Two truths: why don’t we know?
Does writing two truths in the same place mean that one of them can’t remain true?
Schroders have rightly been applauded for their extensive analysis showing we are tracking towards 4°C of global warming. When I first saw this, I knew 4°C was bad but I wasn’t sure exactly how bad. (Hint: brown, yellow and red in the map above are all uninhabitable.)
For the last few months, I’ve been on a journey to find out the impact. That has been very hard. I’m not sure I have the best sources now – and so genuinely and openly please do correct or update for better science in the comments.
But before the science, why was this so hard to find? Why isn’t this better known? Who is keeping it a secret? There are some “inconvenient truth” issues faced by politicians and scientists but maybe the answer lies in human nature and a recent dinner conversation. Having outlined the broad themes, I got the response “Don’t tell me that; I can’t deal with that.”
So before, you read the impacts below, consider if this is true why, as a society don’t we know it and why aren’t we more urgently avoiding it? Why are the long-term holders of capital – Pension Funds & Insurers – not investing in portfolios that are consistent with a 2°C world?
All of us in the investment industry have a responsibility. Suppose you are one of those who are now predicted to live to 150 years old. It’s 2100 and you are trying to explain to your great granddaughter why, when these risks were known in 2018 you didn’t invest consistent with a 2°C world? What would you say?
“You have to understand great granddaughter that not everyone said this would happen, we chose to listen to the 3% that said climate change wasn’t happening. And whilst there were easily available solutions, you have to remember that we weren’t thinking about the long-term risks in those days. What we believed then mattered and what defined risk, was how different we were from the way everyone else was investing – not to stand back and be focused on the actual risks we were running ourselves. Trustee meetings were always busy and we just didn’t see the value in giving the risks in our portfolio more attention.”
And so, to the science (links to updates on the science in the comments please!):
What is our currently expected amount of climate warming?
Schroders have created a dashboard looking extensively across political change, business finance, technology and entrenched industry. https://www.schroders.com/en/about-us/corporate-responsibility/sustainability/climate-progress-dashboard/ . This suggests a 4°C degree implied temperature rise (follow the link for the analysis). This is well above the 2°C Paris commitment but is based on current action not political intentions. The answer may not be exact but it seems a reasonable estimate to then ask: if we continue as we are where we will get to? Whether or not you believe it understates future progress, it does point to the amount of change we need to engage in if we are to reach a 2-degree world not a 4-degree one. (In case 4-degrees seems unrealistic, note that the US Trump government has a similar projection https://www.washingtonpost.com/national/health-science/trump-administration-sees-a-7-degree-rise-in-global-temperatures-by-2100/2018/09/27/b9c6fada-bb45-11e8-bdc0-90f81cc58c5d_story.html?noredirect=on&utm_term=.72e8ed82806e)
What will be the impact of this 4°C warmer?
This has proved hard to find. There was a UK Met office conference in 2009 (https://www.eci.ox.ac.uk/events/4degrees/) followed up by one in Australia in 2011(https://www.eci.ox.ac.uk/events/4degrees/) . The World Bank produced a report in 2012 (which I found unreadable for global impacts http://documents.worldbank.org/curated/en/865571468149107611/pdf/NonAsciiFileName0.pdf ).
I’ve asked at conferences and to those who might know. No one has got back to me. This map is one of the most digestible summaries I’ve found with thanks to https://bigthink.com/strange-maps/what-the-world-will-look-like-4degc-warmer.
This map was first published by New Scientist, and republished by Parag Khanna for his book Connectography. It does seem consistent and directionally similar to other results I’ve read. But if it’s true then the impacts are shocking:
- Brown indicates 'Uninhabitable due to floods, drought or extreme weather'. Say goodbye to the Eastern Seaboard of the U.S., to Mexico and Central America, to the middle third of South America. In Africa, Mozambique and Madagascar are gone; Asia loses much of the Indian subcontinent, including all of Pakistan; Indochina is abandoned, as is most of Indonesia.
- Yellow is not much better: 'Uninhabitable desert'. That's most of the U.S. and the rest of South America, almost the entirety of Africa and the southern halves of Europe and Asia. The map predicts that “Deserts have encroached on (Southern Europe), rivers have dried up and the Alps are now snow-free. Goats and other hardy animals are kept at the fringes”.
- Red is for lands lost to the rising tide (based on a two metres sea rise). Two metres may not seem a lot, but this is where populations are concentrated. In the U.S. for instance, counties directly on the shoreline constitute less than 10% of the total land area (ex Alaska), but account for 40% of the total population.
The map also highlights the “newly habitable” green zones which are spaces and where humanity can farm and retreat to. Can this be considered as anything but the end of our sovereign world as we know?
It is impossible to consider how this can come about through simple “have cake, eat cake” sovereign negotiations without conflicts and several billion deaths. (A different summary had 85%+ extinction in the Amazon as an example of biodiversity impacts.)
And maybe this is not true, and it won’t be as bad… but going back to your future conversation with your great granddaughter: how much risk are you prepared to take that this isn’t going to happen? With science split 97% agree/3% dissent, can you rely on the 3% to be right and 97% to be wrong? Currently 4°C is the 50% expected warming path that we are on: so what risk would you be willing to take that this future world happens – 40% , 10% … less than 1%?
All is not lost
However, all is not lost. Whilst we can’t see these effects today, it’s not too late to make changes now. We can put “understanding the impact of the current expected climate warming of 4°C higher” on the agenda for Trustees, and we can ask two questions and not let them be removed until we get answers. We can ask:
- What is the impact of a 4°C warmer climate? and
- What would our investment strategy look like if we targeted the same return but invested consistently with a 2°C warmer world?
How would that change the conversation with your great granddaughter in 2100?
“I know we were slow, but when I found out, I acted. I put the issue on the agenda, and I didn’t let it go until we had some answers. And doing that, helped others ask the same questions and more funds got involved.”
Now may be, you would still go on to say that you regret that you did not act sooner, or stronger, and more could have been done. But you could say, that when you found out you took some action – and whatever the position was in 2100, it was now better than if you’d taken no action at all.
It is also true that all of this is subject to great uncertainty. I’m less concerned about the detail but know that I want the risk of this map coming to pass to be lower than 50%; much, much lower. And I do know we can do something about it. Green energy is becoming cheaper than fossil fuels – but someone needs to invest the capital to get the higher profits and put fossil fuels out of business.
And now the choice is yours. It doesn’t have to be dramatic. You can simply ensure that the impact of 4 degrees is on your Trustee agenda, ask two questions – “What is the impact of a 4°C warmer climate?”; “What would our investment strategy look like if we had the same return objectives were consistent with 2°C warmer world?”.
You’d have a much better conversation with your great grandchildren in 2100.
Promise.
Nick