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The Science of Climate Change

Climate change is no longer a distant threat or just a possibility, it is now a reality for all of us. In this pathway, Kevin Trenberth, a renowned climatologist, delves into the science behind climate change. He first introduces the climate system, its main components and forces.

Tackling the Plastic Crisis

Plastic pollution is by far the biggest threat to our oceans and this remains an incredibly tough problem to solve. Plastic credits could potentially serve as one of the much needed solutions for this crisis.

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The Scale of the Net Zero Challenge

The price of meeting net zero is estimated to be between $100-150 trillion over the next 30 years. Regardless of this cost, we need to reach net zero before climate change does irreversible damage to the environment and the economy.

ESG, Sustainability and Impact Jargon Buster

ESG, sustainability, impact… they all just mean green, right? Not quite. Despite being used often interchangeably, there are distinct differences between these terms.

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Featured Pathways

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The Science of Climate Change

Climate change is no longer a distant threat or just a possibility, it is now a reality for all of us. In this pathway, Kevin Trenberth, a renowned climatologist, delves into the science behind climate change. He first introduces the climate system, its main components and forces.

Tackling the Plastic Crisis

Plastic pollution is by far the biggest threat to our oceans and this remains an incredibly tough problem to solve. Plastic credits could potentially serve as one of the much needed solutions for this crisis.

More pathways

Book a demo

Pricing

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Plans & Membership

Our Platform

Expert led content

+1,000 expert presented, on-demand video modules

Learning analytics

Keep track of learning progress with our comprehensive data

Interactive learning

Engage with our video hotspots and knowledge check-ins

Testing & certification

Gain CPD / CPE credits and professional certification

Managed learning

Build, scale and manage your organisation’s learning

Integrations

Connect Sustainability Unlocked to your current platform

Featured Content

More featured content

The Scale of the Net Zero Challenge

The price of meeting net zero is estimated to be between $100-150 trillion over the next 30 years. Regardless of this cost, we need to reach net zero before climate change does irreversible damage to the environment and the economy.

ESG, Sustainability and Impact Jargon Buster

ESG, sustainability, impact… they all just mean green, right? Not quite. Despite being used often interchangeably, there are distinct differences between these terms.

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Climate Risk Management II

Climate Risk Management II

Simon Thompson

Chartered Banker Institute CEO & ESG specialist

In this second video on climate risk management, Simon Thompson explains the concept of stranded asset risk and its impact on financial markets. He also covers the challenges faced in quantifying climate-related risks and how scenario analysis and stress testing can be used to assess the resilience of financial institutions.

In this second video on climate risk management, Simon Thompson explains the concept of stranded asset risk and its impact on financial markets. He also covers the challenges faced in quantifying climate-related risks and how scenario analysis and stress testing can be used to assess the resilience of financial institutions.

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Climate Risk Management II

7 mins 14 secs

Overview

Climate change presents substantial risks to financial markets, urging thorough risk assessments. The Task Force on Climate-related Financial Disclosures (TCFD) offers tools to tackle these risks. Stranded assets, like fossil fuels devalued by a swift shift to low-carbon alternatives, could destabilise financial sectors. Central banks, regulators, and the TCFD endorse climate risk management, encouraging organisations to employ scenario analysis and stress testing for resilience. The move to a low-carbon economy simultaneously reduces physical risks while amplifying transition risks, necessitating effective climate risk management in daily operations.

Key learning objectives:

  • Understand the concept of stranded asset risk and its potential impact on financial markets

  • Understand the challenge of understanding and quantifying climate-related risks

  • Outline how scenario analysis and stress testing can be used for assessing the resilience of financial institutions and mitigating climate-related risks

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Summary

What is stranded asset risk and what does it mean for the financial industry?

Stranded asset risk refers to the significant or total loss of economic value an asset suffers due to an abrupt transition to a low-carbon world. This risk is particularly significant for fossil fuel assets which may become unviable due to global warming limitations outlined in the Paris Agreement. The potential losses from stranded assets are so extensive that they pose a systemic threat to financial stability, affecting financial firms, retail investors, and various sectors dependent on fossil fuels.


Why is it difficult to understand and quantify climate-related risks?

Understanding and quantifying climate-related risks is challenging due to their complex and interrelated nature. Variables such as the degree of global warming, the speed of transition, changing regulations, and potential legal liabilities contribute to this complexity. Additionally, these variables are interconnected, resulting in intricate feedback loops. Scenario analysis and stress testing are recommended to help understand the impact of different climate change assumptions.


How can scenario analysis and stress testing help quantify the nature of climate risks?

Scenario analysis and stress testing are vital tools in quantifying climate risks. Scenario analysis allows organisations to understand the potential impacts of various climate change assumptions on their operations. By analysing different global warming scenarios (extreme, intermediate, best-case), they can assess the resilience of their financial portfolios and identify vulnerabilities. Stress testing, often using scenarios from the Network for Greening the Financial System (NGFS), assesses the resilience of financial institutions' balance sheets to significant shocks. This can reveal areas of risk and prompt proactive steps for long-term stability and climate risk alignment.

 

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Simon Thompson

Simon Thompson

Simon is the Chief Executive of the Chartered Banker Institute and co-author of Green Finance: Principles and Practice. He is also a former Vice President of the European Bank Training Network, and is currently Chair of the Global Banking Education Standards Committee. He specialises in professional ethics, and green and sustainable finance.

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