Climate change is bad for business

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"Climate change is bad for business"

Look no further than today to get a glimpse of what the future holds if we continue with business as usual: Record temperatures in the United States, Europe, and Canada; wildfires and hurricanes in Russia; and flooding in Pakistan and China. Climate change is here and there’s more to come. Thousands of lives have been lost, and millions of people have been displaced from these recent disasters. But the economic tolls are also hurting businesses.  CAP’s Rebecca Lefton and Richard W. Caperton have the story in this cross-post from the Center for American Progress.

Economists estimate that Russia’s economy will lose $15 billion this year from the country’s recent disasters””a full percentage point of its expected GDP growth. About half of that loss will come from agriculture and the rest from “lower industrial output, lower demand and lower productivity.” Russia had been gaining ground from a 7.9 percent GDP loss last year, but shoppers are staying home to avoid the toxic smog and heat during the hottest summer on record. Offices are closing and factories are shutting down.

Rising food prices are already limiting spending power. Now the government has banned wheat exports through the end of the year as grain output is down by at least a third. Tourism is suffering, and the U.S. State Department issued a travel warning urging Americans to postpone trips to Russia this summer. To make matters worse, strong storms with hurricane-strength winds in northwestern Russia are further disrupting the country.

Sadly, Russia is only one “poster child for the perils of global warming” this summer. Pakistan’s floods””now covering one-fifth of the country or around the size of England””are causing one of the worst humanitarian crises ever. Pakistan’s economy was already struggling and heavily dependent on international loans. Now the International Monetary Fund says the flooding will cause “major harm to the economy,” including tens of billions of dollars in agricultural losses. Last but not least, unusually heavy rains in China earlier this summer preceded Pakistan’s disaster. They led to flooding that caused tens of billions of dollars of damage.

Countries like Pakistan are ranked as some of the most at-risk because of their vulnerability to climate change and lack of resources to respond. But these disasters are hitting us at home, too. “Biblical” floods in Tennessee this past May caused power outages and “shuttered” businesses. Before that, catastrophic rains soaked the Northeast, the Southeast, and the Midwest. So it’s clear that even developed economies are not immune to the harms of climate change. Further, these economies bear financial responsibility for aiding countries affected by climate-related events.

And these events will get worse. It’s not possible to claim that global warming causes any one event, but Dr. Kevin Trenberth, head of climate analysis at the National Center for Atmospheric Research, says that, “Nowadays, there’s always an element of both [global warming and natural variability].” And according to Jay Lawrimore, chief of climate analysis at the National Climatic Data Center, “Extreme events are occurring with greater frequency, and in many cases with greater intensity.” As a result, Russian officials are signaling an overdue shift in climate policy seriously addressing the need to “get ahead” on global warming for the first time.

Climate-related disasters like we’ve seen across the world and at home will inevitably harm American businesses. That’s why the U.S. Securities and Exchange Commission, which is tasked with making sure that investors are aware of an investment’s risks, has made it clear for the first time that climate change will have a sizeable impact on some businesses’ profits.

The SEC warned in a guidance issued this spring that, “Significant physical effects of climate change, such as effects on the severity of weather (for example, floods or hurricanes), sea levels, the arability of farmland, and water availability and quality, have the potential to affect a registrant’s operations and results.” Investors who rely on this information should expect to see more companies disclosing climate-related risks as climate change’s effects become more evident.

Investors are also paying more attention to climate change when choosing their portfolios. This year investors filed a record 101 resolutions urging 88 U.S. and Canadian companies to address the risks and opportunities climate change poses.

Businesses are suffering from an uncertain policy environment as well. This is true of both traditional energy companies, who need certainty to guide their investments, and clean energy companies, who will help the United States transition to a low-carbon economy.

The United States is losing out on billions of dollars in clean energy investments by sitting on the sidelines of the clean energy race. Deutsche Bank recently decided to spend the majority of its climate change capital in Europe and China where there are “government policies that provide transparency, longevity and certainty.”

Kevin Parker, global head of Deutsche Bank’s Asset Management Division, says the United States is missing out because it’s “asleep at the wheel on climate change, asleep at the wheel on job growth, asleep at the wheel on this industrial revolution taking place in the energy industry.” That’s why out of the nearly $7 billion in green investments that Deutsche Bank holds, only $45 million originated in the United States. American companies have formed a new Chambers for Innovation and Clean Energy advocating for a market-based solution to climate change precisely because they recognize the vast economic benefits their country is losing.

The upshot is that all U.S. companies””those that need to avoid climate disasters, that want investment certainty, and that want to unleash economic growth””stand to gain from a climate bill. A U.S. Environmental Protection Agency analysis finds that passing a climate bill will result in fewer emissions and lower the risk of catastrophic climate change. Moreover, the Peterson Institute for International Economics shows that passing a climate bill will stimulate the economy, create jobs, and make businesses healthier.

The bottom line is that U.S. businesses are being affected by climate-related disasters and will face more of them in the future. Congressional delay in passing climate and energy legislation hurts businesses by allowing global warming to go unheeded, and it also creates an unfriendly environment for companies waiting to win in the clean energy race.

This is cross-posted from the Center for American Progress. Rebecca Lefton is a Researcher and Richard W. Caperton is a Policy Analyst at American Progress.

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44 Responses to Climate change is bad for business

  1. BBHY says:

    Someone should tell the Chamber of Commerce!

  2. mike roddy says:

    Thanks for this detailed listing of the economic reasons to act on climate change. The Stern Report was also good in this respect, in calculating that the global cost of doing nothing is 10 times the cost of taking preventive action.

    Our country was founded by men of the Enlightenment, who believed that reason should prevail over superstition and greed. It’s rather obvious that dark forces are now in charge. The people who are running our government apparently don’t do anything without checking first with the oil and coal companies, industries that will be irrelevant in a few decades.

    The Kochs and Tillersons deserve our scorn, as do the slimy politicians and media people who do their bidding. On another level, the problem seems to come from within. A healthy people would never allow these awful people to control them. Change may have to come from the ground up, which is why leaders like McKibben and Hanson will be so important, along with communicators like Joe Romm and Dave Roberts. The evidence is clearly on their side, but it is their determination and spiritual strength that may end up making the difference.

    And thanks to Climate Progress commenters and contributors, some of whom I’ve had the pleasure to meet. Our mutual obsession- driven by what is there for all to see- has become inspiration, too. And for all of the despair that comes from our personal research, many of us have a feeling that we can do this.

  3. fj2 says:

    While other issues address moral (people are dying) and self-interest aspects (terrific new opportunities are available) for mitigating climate change this addresses the very practical reality that climate change is bad for business.

  4. Climate confuser Bjorn Lomborg has makes up a new story, copied by ‘news’papers around the world: A 7-metre sea level rise is no big deal, and costs only 600 billion per year to cope with: http://bit.ly/Nonsens

    “Tokyo coped with 5 metre subsidence since the 1930s, so we can cope with sea level rise as well”. Forgets to mention that subsidence was stopped in 1975 (http://bit.ly/Toksub), and that Tokyo is still 6+ metres above sea level!

  5. fj2 says:

    $600 billion a year is absurd.

    At one time it was estimated, I remember hearing, that global natural services were valued at a mere US$30 trillion; having absolutely no relationship with reality.

  6. Nick says:

    When the tail-draggers finally come around to the reality of a greater probability of economy-crunching events,they’ll be bitching about how deep we have to cut to even begin the slow process of mitigation. They’ll realise that mitigation IS adaption,after wasting years on this spurious Lomborgian dichotomy.

    (Joe,seriously,I don’t think that “a fifth of the country” Pakistan is literally underwater. Not that the reality,which is possibly more like “a fifth of its arable land”,is any comfort…)

  7. catman306 says:

    Thanks, Joe Romm. Yours is exactly the message that shuts up the deniers.

    Climate is the weather you expect.
    Climate change fails your expectations.
    Unexpected weather always costs someone money, money that could have been used more productively some other way.
    Climate change is bad for business and that’s the message that nullifies the status quo maintenance mentality of the deniers.
    Denying the reality of climate change is bad for business.

  8. catman306 says:

    Send a copy of Joe’s essay to every bank and insurance company on the planet. It may help them change THEIR behavior.

  9. Mark says:

    sums it up very well, thanks.

  10. Rebecca Lefton wrote the article.

    “This is cross-posted from the Center for American Progress. Rebecca Lefton is a Researcher and Richard W. Caperton is a Policy Analyst at American Progress.”

  11. Chris Winter says:

    Lomborg’s cost estimate is laughably low. For a 1-meter rise, the U.S. EPA estimated that it would cost $100 billion to protect all coastal areas at risk.

    See: http://papers.risingsea.net/cost_of_holding_back_rising_sea.html

    That’s for the U.S. alone, not the world, and for only 3 feet, not the 22 feet Lomborg is so sanguine about.

  12. Craig Clarke says:

    Clouds of stinking smoke from British Columbia forest fires covered much of Western Canada on Friday, reducing visibility and sparking air-quality advisories.
    “We’ve got these massive fires and huge plumes of smoke coming from the Interior of the province … and the winds from the west are pushing it right across the Prairies to Manitoba,” meteorologist David Jones said.
    Massive columns of grey smoke filled the sky above the Binta Lake wildfire, south of Burns Lake, and could be seen from hundreds of kilometres away, fire information officer Gwen Eamer said.
    A cold front that swept through B.C’s central Interior late in the week brought winds that fanned existing wildfires and lightning that sparked 11 new fires, Eamer said Friday. There were 264 wildfires burning in B.C., and blazes have so far destroyed 271,600 hectares [671,138 acres], including 70,000 hectares in the last 48 hours.
    “To put it into perspective, the 10-year average for [total hectares burned by this time of the year] is 90,000 hectares,” Eamer said.
    The heavy smoke drifting across Alberta, Saskatchewan and Manitoba reduced visibility and emitted a strong smell. Environment Canada issued an air-quality advisory for central Alberta on Thursday, and for southern and western Saskatchewan on Friday.
    Around Edmonton, visibility was reduced to five kilometres, Jones said. “On Thursday, Kamloops looked like a fog bank, it was so bad. There was one mile of visibility in pretty dense smoke.”
    http://www.vancouversun.com/news/Smoke+from+choking+eastern+provinces+damaging+quality/3423725/story.html#ixzz0xFwu1MQs

  13. mike roddy says:

    Chris, #11: There’s a whole cottage industry debunking Lomborg. The books detailing his errors are thicker than the Dane’s originals!

    Craig, #12: The BC forest fires are partly caused by industrial logging. All that horrible clearcutting left the forests less resistant to pests, drought, and climate change in general. Google Earth BC sometime.

  14. Leif says:

    The policies of the GOBP are obvious and have been very successful over the years. Namely make the rich, richer, at whatever the cost to the environment and humanity.

    One only needs to look at the stratification of wealth in our Nation and the world to see how successful the GOBP has been. Now that the rich have bled the economy/s dry and garnered huge interest payments to themselves, their policies have become to bleed future generations by fighting tooth and nail against mitigating the damage caused to date and limiting their exposure to the costs of those damages and the legacy they have bequeath. Can there be any question that if the GOBP could envision as much profits in mitigation as in rape and pillage their tune would change in a heartbeat? The problem is that the GOBP, and the Democrats to a lesser extent, have tied their wagon to the “rape and pillage” mantra and refuse to look reality in the eye.

    Reality Bites!

    Gated communities will only keep the beast a bay so long.

  15. mike roddy says:

    Leif, Kunstler writes well on that subject. He says that the super wealthy of Long Island and Greenwich are mostly protected by privet hedges. When things get crazy, they will turn into fortresses.

  16. Leif says:

    An interesting tactic in a “Target” boycott demonstration. Getting lots of exposure. Jeff Huggens, you will approve.

    http://www.youtube.com/watch?v=9FhMMmqzbD8

    “Democracy is coming to the USA.” Leonard Cohen

    EXXON, Koch Industries and all? You bet!

  17. Jobless in Seattle says:

    Climate change may be bad for business, but is good for civil engineers and construction workers!

    Regards,
    An unemployed civil engineer who used to work in the construction industry

  18. Jobless in Seattle says:

    And in case anyone’s wondering why climate change is good for civil engineers and construction workers, it’s because it destroys the current surplus.

    More dams destroyed = more dams that need to be rebuilt
    More houses destroyed = more houses that need to be rebuilt
    More stuff that has to be rebuilt = more jobs for civil engineers and construction workers

  19. Paulm says:

    Excellent post! This message has got to get to the business community in the US.
    The Chamber of C there has been taken over by fatalists.

    ….United States is missing out because it’s “asleep at the wheel on climate change, asleep at the wheel on job growth, asleep at the wheel on this industrial revolution taking place in the energy industry.”

    More like DUI at the wheel.

    http://www.facebook.com/photo.php?pid=319535&fbid=123187307697639&op=1&o=global&view=global&subj=841785056&id=100000191114734

  20. Mark says:

    all for the protection of two grasping, bloated, nasty, negligent industries, coal, and oil.

  21. Colorado Bob says:

    BEIJING – Swelled by torrential rains, the Yalu river that marks the Chinese-North Korean border breached its banks on both sides Saturday, inundating communities and forcing the evacuation of more than 50,000 people in China.

    Flood waters punctured a dike between the river and an economic development zone in a low-lying part of the Chinese port city of Dandong, Chinese state media reported.

    North Korea’s official Korean Central News Agency said that about a foot (30 centimeters) of rain had fallen since midnight

    http://news.yahoo.com/s/ap/20100821/ap_on_re_as/as_china_floods

  22. Colorado Bob says:

    It’s funny. You can read that pine beetles have denuded and killed an area of B.C. forest land equivalent to the area of California and New York combined, but it doesn’t sink in.

    It seems impossible. Sheer hyperbole.

    Read more: http://www.vancouversun.com/technology/Pine+beetles+march+across+catastrophe+slow+motion/3417092/story.html#ixzz0xH5K2r3q

  23. David B. Benson says:

    Over on Only in it for the gold, some have taken up calling it climate disruption.

  24. Dibble says:

    Mark @20

    “all for the protection of two grasping, bloated, nasty, negligent industries, coal, and oil.”

    two grasping, bloated, nasty, negligent, heavily subsisised industries..

  25. Dibble says:

    Mark @20

    “all for the protection of two grasping, bloated, nasty, negligent industries, coal, and oil.”

    two grasping, bloated, nasty, negligent, heavily subsidised industries..

  26. GFW says:

    “the super wealthy of Long Island and Greenwich are mostly protected by privet hedges. When things get crazy, they will turn into fortresses.” Not workable … what’s the population of NYC again? In a scenario where civil order has broken down, any trucks carrying food to L.I. would be intercepted. I’m mentally picturing the last flight out of Islip much like the last helicopter out of Saigon. Let’s hope we can avoid that scenario so we don’t have to see the details of how it plays out.

  27. Harold Pierce Jr says:

    The rich folks on LI can always bring food, booze, etc in by boat.

  28. Leif says:

    I cannot imagine that the hungry masses will be very sympathetic to the folks that brought down the demise of humanity when push come to shove on our shores like that happening in Pakistan.

    For perspective, the Area in Pakistan covered in flood water is equivalent to ~4 times the total area of Connecticut and a population of ~five times every person in Connecticut displaced and rendered destitute.

    That is a significant number of angry folks out there. And unlike Pakistan, a goodly portion have guns, thanks to the NRA.

    I expect things will get dicy.

    The NRA condones the use of deadly force to protect your loved ones from external threats. Just how does starvation by Corporate and Capitalism induced Climatic Disruption factor into that equation?

    Would you like to enlighten me EXXON… ???

  29. catman306 says:

    Most corporations don’t care if you live or if you die, Lief. You probably owe money to the one’s that do care.

  30. Leif says:

    Floods in China. I have been reading a very interesting book, “Dirt, The Erosion of Civilizations” by David. R. Montgomery. In it he talks about the past floods in China. I would like to pass on some insight from this book. P. 44 & 45. Referring to the Yellow River but others by inference.

    As the population grew in China the population was forced to move on to the flood plains. To protect the population levees were built to control the inevitable floods. However during the non flood season silt is still carried down the river and reaching the slower flow of the flood plain, settles to the bottom of the river thus making the river shallower, necessitating more dirt on the levees. Year by year the bottom rises and the levees rise and by the 1920 the top of the Yellow River was thirty feet above the flood plain during high water season! When the river finally breached the levees in 1887-89 over two million drowned or died of starvation.

    In 1922, Walter Lowdermilk, a Rhodes Scholar was researching starvation and famine protection in China.

    I quote: “Approaching the site where the Yellow River broke thru its dikes in 1852, Lowdermilk described how a huge flat-topped hill rose fifty feet above the alluvial plain to dominate the horizon. Climbing up to this elevated plain inside the rivers outer levee, Lowdermilk’s party traversed seven miles of raised land before coming to the inner dike and then the river itself. Over thousands of years, millions of farmers armed with baskets full of dirt walled in and gradually raised four hundred miles of the river above its flood-plain and delta.”

    Once again floods are devastating China…

    Does this remind you of New Orleans?

    Six feet of sea level rise projected this next 100 years, 10 or 15 feet more the next 100 years. Still more the next and the next…

    Think Big Money will be any more willing to chip in as the years go on than they are today when the cost of mitigation is as low as it is ever going to be?

    Fat chance.

    They preach adaptation.

    Water invented man so that it could go up hill.

  31. Colorado Bob says:

    Leif -
    Here’s yer “Atta Boy “.

  32. Karen S. says:

    Lay off the sarcasm, you guys. Leif is voicing some of the down-the-road kinds of things most people may be thinking about but don’t dare say out loud. There’s room for a philosopher in here, too.

    As for Jobless In Seattle’s comment, “Climate change may be bad for business, but is good for civil engineers and construction workers!” I think you may be right — as long as people can still afford to buy those rebuilt properties. But I’m not betting on it. http://en.wikipedia.org/wiki/National_debt_by_U.S._presidential_terms

  33. Leif says:

    Two Palms Up to you as well, Colorado Bob.

    Leif

  34. Preeem says:

    Meanwhile, in about every government you can look at on the face of earth, not having caught up to the fact that food production and safety from fire and flood is, apparently, “real life”, the right and left-wingers keep on with their criticism that the greens are somehow “disconnected with reality” and that climate bills and incentives for less consumption are utopic and would kill families.

  35. Harold Pierce Jr says:

    Hello Joe!

    Where is my comment re moutain pine beetles?

    [JR: It isn't in the moderation queue or spam folder. Sorry!]

  36. Chad says:

    Lomborg’s estimates of anything are laughably low, because he heavily discounts ANY future costs and benefits.

    The problem with the logic of “discount rates” is that it just doesn’t apply to intergenerational contexts. Using Lomborg’s exact logic, one would conclude that saving the earth from falling into a black hole and destroying all life in the year 3500 would not be worth spending one single penny in costs today, which is patently absurd. Unfortunately, if one long looks 100 years in the future, the “discount rate” logic is only MOSTLY absurd, and therefore Lomborg et al get away with it. Addtionally, Lomborg et al assume rates of economic growth that are simply unsustainable. Most economic growth is due to population growth and higher rates of resource extraction, neither of which can continue. Only technological growth will underlie future growth, and this single source of growth will inevitably mean slower growth overall. Our grandkids just won’t be super-rich, like Lomborg et al project.

  37. Icarus says:

    Refer to it as ‘climate chaos’ rather than ‘climate change’ and people in general might start to get some inkling of what is in store for us.

  38. Joe Earth says:

    Of course, any extreme changes in weather are going to have a financial impact.

    The important questions to ask are how much of these changes are avoidable, and what will be the impact of avoiding these changes on industry and employment?

  39. David Ferrell says:

    There is a vast popular misconception about what sea-level rise means under global warming. People (including professional attention-getter Bjørn Lomborg, who’s got his over hyped and media-covered a$$ in the place where his mouth should be) tend to think of the seas as creeping upward millimeter by millimeter over the years, very gradually eroding coastlines and intruding little by little into low-lying inland areas. This is deadly inaccurate.

    Much dry land will be returned to the sea under any conceivable warming scenario, but the process won’t be orderly or gradual. Rather, the intrusion of the seas onto the continents will be punctuated and to a considerable extent driven by historic catastrophes like 2005’s Hurricane Katrina, Cyclone Nargis in Burma in 2008, and 2010’s epic inundations affecting widely separated locales in the Northern Hemisphere. The link to climatic warming is becoming increasingly clear, as the 2010 flood events were associated with storm systems pumped up by an energized jet stream that fed massive amounts of latent heat and moisture drawn from warming oceans into the associated low-pressure centers. Last winter’s “snowpocalypses” were similarly fed; hence the connection with warming. In the case of Pakistan, it was the confluence of the normally wet Indian Ocean monsoon circulation with heat and moisture from a maximally warm Atlantic Ocean carried by the eastward-moving subtropical jet to extreme south central Asia as opposed to its usual target this time of year, western Russia (since the jet was deflected southward by the stubborn hot-weather-associated “blocking high” over Russia).

    Reportedly one-fifth of the territory of Pakistan, including one-third of its agricultural land, is now submerged, ruining crops and presaging famine for millions. Perhaps worst of all for the survivors, vital food reserves, a major bulwark against famine—including 500,000 tons of stored wheat—were lost to the floodwaters. One has only to look at aerial photographs of Pakistan’s now-flooded territory to see where tomorrow’s ocean may be. From horizon to horizon, Pakistan’s “landscape” has turned into what resembles a seascape dotted with small islands. The Pakistani floodwaters will recede for the time being, but the massive erosion of topsoil will help to denude the once-fertile land and set the stage for the ultimate incursion of rising seas into lower-elevation portions of the Indus Valley region—territory that since time immemorial has been an agricultural breadbasket. While the region has been subject to flooding throughout history, today’s fast-warming oceans and shifting weather patterns make it more likely than not that unprecedented mega-floods like this one—and worse—will become common as greenhouse-driven climate change progresses.

    The important thing to understand is that warming oceans and rising seas go together, so that the incursion of the seas onto the land is not simply a matter of liquid water eroding coastlines and breaching seawalls. Atmospheric water transport—as steam or vapor—appears set to play a role as great or greater than sea-level rise in returning vulnerable land to the sea. Low-lying regions susceptible to being inundated by rising seas will be recurrently flooded by severe storms bearing enormous amounts of oceanic heat and moisture before salt water intrudes upon them.

    For that reason, major changes will tend to happen in such places virtually overnight, not over years or centuries of sea-level rise. Low-lying areas like southern Florida, the western U.S. Gulf Coast and the Indus River Valley region of Pakistan are elementary cases, subject to being rendered uninhabitable due to recurrent flooding from storms long before they become part of the sea itself. Expect many more such “cases” to turn up in the years ahead.
    ________________________________

    To answer Nick (comment #6) above, who writes

    “Joe, seriously, I don’t think that “a fifth of the country” [of] Pakistan is literally underwater. Not that the reality, which is possibly more like “a fifth of its arable land”, is any comfort…”

    Yes, it does appear that one-fifth (20%) of the ENTIRE COUNTRY of Pakistan is under water. That’s the figure I’ve been seeing everywhere in the news for days. This is the “Global-Warming Era” (a.k.a. the Anthropocene, the CO2 super-interglacial epoch, the Greenhouse Millennium), remember? The extremes of today’s climate are much worse than anything we’ve seen before, capable literally of knocking an entire modern nation flat. Whether we’re talking about destruction in one single blow, or “death by a thousand cuts,” our own Country could be next and our number will in any case come up eventually.

  40. Inverse says:

    Have a look at Google Earth and you will see that 20% of the country is a flood plane, guess where all the people are? Humans are so stupid!!!