LONDON: Misuse of climate models could pose a growing threat to financial markets by misleading investors as to how the physical effects of climate change will play out, according to the authors of a paper published Monday.
With heat waves, wildfires, major storms and sea level rise expected to intensify as the planet warms, companies are under pressure to reveal how the unrest may be. affect their businesses.
But the authors of a peer-reviewed article in Nature Climate Change warned that the effort to integrate global warming into financial decisions had jumped into the models used to symbolize weather by “at least ten years”.
“Just as you would not use a Formula One Grand Prix car to pop into the supermarket, climate models have never been developed to provide sensitive information for financial risk,” said Andy Pitman, climate scientist at the University of New South Wales and co-author of the paper.
Inappropriate use of climate models could lead to unintended consequences, such as “greenwashing” some investments by reducing risks, or affecting the ability of companies to raise debt by over-investing. on others, the authors said.
The problem is that existing climate models have been developed to predict temperature changes over many decades, at global or continental levels, but investors usually need to place-specific analysis of much shorter timeframes.
There are no climate models designed to simulate real weather events, such as storms, that can cause sudden financial losses.
To close the gap, the authors called for the development of new forms of climate forecasting to support the financial sector, with support from certified “climate interpreters” to regulators, investors and help companies make better use of their science.
“Businesses love to use models, because the numbers give them a sense of security,” said Tanya Fiedler, a lecturer at the University of Sydney and lead author of the paper. meaning the numbers are reliable. ”
This story was published from a wire group group with no text changes.