI).
- The World Resources Institute developed Global Forest Watch is an online system to monitor forests and provide information to improve their management (see http://www.globalforestwatch.org/about/awards_and_testimonials). It combines satellite data with modern mapping and information and communication technologies to enable a new kind of environmental monitoring and decision-support tools.
- A partnership between Google and the Brazilian environmental NGO Imazon, Google Earth Engine integrates satellite measurements dating back decades with other data feeds such as weather information to map changes such as deforestation in remote areas. Future applications will enable monitoring of sea ice change and illegal fishing.
- IBM’s Insight Cloud Service, a partnership with Twitter and the Weather Company, combines open data with private data to produce analytics enabling, for example, insurance companies to issue weather warnings to policy-holders.
Such programmes illustrate how large-scale collaborative efforts that leverage large data sets, scientific modelling, computational power and capacity-building programmes can improve local decision-making to increase resilience and reduce exposure to important food security-related risks.
Box 3.2.2: Reducing Food Waste
Current estimates suggest around one-third of all food produced for human consumption is lost or wasted along the food value chain, with a direct economic cost of US$750 billion per year. Excluding land-use change, the annual emissions footprint of food produced but not consumed is around 3.3 million tonnes of carbon dioxide equivalent (CO2e), more than the total national emissions of India; the land requirement is almost 1.4 billion hectares, close to 30% of the world’s agricultural land area; and the blue water (surface and groundwater) consumption is approximately 250 cubic kilometres, three times the volume of Lake Geneva.1a
Approximately half of this volume (54%) is lost in upstream processes including agricultural production (a third of the total alone) and post-harvest handling and storage; the other half (46%) is wasted in downstream activities such as processing, distribution, and consumption. Consumption wastage is much higher in high- and middle-income regions (31–39% of total losses) than in low-income regions (4–16%). Significant low-income losses at the post-harvest stage result from a lack of adequate infrastructure to prevent spoiling.2a
Compounding the problem of direct losses are wasteful, or resource-inefficient, forms of food production: grain-fed livestock production, for example, results in significant losses of edible calories along the food chain from those available from plants to those ultimately consumed by humans. This inefficiency is expected to become increasingly significant as a growing global middle class consumes more meat.
The cost of food wastage is significant not only in economic terms, but also for current and future resource and food security. Addressing food wastage offers significant potential to alleviate pressures on natural resources and the tightening balance of supply and demand: it is estimated that halving the current rate of wastage could meet over a fifth of caloric needs by 2050,3a reducing required cropland by 14% and agricultural greenhouse gas emissions by 22–28% (saving approximately 4.5 GtCO2e per year) relative to the counterfactual of no reduction in food wastage.4a
Currently the environmental costs of food waste are externalized and the market incentives to reduce waste are minimal. Maintaining supply chains that deliver year-round uninterrupted supplies of produce are inherently wasteful because retailers depend on over-ordering and suppliers on over-producing. But currently the economic benefits of this model outweigh the costs. Exacting retail quality and presentation standards, consumer expectations, and legislation governing food re-use all exacerbate the problem by rejecting perfectly edible but non-aesthetically pleasing produce. Minimizing waste will therefore require technical innovations, legislative reform, and a recalibration of consumer expectations.5a
2. Reducing Economic Exposure through Insurance Innovations
Crop insurance schemes do not always deliver sufficient protection for small farmers against potential losses – either because they are too expensive for low-income smallholder farmers or because they provide perverse incentives that discourage policy-holders from investing in crop productivity. International aid for disaster relief financing has often proved to be slow, ad hoc and expensive. Innovative climate-informed insurance schemes can help to address the shortcomings in these two models, efficiently reducing exposure to economic losses and thereby food insecurity.
Robust and affordable weather insurance depends on the availability of accurate data, together with improved capabilities to forecast weather variability and extreme events such as droughts. Today a combination of data provided by weather stations with remote sensing and satellite imagery are helping scale innovative insurance schemes across developing countries.
Weather index insurance schemes, also known as “index-based financial risk-transfer mechanisms”, pay out based on weather rather than crop losses. They use an index of productivity-relevant weather variables such as precipitation onset and intensity, streamflow and temperature: the insurance pays out, for example, if measured rainfall falls below a specified level.
One advantage of weather index insurance is that it removes the need for expensive field visits to assess crop damage, reducing costs and improving accessibility of insurance for low-income smallholder farmers. Having such insurance coverage can create a virtuous circle: it often is a necessary condition for accessing bank loans or other credit, which in turn can be used to invest in improved agricultural inputs for increased productivity and reduced risk exposure. Weather index insurance schemes also remove the possibility of poorly designed crop failure insurance schemes that effectively incentivize farmers to allow crops to fail.
With nearly two-thirds of its population working in agriculture – 80% as smallholder farmers – Sub-Saharan Africa is especially vulnerable to food insecurity caused by droughts and temperature rises. World Bank data suggest that Sub-Saharan countries will need between US$14 billion and US$17 billion per year from 2010 to 2050 to adapt to climate change.42 The Africa Risk Capacity (ARC) is an innovative African Union initiative, launched in 2014, to help close the financing gap by improving insurance for climate-related risks.
ARC combines several risk transfer mechanisms to reduce the cost of insurance while increasing its effectiveness. For example, because not all parts of the continent will be affected by drought at the same time, by pooling drought risk across all member countries ARC can reduce individual premiums paid by governments by up to 50%. To be eligible for insurance through ARC, governments have to develop evidence-based contingency plans.
In addition to regular ARC insurance schemes covering the costs for immediate responses to weather disasters, the ARC Extreme Climate Facility will issue data-based climate change catastrophe risk bonds to participating countries.43 These bonds are structured as concessional finance that must be used to reduce risk exposure and vulnerability. This not only provides countries with incentives to invest in climate-smart agriculture, but also improves long-term planning and reduces investment risks for the private sector. By blending public and private finance, ARC hopes to generate over US$1 billion in additional finance over the next 30 years.
3. Financial System Shift to Unleash Climate-Resilient, Low-Carbon Investments
Effectively tackling climate-induced risks will require new ways to incentivize climate-smart investment. Despite increasing recognition of the economic risks, global financial systems are yet to incorporate them into financial decision-making. Finding ways to adapt established risk assessment analytics, models and reporting frameworks could unleash larger flows of capital towards climate-friendlier investments.
For many executives and boards of directors, climate risks seem less immediate than other issues. Even where Environment, Social and Corporate Governance (ESG) data are disclosed, investors often remain unaware of the severity of the threat: these data tend to be appended in an annex rather than integrated into core financial statements, and they do not make clear the materiality of specific climate and regulatory risks. The sheer number of ESG criteria is a barrier to comparability and identification of material risk. Most analysts do not take opportunities such as earnings calls to raise questions on material climate risk.
Finding ways to factor climate and regulatory risks into short-term decision-making processes and related financial metrics is essential for driving climate risk–informed investments. This requires not only using better, forward-looking data and metrics, but also mainstreaming these elements in core financial processes and indicators. One major step in that direction is the recent announcement of Mark Carney, the Governor of the Bank of England and Chair of the G20’s Financial Stability Board (FSB), for the FSB to support global efforts for voluntary standardized reporting on financial risks associated with climate change.
Corporate commitments and domestic regulatory reform can also be important drivers of change. At the COP21 in Paris a number of new corporate commitments to decarbonize portfolios, issue green bonds, or support more robust carbon pricing were made. They send important signals to the broader business and investment communities and help to win the trust of governments in corporate support for improved climate-friendly regulations. China’s Green Credit Policy, launched in 2007, is an example of how regulators can tip markets towards more sustainable investment.
Understanding how regulatory reform across sectors can help align financial markets with sustainable development is the objective of the United Nations Environment Programme’s Inquiry into the Design of a Sustainable Financial System. Other recently launched initiatives seek to align various aspects of the financial markets with climate-associated financial risk and sustainable development:
- The AR!SE Initiative (Private Sector Alliance for Disaster Resilient Societies), a global effort led by the United Nations Office for Disaster Risk Reduction (UNISDR), aims to provide a new vehicle for collaboration between the private and public sectors that can unlock enormous potential at the local, national, regional and global levels to contribute to achieving the outcome, goals and targets of the Sendai Framework for Disaster Risk Reduction 2015–2030.44 By engaging and expanding the number of private sector organizations and others involved in supporting the implementation of the Sendai Framework for Disaster, AR!SE will provide a robust and effective mechanism to allow the private sector to implement tangible projects and initiatives that deliver results critical to the achievement of the outcome and goal of the Sendai Framework.45
- The Investor Confidence Project, led by the Environmental Defense Fund, seeks to create a marketplace for energy efficiency by standardizing energy efficiency protocols. Standards are an important enabler for growing investments in emerging industries because they provide the transparency, comparability and security required by underwriters and investors. Retrofitting buildings to be more energy efficient is one example where lack of standardization is a barrier to scaling up investment, despite the clear economic benefits.
- The Banking Environment Initiative (comprising Barclays, BNP Parisbas, BNY Mellon, Deutsche Bank, Goldman Sachs, Lloyds Banking Group, Northern Trust, The Royal Bank of Scotland (RBS), Santander, SMBC, Standard Chartered, Westpac) has led the development of new trade finance instruments, such as Sustainable Shipment Letter of Credits, intended to incentivize sustainable land use and to preserve forests when working in developing tropical nations.
- The 1-in-100 Initiative seeks to stimulate and reward climate-resilient investment through collaboration involving insurance companies, regulators, scientists, modellers, accounting professionals, investors and other stakeholders. The initiative focuses on adapting lessons from the insurance industry about how regulatory reform for capital requirements and accounting procedures can be applied to other economic sectors to increase the resilience of balance sheets to climate shocks, while increasing the transparency of a company’s exposure to climate risk.
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