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Climate Risk: The Perils of Ignoring the Things We See




 

Climate change is not a distant event!


Terrains on fire, ravaged coastlines and loss of marine life are making indelible marks on the Caribbean risk landscape. Through each successive event, the region’s perilous vulnerabilities are exposed. Yet it is still not responding in a way that mitigates against those ills. Sweltering days, dryer seasons and floods within a few minutes of intense rainfall are all danger signals. However, we normalize it and fool ourselves into believing that umbrellas, air-conditioning and multiple water tanks are solutions to what we are witnessing.  


Widespread drought across the Latin America and the Caribbean region has had significant impact on inland shipping routes, crop yields and food production, leading to worsening food insecurity in many areas. Precipitation declines are underscoring high vulnerabilities to drought with several territories from Latin American becoming on the global list of the most water-stressed countries, with less than 1 000 m3 freshwater resources per capita. In 2021, the World Meteorology Organization published a report signaling that 2020 was one of the three warmest years on record for Mexico/Central America and the Caribbean, and the second warmest year for South America. Temperatures were 1.0 °C, 0.8 °C and 0.6 °C above the 1981–2010 average, respectively. This was surpassed by the temperatures recorded in 2023. These statistics must also be paired with warnings given by the Intergovernmental Panel on Climate Change. In their sixth assessment report published in 2023, they delved into the physical science of the climate system. The changes that if sustained could lead to shifting weather patterns, agricultural declines, wildlife migration, population displacement and damaged economic systems. This is a future that leads to famine. A future where you can be a responsible homeowner one day and be fleeing as a refugee the next.


Understanding external contexts is a crucial step in understanding potential risks inherent in any system. It sets the tone for how institutions are structured and how businesses are forged to operate. It also highlights what is needed in terms of personal responsibly to reduce excessive consumption. True understanding of climate risk therefore requires the shifting of perspectives from viewing Climate Change as an abstract distant environmental issue to one of the greatest risks that societies, business and governments are likely to face. Whilst it is being tacked globally via the Paris Agreement (a legally binding international treaty adopted in 2015 that was drafted to tackle climate change mitigation, adaptation and finance) and  by companies making declarations to becomes net zero (reaching a balance between emissions introduced to the atmosphere and emissions removed), businesses have to be equally prepared to operate in  scenarios where climate abatements efforts are unsuccessful and prepare to adapt.


International credit agencies and global investors are paying attention to climate risk and rating companies on their Environmental, Social and Governance profile (ESG). ESG is becoming mainstream as climate risk is being recognized as a critical factor in companies’ long-term profitability. Regulators in different jurisdictions are also getting involved. In fact, in March 2022, the US Securities and Exchange Commission issued a draft proposal to US public companies that will compel them to additionally report on their greenhouse gas emissions and the energy they consume in their investor reports. Companies cannot afford to ignore climate catastrophes when it impacts employee welfare, damages assets, and makes financial capital harder to access. False security mechanisms and lip service must be replaced with committed action to combat this critical emerging risk.


With harsher weather on the rise, the region cannot afford to make claims of being an innocent bystander as it relates to climate risk. Caribbean leaders must honestly contemplate why climate risk management is not mainstream conversation and the adaptation needed to mitigate against it has not been institutionalized into public policy.  


For through its inaction, it may be failing to champion its own fate….



    



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