Intergovernmental Panel on Climate Change PDF

A Brief on IPCC
On 9 August 2021, the Intergovernmental Panel on Climate Change (IPCC),
comprised of the world’s leading climate experts, published the first part of its sixth
global climate assessment. The IPCC was set up by the UN and World
Meteorological Organization in 1988 to provide policymakers with regular scientific
assessments on the current state of knowledge about climate change.
The first report focuses on physical science. The second report (expected in
February 2022) will focus on climate impacts and adaptation and the third report
(expected in March 2022) will focus on climate mitigation, with the final synthesis
report pulling everything together in September/October 2022.
What the report says..
The title of the IPCC’s press release pretty much says it all: climate change is
widespread, rapid and intensifying. The UN Secretary-General, Antonio
Guterres, described it as “code red” for humanity and that it “must sound a death
knoll for fossil fuels”.
The IPCC’s latest findings says it is “unequivocal” that human activity is responsible
for the current climate crisis and that the goals of the Paris Agreement will be
missed without deep and rapid cuts to greenhouse gas emissions (in particular,
carbon emissions but also other potent GHGs like methane).
An increase of 1.5 degrees Celsius (above pre-industrial levels) in global
temperature is thought to be the level beyond which the impact of climate change
(which we are already seeing now) will get much worse - with higher frequency and
severity of floods, heatwaves, wildfires and droughts. According to the IPCC’s best-
case scenario (i.e., even with deep reductions in GHG emissions), we’re expected
to reach the 1.5C increase by 2040. According to one of the report’s lead authors,
Piers Forster: “If the world can substantially reduce emissions in the 2020s and get
to net zero carbon emissions by 2050, temperature rise can still be limited to 1.5C”.
Which is why this decade is being heralded as the “make-or-break decade” for
climate action.
For those who have been following the climate debate closely, these findings won’t
come as a big surprise. We just need a look at news footage over the last couple of
months to see this in real time: devastating flooding, heatwaves and wildfires
raging across the globe. But for those who are still at an earlier stage of their
climate journey, the IPCC’s latest findings will make it harder to justify either not
taking any action or just doing the bare minimum.
What does it mean in practice?
1. Prepare for more climate regulatory policy
It’s likely that the IPCC’s report(s) will put pressure on governments across the
globe to consider introducing new or more stringent climate regulation and policies.
These might include rules on the phase out of coal power plants and internal
combustion engines, climate reporting for corporates and the financial sector,

climate stress testing for banks and insurers combined with “supervisory
expectations” of how financial regulators expect banks and insurers to deal with
climate risks, anti-greenwash rules for investment products, and possibly carbon
taxes and emissions trading schemes.
The EU and UK are already quite advanced on this front. And no sooner has the
European Commission published its mammoth “Fit for 55” package (EU has adopted
a climate law enshrining its new climate targets of at least a 55% reduction in
greenhouse gas emissions by 2030 compared to 1990 levels and net zero by 2050 )
of proposed changes to EU legislation and policy than questions are already being
asked as to whether considering the IPCC’s latest report will be enough to avert
climate disaster.
All eyes are now on COP26 where global leaders will meet in November in Glasgow
to hammer out the next global climate agreement – with some of the key questions
being:
 Will governments commit to more ambitious climate targets and action?
 Will developed nations agree a finance package that enables developing
countries to sign up to steeper reductions in their GHG emissions?
 Will a global agreement be reached on the phasing out of coal and other
fossil fuels by a certain date?
 Will mandatory climate reporting become the global norm?
 Will global leaders reach a consensus on the need to put a price on the cost
of carbon? Be it through cap & trade emissions trading schemes (like the EU
ETS and UK ETS), a carbon tax or more complex hybrids such as the EU’s
proposed Carbon Border Adjustment Mechanism.
INTRODUCTION OF ESG RELATED POLICIES FOR DIFFERENT INDUSTRIAL AND
BUSINESS SEGMENTS IS UNAVOIDABLE AND IMMINENT. BEST FOR CORPORATIONS
TO BE PREPARED WITH AN AUDIT AND EXECUTION PLAN TO CURB THEIR ENERGY
DEMANDS AND HENCE SAVE COSTS IN THE LONG RUN. WIN-WIN.
2. Climate change will impact all asset classes in pretty much all regions
The IPCC report makes it crystal clear that it’s warming almost everywhere and it’s
warming rapidly. However, there will be some variations depending on your
geographic location.
In any event, for asset managers and owners as well as lenders and insurers
worldwide, the clear message is that climate change can impact all asset classes
regardless of where they are located. So, climate change is clearly financially
relevant to investment portfolios, putting a greater emphasis on the need for
climate risk assessments and risk management programs. And asset owners should
also be asking their asset managers if their business models are fit for purpose and
whether they align with asset owners’ own climate objectives and commitments.
And for investee companies, now is also the time to rethink business models and
strategies if you haven’t already started. Greater investor scrutiny and engagement
will likely speed up the trend we are already seeing in terms of the reallocation of

capital to more sustainable investments and market repricing to reflect the risk of
potential stranded assets. According to the executive chair of the Carbon Tracker
Initiative: “any company whose core business exposure is to a high carbon
economy faces significant reweighting by markets in the next decade”.
But you don’t have do this alone or start from scratch – there are a number of
industry initiatives that have sprouted over the last 12-18 months to help the
financial sector and corporates roll out credible climate strategies, such as the Net
Zero Asset Owners Alliance, the Net Zero Asset Managers Initiative, the Partnership
for Carbon Accounting Financials,
(PCAF is a global partnership of financial institutions that work together to develop
and implement a harmonized approach to assess and disclose the greenhouse gas
(GHG) emissions associated with their loans and investments and the Race to Net
Zero alliance)
INDUSTRY AND BUSINESS DYNAMICS IS BOUND TO SEE A SHIFT IN THE WAY THEY
OPERATE. WITH EMPHASIS ON SUSTAINABLE INVESTMENTS FROM BOTH A PR AND A
FUTURE STANDPOINT. ALSO, THE INCREASE IN ADVERSE WEATHER CONDITIONS
WILL LEAD TO A GREATER RISE IN HVAC DEMAND AND GREENER WORKSPACES.
CENTRALIZED COOLING FOR ECONOMIC ZONES IS GOING TO BE AN AREA OF LARGE
FOCUS TO BOOST ITS EFFECTIVENESS AND EFFICIENCY.
3. Be ready for disruptions to supply chains
It stands to reason that if climate change can impact all asset classes in all regions
of the world, then this will also impact global supply chains. Although the agri-food
sector is likely to be particularly affected, this is not the only sector at risk.
And it’s not just about reducing the risks of climate change (be they physical or
transition risks), it’s also about adapting and building resilience to the climate
impacts that are already happening.
DUE TO THE CHANGING WEATHER PATTERNS, INDUSTRIES RELYING ON
PERISHABLE RESOURCES ARE GOING TO WITNESS AN ADVERSE REACTION IN
SUPPLY BOTH FINANCIALLY AND IN RELIABILITY. EVEN SOURCING IS GOING TO
BECOME A CHALLENGE AS NORMS STEP IN REGARDING SUSTAINABLE SUPPLY
CHAIN.
4. Foreseeable change in Investor engagement with companies wrt
climate issues
Earlier this month, a group of 53 global investors with US$14 trillion in asset under
management called on companies to disclose a net zero transition plan, identify the
director responsible for the plan, and provide a means for investors to vote annually
on progress against the plan. The group of investors has warned corporates in
carbon-intensive sectors to prepare for climate change to remain firmly on the
agenda for the 2022 AGM season.

The IPCC’s latest findings provide investors with an even stronger case to demand
more action from businesses (e.g. earlier targets, clearer intermediate targets by
2030, more stringent criteria for use of carbon offsets, etc).
THE LANDSCAPE OF COMPANY VALUATION IS GOING TO CHANGE INCLUDING
SUSTAINABLITY GOALS AS A PRIMARY FACTOR. INVESTOR PRESSURES ARE GOING
TO PUSH COMPANIES TOWARDS ADOPTING AND EXECUTING PLANS TOWARDS
EFFECTIVE SUSTAINABILITY GOALS, NOT JUST FROM A PR PERSPECTIVE BUT ALSO
FUTURES.
5. More power to climate litigators
According to the Grantham Institute’s latest report on global trends in climate
change litigation published in July 2021, there has been an exponential increase in
climate change litigation across the globe, with cases targeting not just government
inaction but also companies and the financial sector. The recent decision in the
Shell climate case in particular has led to much speculation as to whether this is
likely to result in copy-cat litigation against other companies (not just oil & gas
companies) both in the Netherlands and other countries.
ENERGY AND CARBON-RELATED AUDITS ARE GOING TO INCREASE IN NUMBER AND
COME WITH MORE RAMIFICATIONS NOT ONLY FROM A FINANCIAL BUT LEGAL
STANDPOINT AS WELL. SERIOUS IMPLICATIONS COULD INVOLVE HALT OF
OPERATIONS, ENVIRONMENTAL AND COMMUNITY BASED SERVICES.
Whats to be discussed at COP26? (
Why is ESG important? Its significance to diff industries – Governance,
Investor Value, Business risk
Prepare for Energy Audits and Performance action - Strengthening of
litigators
Potential Ramifications of Noncompliance to energy norms - Carbon
Credits or Tax
Realizing and consolidating the True cost of supply chain – Blockchain for
accountability and crypto based on carbon saved
Awaiting Green Investment Opportunities in India?

Description – How big is India’s potential in green investment. Current status of
green investments in India, and which sectors are the fastest growing in green
investment. Top lenders and institutions offering green investments.
ESG Opportunities in India?
Description – We can cover the ESG opportunities in Indian context, risks and
rewards involved with it.
ESG is seen as a critical component for fund-raising. Integration of ESG
factors into the financial world.
Description – An article on how evaluation of a corporation’s sustainable,
responsible, and ethical practices has become essential in the financial market.
Greatest Achievements by ESG on Global Scale.
Description – Elaboration of the following three points: -
1. Increasing number of sustainable funds and investments
2. Increasing international standards and frameworks for adoption of ESG,
responsible investments, and reporting.
3. Global leaders joining hands to combat climate change, social inequity, and
reduce global emissions.
Green Bonds – Global Context
Description – Green bond milestones, region-wise breakup of green bonds, and
sector-wise of green bonds.

INDIA
The largest reductions in economic growth at 2°C compared to 1.5°C of warming
are projected for low- and middle-income countries and regions (the African
continent, Southeast Asia, India, Brazil and Mexico) (low to medium confidence).
Countries in the tropics and Southern Hemisphere subtropics are projected to
experience the largest impacts on economic growth due to climate change should
global warming increase from 1.5°C to 2°C (medium confidence).
Without considering adaptation options, such as cooling from more reflective roofs,
and overall characteristics of urban agglomerations in terms of land use, zoning and
building codes (UCCRN, 2018), Karachi (Pakistan) and Kolkata (India) could
experience conditions equivalent to the deadly 2015 heatwaves on an annual basis
under 2°C of warming (Akbari et al., 2009; Oleson et al., 2010; Matthews et al.,
2017)
Additional factors such as changes in albedo induced by aerosols and snow-cover
change may also affect temperature gradients and consequently pressure gradients
and the strength of the monsoon. In fact, it has been estimated that an increase of
the regional land mass albedo to 0.5 over India would represent a tipping point
resulting in the collapse of the monsoon system (Lenton et al., 2008)
India can adopt a bottom-up approach by developing villages and small cities to
make them emissions and coal-free. This will reduce the potential issue of haves
and have-nots at the base level. Even today, agriculture is the main occupation of
50% Indian population and due to traditional methods, it has also been a major
cause of environmental degradation. Agricultural reforms should be brought that
provide a greener solution to farmers over traditional methods like burning husks.
The use of chemical-based fertilizers should be discouraged, and green fertilizers
and manures should be popularized. Incentives and awareness should be provided
to farmers for adopting green farming techniques.
India is blessed with enormous green and inexhaustible sources of energy like solar
energy, wind energy, geothermal energy, etc. These must be explored and
exploited immediately. India must explore its solar and wind energy reserves. With
the development of infrastructure, these green sources can essentially replace
conventional sources. Solar lights should be installed in all government buildings
and officials should be encouraged to choose carpool or public transport. This will
reduce the pressure on conventional coal-petroleum based sources for meeting
energy needs.
India is aiming for exclusively electric vehicles (EVs) by 2032 (NITI Aayog and RMI,
2017). Globally, EV sales were up 42% in 2016 relative to 2015. Investing in the
electrical automobile industry will significantly reduce vehicular GHG emissions.
People should be given incentives to switch to electrical vehicles. A roadmap must
be prepared to ensure the smooth functioning of electrical vehicles on highways

and roadways. Efficient implementation of the new vehicle scrappage policy will
become a game-changer. A comprehensive and detailed policy document for
industries should be prepared to guide them on how to minimize pollution and reach
a net-zero carbon emission by 2030. The millionaire businesspersons should be
motivated to perform their corporate social responsibility and invest in initiatives to
control climate change.
A case study for India shows that switching from biomass cook stoves to cleaner gas
stoves (based on liquefied petroleum gas or natural gas) or to electric cooking
stoves is technically and economically feasible in most areas, but faces barriers in
user preferences, costs and the organization of supply chains (Jeuland et al., 2015).