Climate - Double Materiality at Work

[Music] I'll use that um I'll do it oldfashioned style uh and I'm grateful to be here again I was here at the last resolve conference 18 months ago I'm a little disappointed that Rachel did not introduce me with a song like she did with the people this morning I would have thought even that after she said it took five minutes in which to compose that song with AI that we could have come up with one over lunchtime um and thank you everyone for staying part uh staying back for what is the graveyard shift uh but networking will start immediately afterwards this is a subject uh close to Linda's heart I know very close to my heart and frankly it should be very close to everyone's heart here um climate change means risk climate change means cost climate change is not a future matter the climate invoices are here now and they are p payble now and it's something that we're going to be discussing during the course of our session um this afternoon they're payable reputationally they're payable in what Tim referred to as a social license setting they're payable operationally and operational changes are now going to be required immediately up and down the value chains and they're payable of course financially double materiality um is a concept um of corporate report important uh it emphasizes the need not only for companies to disclose how sustainability issues now in addition to financial issues affect them but there's now going to be under a series of uh reporting uh directives that have been adopted in various jurisdictions requirements for companies themselves to um uh go and uh take the next step and report on the due diligence procedures that they have brought to bear to deal not only with how sustainability issues are going to in affect their businesses up and down the value chains but how they are going to affect other companies the environment at large Society at large um through their value chain activities it is going to drag um uh it's going to drag um uh entities that are part of that supply chain into the climate space even when they are not directly um operating in those markets uh Mel is going to deal with that in in much more detail um in due course but when I say that it's changing things financially and operationally the insurance markets do already and will increasingly have a role to play in this space premium coverage and risk have changed they are immediate they they are already affecting the bottom line of businesses they will continue to affect the bottom line of businesses because insurance companies are going to Bear the brunt or much of the brunt of uh the risk of the giving of the risk that is coming to pass uh with with climate change and how it is going to operate on various different Industries we're also going to touch upon this afternoon um racer and Thomas will deal with the insurance point we're also going to touch this afternoon um on what I think has been referred to several times as the Dark Masters of uh um of the class actions the climate funders and we have Thomas here uh to represent the Dark Masters um it's a a title that he's heard referred to several times today and he's going to tell us why he takes great exception to that so how we ended up here um it was worth uh worthwhile I thought to go back to the beginning all of us need to stop every now and again and take a pause on where we are and why we're here it's hard to believe that United Nations um framework convention on climate change is now 32 years old we all get lost in the cop numbers cop 28 cop 29 but 32 years ago uh these were the laudable objectives ultimately an objective to stabilize greenhouse gas concentrations at a level that was going to prevent dangerous anthropogenic interference with the climate system so far so good as a laudable aspiration but then the next statement which I put up on the slide which frankly in today's age GRS when you read it that it was going to be stabilized at a level and within a time frame sufficient to allow ecosystems to adapt naturally to climate change apparently if we did it more slowly the Earth's ice sheets would uh melt uh less rapidly or not melt at all if we were going to deal with um uh climate change in a particular time frame um it's it's remarkable to think that um that that um as an objective was actually enshrined in the in the convention all those years ago as we know it's passed through the Kyoto Protocol the Paris agreement the Glasgow commitments um ultimately to try to reach a point point where there was an agreement on how high um we were prepared to accept a word again I find grating but prepared to accept how far we would go above pre-industrial levels of global warming not two degrees well below two degrees and well below two degrees at 1.5 degrees by capping greenhouse gas emissions in 2025 and then reducing them by 4.3% um uh by 2030 this was so the so the United Nations framework convention says is all part of a legally binding agreement well that depends on whether you've given effect to the treaty at a domestic level and how you've then put in place National laws to try to implement it and in many in many jurisdictions around the world that just hasn't happened the German constitutional Court back in um 2021 uh set out what is probably a statement of the obvious so far from being legally binding um immediately by being um a party to the treaty uh it's a system based on Mutual trust with a series of targets and it was Mutual trust because nowhere was there any agreement in the Paris agreement uh about how parties were going to commit themselves to specific reduction measures so where are we tracking the two words uh and this is not meant to be a climate talk but it's sobering to pause and think why the climate bill is now in I unashamedly borrow this from Professor Yan rockstrom um climate talk um a TED Talk that you'll find online line in September 2024 only a few months ago uh are tipping points on the the Earth Systems and where we're tracking 2023 was the hottest year on record 2024 is going to be hotter still by 2022 we had past 1.2 degrees increase above pre-industrial 1850 to 1900 Levels by 2023 we had already touched 1.45 de Centigrade above those levels we were already at the well below 1.

5 degree level we're projected to actually pass through that this year but most troubling in this curve according to the climate scientists is the steepness of the annual Global mean average temperature increase in the four decades up until 2014 that equated to one uh 0.18 de Centigrade per decade in the last decade that has shot up to 0.26 de given where we are now at we are tracking to pass 2 de by 2045 unless things change we are tracking to be at 3 Dees by 2100 none of your grandchildren will look back on you in a favorable way um if we reach at that point and running with this has been an almost immediate correlation or similar correlation between any number of socioeconomic behaviors of man and degradation to Earth systems that are necessary for climate sustainability population increase loss of free uh fresh water putrification of fresh water with nitrogen and sulfate loss of um uh uh Global Eco uh Global um rainforest um coverage this is where we are tracking now in the blue bar to um 3 degrees as I say the pledges would keep it as two degrees on current trends the 1.5 Target looks like it's almost ancient history and there in lies the problem because what's happened over the last few years is that this has become almost an issue to be politically managed not an issue to be confronted um as I say we need to pause we need to stop uh we need to consider how we're going to address this I said at the beginning that the climate invoices in I didn't do a slide on how much that was going to cost because it depends on what study you read and it depends on what you put into the climate science and climate economics model how do you value population displacement how do you do you value the health effects um how do you value in the cases of countries as we all know like taloo that are going to lose their entire physical nation state the loss of a culture but the the econ the the climate economists value this in$ 2050 at somewhere between depending on the model us 12 trillion per anom upwards to us3 38 trillion perom in $250 that last figure would represent its forecast an 18% impact on global GDP I come to the next and last point of this um overarching um discussion what about the second limb of what the German constitutional Court said what about Mutual trust that was meant to be the primary focus of cop 29 last last month in aaban we were meant to have a position where there was an agreement and we did get an agreement um at least on global financing of the less developed countries um we all know how that ended up those countries came the less developed countries and that's a list of person a list of countries that were set in 1992 I hasten to add came with a climate bill of 1.2 to 1.

7 trillion they walked away with $300 us billion do from 2035 onwards as a commitment putting that in perspective that is 45 days of global defense spend is the commit ment that the um uh remaining Nations um were prepared to make and that to the most climate vulnerable and poorest countries in the world that are already overextended um and overspending on meere loan repayments as I've tried to highlight on this slide so yes within all of that companies have to adapt um there is a litigation Paradigm that goes to the reputational build that I've been describing um unless we're in the framework setting of uh um National framework litigation we've had some of that through the European Court of human rights in recent times um it is largely reputational and strategic we'll address that in a moment um with the panel U there's the corporate there's the compensatory climate change cases which will'll also address with the panel um and with discussions with Thomas but there is now a bill there is a bill to be paid and there are now mechanisms that are now coming into play and are coming into play this year through amongst other things these reporting directives that'll require companies not just um within Europe uh not just uh within America or other jurisdictions where these directives have been adopted but will require companies all the way through the supply chains to be paying those bills and if I can invite the rest of the panel up now we'll start the discussion [Music] w