How to Address the Climate Risk Divide

Kris De Meyer

16 years: Neuroscientist

The climate risk divide that means climate scientists and the financial markets can't see eye to eye. Join Kris De Meyer as he explores how to bridge this divide.

Corporate Governance

The climate risk divide that means climate scientists and the financial markets can't see eye to eye. Join Kris De Meyer as he explores how to bridge this divide.

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How to Address the Climate Risk Divide

10 mins 35 secs

Key learning objectives:

Identify the 3 steps to close to climate risk divide
Understand what each step involves

Overview:

There are 3 steps we can take to close the climate risk divide: reminding ourselves of misunderstanding when it comes to differing meanings of climate risk, creating a touchpoint for risk communications between scientists and financial markets and using qualitative risk information effectively.

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Summary

What are the 3 steps to closing the climate risk perception divide?

1. Remind ourselves of the potential for misunderstanding

2. Create a touchpoint for risk communications

3. Use qualitative risk information effectively

What does 'reminding ourselves of misunderstanding' involve?

Every time you see or hear the words climate risk, ask yourself what meaning of climate risk the speaker has in mind. When you use the phrase, ask yourself:

– Which meaning am I using?

– How is this going to be understood by my target audience?

What does 'creating a touchpoint for risk communications between scientists and financial markets' involve?

This means some compromising on both ends of the spectrum. Scientists need to provide information that would allow the development of risk management practices, focusing on worst-case outcomes. Finance professionals would need to give up on the expectation that the science community can provide the quantifiable data to price climate risk in the same way as we price some financial risks.

What does 'using qualitative risk information effectively' involve?

Use the data we already have to create qualitative graphs for regional and national economies, on the probability of local GDP collapsing as a result of the dangers of climate change. This type of qualitative risk analysis can then help to make the case for policy interventions that use subsidies, taxation, or financial regulation to drive a market response that supports a transition away from fossil fuel use.

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Kris De Meyer

Kris De Meyer, a neuroscientist at University College London, believes climate change is a 'people problem' influenced by how people perceive risk, communicate, and think about societal change. The Climate Action Unit aims to bridge communication and understanding gaps between different experts, such as climate scientists and decision-makers in policy, business, and finance, to address climate change and its impact on society.

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