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Financial Risks and Opportunities in the Time of Climate Change
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Financial Risks and Opportunities in the Time of Climate Change

Dirk Schoenmaker and Rens van Tilburg
Bruegel, 2016
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8

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Recommendation

Climate change, along with the overuse of natural resources, poses not just a global environmental risk but also raises the potential of serious financial shocks to the economy. While some of the dangers based on the current trajectory of environmental degradation are knowable, others present asymmetric perils to the financial ecosystem, argue authors Dirk Schoenmaker and Rens van Tilburg. getAbstract recommends their cogent report to policy makers, financial executives and others interested in the nexus of finance and energy.

Summary

At the 2015 Paris summit on climate change, close to 200 countries committed to limiting the increase in the Earth’s average temperature to 2ºC [3.6ºF] – and preferably to 1.5ºC [2.7ºF] – higher than the prevailing level in preindustrial times. Achieving this cap requires a steep decrease in carbon emissions and in the use of fossil fuels. The impacts of a warming planet are serious both for the environment and the financial system. Ecological “tipping points and feedback loops” devastate natural resources and biosystems, and energy supply imbalances – as the world weans itself from oil, gas and coal – can trigger...

About the Authors

Dirk Schoenmaker is a senior fellow at Bruegel. Rens van Tilburg is the director of the Sustainable Finance Lab at Utrecht University.

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