“It is time to abolish billionaires ... because we cannot afford them, the planet cannot afford billionaires,” Kenyan climate activist Njoki Njoroge Njehu told 10,000 protesters in Lausanne, Switzerland on January 17. She is right. It is the billionaire class that is blocking moves to make the urgent shift to create a safe climate.
The billionaire class has been put on notice even by their friends in the banking sector. The Bank for International Settlements (BIS), which operates as the bank for central banks, has just published a book warning of a “green swan” moment — an unpredictable economic event linked to climate change — with wide-ranging impacts. (The global financial crisis of 2007-08 was described as a “black swan” event.)
The Green Swan: Central banking and financial stability in the age of climate change it warns the challenges to banking systems posed by climate change are “particularly challenging”. This is because of “the radical uncertainty” of climate change, which it describes as “a physical, social and economic phenomenon that is constantly changing and involves complex dynamics and chain reactions”.
In other words, banks are being warned they may have to underwrite the enormous costs associated with governments’ refusal to act now to keep fossil fuels in the ground. That includes paying out insurance claims and repairing infrastructure destroyed by an increasingly dangerous climate.
The costs associated with Australia’s New Year megafire crisis are only now beginning to be tallied. Cautious estimates of the cost of lost income from farms and tourism is $1.5–5 billion. But if you add the cost in human lives, injuries and shortened lives due to smoke-related stroke, cardiovascular and lung diseases; damage to species and habitats; the loss of livestock, grain and feed, crops, orchards and national and local parks; the social costs of mental health problems; unemployment and increases in suicide, substance abuse, relationship breakdowns and domestic violence, the costs become considerably higher.
The BIS also warns of “transition risks”, by which it means the expected rise in climate refugees. It is also concerned about “stranded assets” — the risk to fossil-fuel companies of “unanticipated and sudden write-downs, devaluations or conversion to liabilities”. It cites studies showing these stranded coal, gas and oil “assets” range from US$1–$18 trillion.
“Traditional backward-looking risk assessments and existing climate-economic models cannot anticipate accurately enough the form that climate-related risks will take”, the BIS report stated.
It warned that to avoid climate change tipping points required “immediate and ambitious action towards structural transformation” of economies, which needed to include “major changes in regulations and social norms”.
It said there was “no single model or scenario” that can provide “the full picture of the potential macroeconomic, sectoral and firm-level impacts caused by climate change”. It then said: “Even more fundamentally, climate-related risks will remain largely unhedgeable as long as system-wide action is not undertaken.”
It warned that central banks are facing “uncharted waters” and “if they sit still and wait for other government agencies to jump into action” they will be faced with a “green swan event” and they will be forced to intervene to buy large sets of devalued assets “to save the financial system once more”.
The BIS wants coordination across the banking sector to work on a plan to integrate climate-related risks into banking regulations. It said this “task is urgent” since climate-related risks “could become irreversible”. Carbon pricing and the “systematic disclosure of climate-related risks by the private sector” are its starting points.
The World Economic Forum in Davos, Switzerland, has adopted sustainability as a key theme, with “How to Save the Planet” one of seven key discussions. It is even promoting Greta Thunberg’s presence as a key selling point. US President Donald Trump will also be attending, providing Thunberg with plenty of ammunition.
But, as she has repeated at previous global summits, the climate movement will only be satisfied with actions, not words.
If Klaus Schwab, chair of the World Economic Forum, and others thought they were winning hearts and minds with their new focus on sustainability, Thunberg used her speech in Lausanne to emphasise the high-school movement was only getting started. “You have not seen anything yet”, she said. “We are not going to go away.”