The fossil fuel industry is arguably the main culprit behind the climate change crisis, but it's not the only category that's contributing to the problem. The financial sector, for example, has been making its own missteps with climate change, and they're frighteningly similar to the ones it made with the housing market during the financial crisis of 2008.
A new report titled Degrees of Risk reveals that the financial sector has been relying too heavily on 3°C and 4°C global heating models without taking into full consideration the seriousness of those scenarios. The National Centre for Climate Restoration says this approach is similar to the one the financial sector took 13 years ago when the housing market crashed—back then, it also relied on inordinately optimistic models which made it seem like a disaster could be averted.
According to the report, a global average warming of 4°C (covering land and ocean) would essentially mean a 6°C increase over land and an 8°C increase over the mid-latitudes. All in all, that would lead to a 10°C increase in the summer average, or 12°C in heatwaves.
To put that into perspective, in places like western Sydney, which already reached highs of 48°C this year, adding 12°C would bring heatwaves of 60°C. At climate extremes like that, societies and economies would simply crumble. "Bank customers would be dead on the streets," the report said.
Ian Dunlop, the head of the Australian Coal Association who co-authored the report, says that prioritizing data collection over action could have catastrophic consequences. While analyzing models or conducting "stress tests" can provide an idea of what to expect, they are not conclusive, and thus heavy reliance on such should be avoided.
"Our point, quite simply, is you don’t use scenarios in these extreme situations where the costs are infinite and the economy is going to collapse. The implication is that you’re not going to have an economy," he added.
The moral of the story is that actions will speak louder; at least, at this point in time. Scenario analysis is useful, yes, but it should not take precedence over action, especially when time is running out.
