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Climate risk tops agenda across leadership, business and society

5 February 2020: we're all in it together. Our leadership, business and we, as citizens, are all mobilised by climate risk. It is securely at the top of the agenda wherever you look.

The announcement that Mark Carney, Governor of the Bank of England, has been appointed by the Prime Minister as Finance Adviser for COP26 (the UN Climate Change Conference) can leave no one in doubt that leadership is central to solving the climate emergency. The rationale for his appointment? To help build a sustainable financial system to support the transition to a net zero economy.

“His appointment adds credibility to the government’s intentions for achieving the net zero economy by 2050,” says Zsuzsanna Schiff, Manager, Auditing and Reporting in ICAEW’s Financial Services Faculty. His key focus will be mobilising action across the financial system to help achieve the 1.5°C goal of the Paris Agreement, including building the frameworks for financial reporting, risk management and returns.

At the same time, the latest PwC global CEO survey has shown that climate-related threats to business has soared up the agenda. Richard Spencer, ICAEW Head of Sustainability, says: “While 64% of the CEOs surveyed see climate as a threat to their businesses, ahead of populism, terrorism and access to capital, three-quarters of them think their responses to the crisis will enhance their corporate reputations.

“We might ask in the light of the very present scale and likelihood of climate crisis coupled with the lack of public trust, what that response will be and how will it help build public confidence.”

He is referring to the World Economic Forum ‘Global Risk Report’ and the Edelman Trust Barometer. “There has been a lot of buzz around the ‘Global Risk Report’ as, for the first time in its history, the five main risks (those most likely to happen and hit us hard) are all environmental. The top three are all climate change. There is no doubt anymore that a climate crisis is a business crisis,” he says.

“But the icing on the cake is that the Edelman Trust Barometer tells us that, although the global economy is healthy and unemployment is at low levels, there is an absence of public trust,” says Spencer. Edelman looks across four institutions: government, business, media and civil society. He continues: “Not one of them is trusted and that is largely down to people’s fears for the future. People expect CEOs to take a leading role and brands to act on the big challenges we face, and that they should serve the interests of all stakeholders.”

Further, society generally is being mobilised to tackle climate risk. The first meeting of Climate Assembly UK has taken place and brought together citizens to discuss the UK’s response to climate change. The 110 members, chosen by civic lottery, were selected to represent the UK population and discuss how the UK can achieve net-zero carbon emissions by 2050. This is the first of four such meetings which saw presentations from Sir David Attenborough and Chris Stark, Chief Executive of the Committee on Climate Change.

“A citizens assembly was one of three key demands of the Extinction Rebellion movement which in 2019 contributed to the tipping point in climate consciousness of UK citizens,” points out Francesca Sharp, ICAEW’s Sustainability Manager. “The first big question, raised by both speakers and members, was how to ensure that the transition to a greener society is fair and does not hit the poorest the hardest."

Challenging questions are likely to abound over the course of the four weekends with the final report of the Assembly due in March.