A survey among 78 financial institutions in Latin America and the Caribbean holding 54% of the total assets managed by the banking sector in the region, revealed that 38% of banks incorporate guidelines on climate change in their strategy and 24% have a policy on climate risk evaluation and disclosure.
The study entitled “How the Banks of Latin America and the Caribbean incorporate climate change in their risk management,” presented today during an online event, was prepared by the UN Environment Programme Finance Initiative (UNEP FI) and CAF – Development Bank of Latin America, with the collaboration of the Latin American Federation of Banks (FELABAN).
69% of the participant banks identified forestry and agriculture as the sector most exposed to climate risks, followed by the energy generation sector at 44%. 80% of the institutions recognized that the main physical risk to be incorporated in their risk evaluation and management was ‘flooding,’ followed by ‘drought’ (mentioned by 41% of the banks).
Banks in the region have an opportunity to improve the assessment of climate risks in their plans and strategies, with the aim of increasing their resilience and be better prepared to support the transition to low carbon economies.
According to the report, 41% of the institutions that took part in the survey recognized they do not have mechanisms to identify, analyze and manage climate risks.
The authors concluded that climate risks remain unmanaged mainly due to a lack of knowledge regarding the financial impact of climate change, and because of the absence of regulatory demands.
Banks in the region still tend to perceive climate risks from the perspective of how companies impact the environment, and not how exposed these companies are to climate threats. Considering the latter is key for financial institutions in the face of the expected increase in disasters and other impacts of extreme weather, the report notes.
According to the Intergovernmental Panel on Climate Change, given current concentrations and on-going emissions of greenhouse gases, it is likely that by the end of this century the rise in global temperature will exceed 1.5°C above preindustrial levels. This will come with higher sea levels and more frequent and intense climate disasters.
“During the last decade, banks in Latin America and the Caribbean have made significant progress in integrating sustainability criteria in their different areas of work. The study that we present today will also contribute to the timely management of climate risks in their financing portfolios,” said Julián Suárez, Vice President of Sustainable Development at CAF.
“Climate risk assessment is key to the goal of aligning the banking industry with a sustainable and equitable global economy in the 21st century, which becomes even more relevant today as we need to build back better after the COVID-19 pandemic,” said Eric Usher, Head of UNEP FI.
The authors call to follow the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), and to replicate initiatives like the UNEP FI pilot project with 16 of the world’s leading banks to develop analytical tools and indicators that strengthen the assessment and disclosure of climate risks.
The survey revealed that 53% of the banks utilized the Sustainability Report as a mechanism to disclose risks linked to climate change, while only 16% reported through regulatory financial forms as advocated by the TCFD recommendations.
Due to the lack of knowledge regarding climate-related risks definitions, the authors also recommend the banking sector of Latin America and the Caribbean to prepare a common taxonomy on these issues.
Global warming did the Unthinkable
French ski resort closes permanently because there’s not enough snow, CNN informs. Winter is coming. And for yet another ski resort in France, that means facing up to the reality that there isn’t enough snow to carry on.
La Sambuy, a town which runs a family skiing destination near Mont Blanc in the French Alps, has decided to dismantle its ski lifts because global warming has shrunk its ski season to just a few weeks, meaning it’s no longer profitable to keep them open.
“Before, we used to have snow practically from the first of December up until the 30th of March,” La Sambuy’s mayor, Jacques Dalex, told CNN.
Last winter, however, there was only “four weeks of snow, and even then, not much snow,” he added. That meant “very quickly, stones and rocks appeared on the piste.”
Able to open for fewer than five weeks during January and February, Dalex said the resort was looking at an annual operating loss of roughly 500,000 euros ($530,000). Keeping the lifts going alone costs 80,000 euros per year.
La Sambuy isn’t a huge resort, with just three lifts and a handful of pistes reaching up to a top height of 1,850 meters (about 6,070 feet).
But with a range of slopes running from expert “black” to beginner “green” and relatively cheap ski passes, it was popular with families seeking more of a low-key Alps experience than offered by bigger, higher-altitude destinations.
UK snow report website On The Snow calls it “an idyllic place to visit, with exceptional panoramic views and everything you need in a friendly resort.”
La Sambuy is not the only French ski resort facing a meltdown. Last year, Saint-Firmin, another small Alpine ski destination, opted to remove its ski lift after seeing its winter season dwindle from months to weeks, a situation also blamed on climate change.
Mountain Wilderness, a French environmental group, says it has dismantled 22 ski lifts in France since 2001, and estimates that there are still 106 abandoned ski lifts across 59 sites in the country.
According to a report published in August by the scientific journal Nature Climate Change, 53% of 2,234 ski resorts surveyed in Europe are likely to experience “a very high snow supply risk” at 2 degrees Celsius (3.6 Fahrenheit) of global warming above pre-industrial levels, without use of artificial snow.
A report published in January in the Proceedings of the National Academy of Sciences journal found a “substantial possibility” of global temperature rises crossing this 2-degree Celsius threshold by mid-century.
La Sambuy’s Dalex said that “all winter sports resorts in France are impacted by global warming,” particularly those at a medium mountain altitude between 1,000 and 1,500 meters.
G20 summit must formulate plan for Global South climate change threat
The G20 summit in India must have a “concrete plan” for “scaled-up” green financing for the Global South as a critical strategy to combat climate change, affirms the founder of one of the world’s largest independent financial advisory, asset management and fintech organizations.
The comments from deVere Group’s Nigel Green comes as leaders of the Group of 20 top industrialised and developing countries will gather this weekend in New Delhi for a summit that will celebrate the end of India’s 12-month G20 presidency.
He says: Climate change is no longer a distant threat; it is a present reality. Rising global temperatures, extreme weather events, melting ice caps, and sea-level rise are already affecting communities, ecosystems, and economies worldwide.
“The Global South, comprising developing nations with limited resources, bears a disproportionate burden in this climate crisis, despite contributing minimally to greenhouse gas emissions.
“As such, the leader of the G20 – the richest countries in the world – must use the summit starting in India this week to formulate a concrete plan for scaled-up green financing to help the Global South tackle the biggest issue of our time.
“A failure to do this could, ultimately, have catastrophic consequences for our planet and its communities.”
Green financing encompasses a range of mechanisms designed to support sustainable, environmentally friendly projects that mitigate climate change and enhance resilience.
These include investments in renewable energy, energy efficiency, climate adaptation, sustainable agriculture, and conservation efforts.
“One of the major challenges faced by the Global South is access to financial resources needed for climate action. Developing nations often lack the financial capacity to invest in green projects without incurring significant debt,” says the deVere CEO.
“The G20 summit must play a pivotal role in bridging this financial gap by prioritising green financing and creating mechanisms to make it more accessible.”
G20 countries, being the largest economies in the world, must also “commit to increasing in a considerable way their financial contributions to international climate finance mechanisms. These funds are essential for providing support to developing nations in their efforts to mitigate emissions and adapt to the impacts of climate change,” he notes.
Nigel Green goes on to add that the G20 summit should also serve as a platform for fostering collaboration between developed and developing nations.
This collaboration can take various forms, including knowledge sharing, technology transfer, and capacity building.
In addition, to scale up climate action, it is crucial to engage the private sector. G20 countries can promote public-private partnerships and initiatives that attract private sector investment in green projects.
“This can be achieved through incentives, guarantees, or risk-sharing mechanisms that make investments in sustainability more appealing to businesses.”
Innovation in financial instruments, such as green bonds and climate insurance, can unlock alternative funding sources for climate projects in developing nations.
The deVere CEO says: “The G20 summit must urgently encourage the development and adoption of such instruments to diversify funding options.”
The G20 summit in India presents a crucial opportunity to prioritize green financing for the Global South as a key strategy to combat climate change.
This summit can be a turning point in the global fight against climate change, demonstrating that unity, innovation, and commitment can drive transformative change toward a sustainable future for all.
“The urgency of climate action cannot be overstated, and the global community must act decisively.
“By committing to green financing, promoting collaboration, and bridging the financial gap, the G20 can lead the way in ensuring that all nations, particularly those in the Global South, have the resources and support they need to address the climate crisis effectively,” concludes Nigel Green.
To tackle wildfires, researchers in Europe team up with frontline forces
The EU is seeking to limit growing threats from blazes through the use of satellites, artificial intelligence and unmanned aerial vehicles.
By JACK MCGOVAN
Picture the following scene on the French island of Corsica: a local fire service uses a special surveillance camera to detect smoke in the area, quickly declare the outbreak of a blaze and mobilise a targeted response.
No, the action in the Biguglia municipality on Corsica’s northeastern coast wasn’t one of the many wildfire emergencies in Europe in 2023. Rather, it was a demonstration in October 2022 under an EU-funded research project to help regions in Europe counter threats from wildfires.
The Biguglia exercise used a smoke bomb to simulate the start of a fire and an extensive data network to trigger the rapid-reaction steps. It involved a service that has 1 300 firefighters who protect a population in this part of Corsica – the Mediterranean’s fourth-biggest island – that grows to around 400 000 in summer.
‘This first demonstration on Corsica was very positive,’ said Michael Pelissier, a firefighter who participated in the test.
As part of the EU project, called SAFERS, a similar firefighting exercise took place in the Piedmont region of Italy in February 2023 and two more trials are planned in Greece and Spain toward the end of this year.
‘After the next two demonstrations, we would like to push the management system forward in Europe and also beyond,’ said Claudio Rossi, who coordinates the project and is a senior researcher at an Italian research and innovation centre called the Links Foundation in the city of Turin.
With the help of EU funding, Europe’s research community is joining forces with firefighters to prevent fires from spreading or from happening at all. SAFERS is one of several EU projects to combine resources and know-how for tackling wildfires on the continent.
The focus of SAFERS is primarily on the use of satellites and artificial intelligence, or AI, to provide information that could help save lives and contain environmental damage.
‘The orchestrated utilisation of AI-powered solutions can increase resilience to forest fires,’ Rossi said.
Running for three and a half years through March 2024, the project features weather and hazard maps, fire-detection techniques, input from the general public and other tools to help local authorities prepare.
The ultimate goal is to build on the demonstrations in France, Greece, Italy and Spain and develop a comprehensive wildfire-control system for use around Europe.
By combining satellite images and other data, the system is intended to give first responders, decision-makers and ordinary people a clearer view of what’s happening and to facilitate the best responses.
Earth-observation data from the EU’s Copernicus programme is the primary source of information. This would be combined with data collected from smoke detectors, mobile applications, social media and forecast models.
A stark reminder that wildfires pose a growing threat in Europe came from news images in July 2023 of tourists fleeing flames on the Greek island of Rhodes and blazes spreading near the Sicilian city of Palermo.
A month later, attention turned to Spain and Portugal where blazes destroyed more than 16 300 hectares of land and forced the evacuation of villages and tourist accommodations.
The Biguglia municipality on Corsica was chosen as a SAFERS demonstration site in part because of a major fire there in 2017.
‘These last years we have noticed that, notably because of global warming, the summer season has a tendency to expand,’ said Pelissier, the firefighter. ‘So we are increasingly threatened by forest fires.’
The EU, which recently doubled its firefighting fleet of aircraft, has deployed more than 10 planes, 500 firefighters and 100 vehicles to help control and quell wildfires in Greece alone during the summer of 2023.
Over the past two months, the EU has also mobilised such support for Cyprus and – outside Europe – Tunisia. The moves were closely coordinated with national authorities.
Another EU-funded project – TREEADS – plans to feature drones, high-altitude balloons and satellites in a Europe-wide protection system.
‘We can’t only invest in fire trucks, helicopters or planes – we need to train our communities before the fires happen,’ said Kemal Sarp Arsava, who coordinates the project.
Arsava is a senior research scientist at Norway-based RISE Fire Research, which specialises in fire safety.
TREEADS aims to establish a comprehensive fire-management platform covering all three stages of wildfires – before, during and after a blaze breaks out.
Arsava is a native of Turkey who has also worked and studied in the US.
While in the US in late 2019, he was reminded of the international dimension of the wildfires threat by noticing the effect of Australia’s major outbreak of bushfires at the time.
Based then in the state of New Hampshire, Arsava said the blazes caused a slight haze in North America while primarily hurting air quality in South America.
‘The smoke from all of the wildfires in Australia basically crossed the Pacific Ocean and even changed the colour of the sky in America,’ he said.
Drones and balloons
TREEADS began in December 2021 and is due to run until end-May 2025.
The initiative brings together research institutes and companies from 14 European countries and Taiwan.
Besides Norway and Taiwan, the participants are from Austria, Belgium, Bulgaria, Cyprus, Denmark, France, Germany, Greece, Italy, Lithuania, Romania, Spain and Sweden.
The team of researchers is developing new technologies that’ll be tested in eight countries represented in the project.
One plan is to use drones and high-altitude balloons to detect blazes early, collect data for fire crews and even aid their actions by dropping fire-suppressant materials.
A four-layer approach is foreseen: low-altitude drones to locate fire hotspots; mid-altitude drones to drop fire suppressants; high-altitude balloons to provide a broader view; and satellites for the whole picture.
The trials are due to start early next year.
The project is also testing a virtual-reality headset to train firefighters who aren’t typically assigned to dealing with wildfires. That means teaching city firefighters to deal with blazes in different terrains should the need arise.
In total, more than 26 technologies including for fire protection and suppression will be enhanced, developed and verified in TREEADS.
‘These new technologies will make it easier to fight wildfires in the future,’ said Arsava.
Research in this article was funded by the EU. This article was originally published in Horizon, the EU Research and Innovation Magazine.
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