Effects Of Climate Change On Financial Sector

1273 words - 6 pages

Effects of Climate Change on Financial Sector
Abstract
Burning hydrocarbon e.g. fossil fuel emits carbon dioxide and other greenhouse gases like methane. Nature has its own ways of absorbing these green house gases. But since Industrial age we have been emitting green house gases at a higher rate than the capacity of nature’s sink. These green house gases trap heat, affecting the environment and ecosystem in numerous ways.

Figure [ 1 ]: Historic Atmospheric CO2 Concentration (ppm) for 1,000 Years
The preindustrial carbon dioxide concentration in atmosphere of around 280 ppm has risen to current level of 386 ppm. The Intergovernmental Panel on Climate Change (IPCC) project CO2 ...view middle of the document...

Insurance, Re-Insurance, Life Insurance and Pension
Climate change will bring to geographic and demographic changes in various parts of the planet. Mortality and morbidity will be affected by milder winters, increased temperature spreading tropical diseases and pests and extreme weather events. Life insurance and pension industries use financial models based on financial assumptions on the links between economic variables, such as investment return, interest rates, inflation, and salary increases, which have historically been stable. In post colonial era we have lived in a time of steady economic growth and prosperity. In UK’s perspective, The UK Chartered Institute of Insurers predicts that weather related damage will be larger than economic growth by 2065 (Nick Silver, May 2003, The Actuary). The insurance industry will be the first to bear the cost of such unprecedented events and will be passing the liabilities to the common people in terms of increased premium.
Sectors with Potential Regulatory Pressure
After the Copenhagen Summit, Governments all over the world have come to political agreements, at least morally, that climate change is a reality and we should take action to nullify its effects. As per the Copenhagen Accord and other announcements from the Governments around the world there will be an effort to ‘control’ GHG emissions. Hence, the industries responsible for creating GHG emissions will be asked to take the first steps. The industries which will be affected the most by modified policy norms are fossil fuel power generation, oil and gas extraction and refinery, manufacturing requiring high amount of energy, chemical, cement, ceramic and glass, paper pulp, Transportation etc.
Asset Liability Management
Asset Liability Management is very crucial to the financial business as most of the assets and liabilities translate into medium to long term cash flow projections. Typically, a bank lends funds over a period of 20 years. A life insurance company receives regular premiums for periods of often higher than 30 years to guarantee over the mortality or the morbidity (invalidity) of an individual. A pension fund receives contributions from individuals aged 18 to 60 and will invest these contributions into assets so that it is able to provide adequate retirement for these individuals at retirement age. (Impacts of Climate Change on Financial Institutions’ Medium to Long Term Assets and Liabilities by Louis Perroy, 2005). Climate change will change the input variables of several assumptions on which these industries stand.

New Opportunities: CDM Projects
As IPCC, UNFCCC and Governments around the world is trying to find solutions to control GHG emissions and several industries are finding opportunities in this. ‘Cap and Trade’ policy has enabled companies in developing countries to import technologies from developed countries. This has made some projects economically profitable which were not otherwise.
Several CDM projects...

Other Papers Like Effects of Climate Change on Financial Sector

Climate Change on Africa Essay

817 words - 4 pages Examine how the economic impacts of climate change may vary within the African continent” Climate change is already hitting Africa hard however, the IPCC (International panel on climate change) have suggested that Africa will be getting even drier and continue to steadily warm like it has warmed by 0.5 degrees Celsius since 1900. Already being amongst the poorest countries of the world, many African economies are expected to suffer further

Effect of Global Warming on Climate Change and Its Adaption

3210 words - 13 pages local climate variability can influence peoples’ decisions with consequences for their social, economic, political and personal conditions, and effects on their lives and livelihoods. The effects of climate change imply that the local climate variability that people have previously experienced and have adapted to changing and changing at relatively great speed. Key words: green house gases, methane, precipitation, warming, climate variability

Impacts of Climate Change on Caribou and Reindeer

567 words - 3 pages Impacts of climate change on Caribou and Reindeer: Caribou and Reindeer are among many of the large plant eater, arctic animals found on land. Climate-related changes are likely to cause cascading impact involving many species of plants and animals. Compared to ecosystems is warmer regions, artic systems have fewer species filling similar roles; thus having an affect on the other species that depend on them – for example, a decline the

Climate Change and Its Effect on Bangladesh

2725 words - 11 pages major climate change related problems: reduced fresh water availability, surface drainage congestion, sea level rise, increased floods and coastal storms, and how they affect the country. Secondly, the study aims to provide direction on how the potential effects of climate change and adaptation options can be factored into policy making. Finally, this study illustrates how dealing with climate change could be incorporated in ongoing initiatives

Financial Effects of Patient Misdiagnosis

592 words - 3 pages recognize complications that change or aggravate an existing condition. Sometimes a doctor diagnoses one condition correctly but misdiagnoses another condition or fails to realize that there is a second diagnosis that needs to be made this healthcare issue negatively affect hospitals and medical offices financially. The financial management staff in the health industry have to carefully monitor, analyze, and calculate the budgets and monetary

Effect of Fdi on Indian Insurance Sector

1828 words - 8 pages “The effects of FDI on the Indian Insurance Industry” Abstract Chapter-1 1.1 Introduction In the world of increased competition and rapid technological changes, globalization has played a complimentary role over the past years. Globalization has encouraged more and more multinationals to adopt FDI. According to Charles W.L. Hill (1998) “FDI occurs when a firm invests directly in facilities to produce and market a product in a foreign

Roles of Tropospheric Ozone and Aerosols in Climate Change

2224 words - 9 pages The two radiative active species- ozone and aerosols- play a big part in the global climate change. Based on the individual properties, aerosols are determined to offset the warming created by minority GHGs such as ozone. Due to their many influences, improving the understanding of their effects is very essential in future climate prediction. Troposphere ozone and aerosols may be short-lived pollutants compared to CO2, but their impact on climate

Global Warming: Confronting The Realities Of Climate Change

664 words - 3 pages Global Warming: Confronting the Realities of Climate ChangeSea level rise is accelerating. The number oflarge wildfires is growing. Dangerous heat waves are becoming more common. Extreme storm events are increasing in many areas. More severe droughts are occurring in others.These are just some of the consequences of global warming, which are already having significant and harmful effects on our health, our environment, and our communities.Unless

The Effects of Employee Satisfaction on Productivity, Performance, Customer Satisfaction and the Organization Financial Performance

1958 words - 8 pages performance. The effects of Employee satisfaction on Productivity, Performance, Customer satisfaction and the organization financial performance Many of the recent researches have succeeded in establishing strong connection between employee satisfaction and the performances of the organization. Earlier, organizations considered employees or manpower just as another resource like money, material machines etc. However, the development of

Position Paper on Negotiations on Climate Change and the Suggested Steps by the Russian Government

1386 words - 6 pages The Russian Federation United Nations COP 17 Position Paper on Negotiations on Climate Change and the Suggested Steps by the Russian Government In a fight to mitigate and adapt to the effects of climate change, the Russian government acknowledges that there is an immediate need to collectively take action to combat this global issue. Russia feels that this can be accomplished, with the implementation of strict resolutions, whilst avoiding

A Framework for Prudential Regulation and Supervision of the Financial Sector

5339 words - 22 pages and the exchange rate regime was changed to allow for the establishment and maintenance of a more market determined exchange rate. In 1985, a new phase in the adjustment process ushered in financial sector reforms with monetary management and interest rate determination moving towards stronger reliance on the market mechanism. The most far reaching effect of these reforms was the opportunities for the entry of new near

Related Essays

The Effects Of Global Climate Change On Polar Bears

2770 words - 12 pages change presents some serious problems and dangerous changes for all living organisms, but it is of especially great concern to the polar bear.In order to understand the effects climate change has on the polar bear, it is important to understand climate change itself. Climate does not refer to only temperature, but also to humidity, precipitation, cloudiness, and wind (Dessler et al, 2006). Since 1950, scientific evidence has continued to grow

Effects Of Climate Change And Global Warming In Agricultural Regions

2818 words - 12 pages global warming on agriculture and forestry The anticipated consequences of global climate change are a matter of uncertainty in the Vhembe region but the general idea according to the study done by the financial and fiscal commission on the impacts of climate change on South African rural areas with effect of climate change on net revenue of changes in two climatic factors, rainfall and temperature, while controlling for soil type and farming

Impact Of Climate Change On Automotive Business

1027 words - 5 pages the emission, and each year, the number of cars on the road is keep increasing at large rate. In response to this issue, car manufacturers are on the way to reduce the risk of climate change by producing more environmental friendly products, change the equipment to create more clean and effective production, thus reduce the chance of climate change. Through this report, we can clearly see that many new measures must be implemented in order to control and eventually reduce the negative effects of climate change in the industry.

Effect Of Climate Change On Poultry Production

1401 words - 6 pages EFFECTS OF CLIMATE CHANGE ON POULTRY PRODUCTION 1.0 INTRODUCTION Poultry are birds such as the domestic fowl, Turkey, Duck, Goose, Ostrich e. t. c which are of economic importance to man. Their production is one of the livestock production with significant contribution to human food (Demeke, 2004). It is the primary supplier of eggs and meat as a source of income and employment to people compared to other domestic animals (Avila, 1985). They