The planet is set to experience temperature rises of 4.1°C – more than double the upper limit of 2°C set out in the Paris Agreement, according to a report by Schroders.
Based on a framework of indicators spanning politics, business, technological progress and energy, the asset management giant warns that on current trends, the limit will be breached within 30 years. This is expected to accelerate environmental damage and economic costs, as climate change becomes a defining driver of the global economy, society, and financial markets over the coming decades.
“The changes to the global economy, societies and industries needed to cut emissions far and fast enough to meet a 2°C goal will reshape the investment landscape,” the report states.
“Until now, financial markets have been unconvinced that political leaders will take the necessary steps, or that societies will make the changes needed without political intervention. “As a result, investment valuations do not yet appear to discount significant climate impacts.”
In conjunction with the report, Schroders released a ‘Climate Progress Dashboard’, designed to give investors insight into the progress being made towards meeting the 2°C temperature rise target. This is recorded across 12 different indicators such as political ambition, public concern, corporate planning, climate finance, carbon prices, oil and gas investment, coal production, and oil and gas production. It shows that while coal production and political ambition point to temperature rises of 2.2°C and 2.8°C respectively, progress on oil and gas production indicate an increase of 7.8°C.
This is said to show the risks that remain inherent in energy companies, with the dashboard providing objective information for investors, rather than confusing and contradictory climate signals.
Source – The Environmentalist