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8 Aug, 2018 13:03

Top bank warns that governments and corporations aren’t prepared for climate change

Top bank warns that governments and corporations aren’t prepared for climate change

One of the world’s largest banks, HSBC, has highlighted research indicating that Earth is running out of resources to sustain life and that governments and corporations are failing to prepare for the effects of climate change.

The world has spent its entire budget of natural resources for the year after crossing the threshold on August 1. The date, dubbed ‘Earth Overshoot Day’, marks the earliest point the planet hit its annual resource limit.

READ MORE: ‘Hothouse Earth’: Planet will become ‘uninhabitable’ if climate tipping point reached, study finds

HSBC highlighted the issue using research from the Global Footprint Network (GFN), an independent think tank that promotes conservation and sustainability. The bank blamed businesses and governments for not adequately preparing for climate change, and not using natural resources efficiently.

The bank noted extreme weather events, such as rising temperatures across Europe and wildfires in California, Greece and Scandinavia in its remarks about the research. "As scientists work on attribution analysis for specific events – the general consensus is that climate change is making these events more likely to occur and more severe,” HSBC said, according to Business Insider.

Overshoot Day is calculated by taking the amount of natural resources generated by the Earth that year, dividing it by humanity's consumption of Earth’s natural resources, and multiplying by the number of days in a year.

For most of the history of the planet, Earth was able to produce more resources every year than humans could use. However by the early 1970s the balance shifted and human consumption began outstripping what the planet could reproduce.

Last year’s Earth Overshoot Day fell on August 2 and it has occurred earlier each year since 1971 when it fell on December 21. Humanity is using around 1.7 times the amount of resources Earth produces per year, GFN estimates. By 2020, the group projects that human demand on the planet’s ecosystems will likely exceed what nature is able to regenerate by 75 percent.

“We use more ecological resources and services than nature can regenerate through overfishing, overharvesting forests and emitting more carbon dioxide into the atmosphere than ecosystems can absorb,” the nonprofit’s website reads.

The Intergovernmental Panel on Climate Change (IPCC) claims that temperatures will rise by around 15 percent worldwide by the year 2100. HSBC believe that this will lead to more extreme weather events with a heightening social and economic cost.

READ MORE: Climate change events linked to higher rates of suicide – study

“In our view, adaptation will move further up the agenda with a growing focus on the social consequences,” the analysts said.  

HSBC’s intervention in the climate debate is just the latest from banks and asset managers who are now actively factoring climate risks into their decision-making. Earlier this year, over 200 of the world’s largest investors, including BlackRock and JP Morgan Chase, pledged to report the risk that climate change poses to their business. The Task Force on Climate-Related Financial Disclosures is an initiative aiming to develop a consistent framework for firms to disclose climate-related financial risks.

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