Last Updated on Thursday, 10 November, 2022 at 9:31 am by Andre Camilleri
During my tenure as Malta’s Political and Security Committee representative, the core topics of interest were not just military and security in North Africa, the Middle East, the Gulf and the Sahel region. Other topics of interest were the promotion of human rights and in particular climate security.
Nevertheless, before delving deeper into the subject I wanted to personalise this opinion piece. A few years back, one of my closest acquaintances, who happened to be a specialist in psychology and sociology, and with a deep understanding of anthropology told me that my interest in sustainability relates to my upbringing. Bafflingly, I paused for a few minutes and proceeded to ask him what he meant by that statement. I was told that coming from a relatively disadvantaged environment made me appreciate and get a better insight – with the help and guidance of my family and grandparents – of my surroundings. True, fiscally it was tough and not an easy childhood, at all. However, I always professed to progress in life and that came from my family’s encouragement. My grandparents, great-grandmother, great aunt, as well as my parents lived next to each other just like a small community. I remember them accentuating the importance to advance my studies. Frankly, they were quite harsh on the narrative but not truly consistent with its imposition.
Distinctly, I remember my grandmother Betty, telling us that we need to upcycle. At that time, I had no clue what the economic effects of sustainability represent. Once, I remember her telling me that we need to take care of our pennies for the pounds to look after themselves. And that was a reference to her savings to cater for my birthday and Christmas gifts. She was generous but not spendthrift. My grandmother was born in 1936, a different generation that experienced destitute and famine because of the Second World War. Her wisdom and strength were inspiring to the point of teaching us how to adapt to every situation and develop strong resilience when facing difficulties. Uncanny as it might sound, when recounting the stories of past wars and contrasting their consequences to the present, including the effects of climate change, indisputably they are all direct consequences of negative human activities.
By the time of the publication of this article the 27th Conference of the Parties of the UNFCCC on Climate Change would still be in progress, and we might be able to write about its outcome in another opinion piece. Clearly, the demand for commitments to reduce greenhouse gas emission, is greater than the preceding years. To reach the Paris Agreement targets, leaders around the world must commit to tougher decisions. Climate change is happening and scientists anticipate the spurt of global warming ahead of the forecasts that were published two decades ago. Independently, on the eve of COPS 27 the European Central Bank announced that the integration of Climate and Environmental Risks, known by their acronym C&E risks, are key components that the financial industry must incorporate within its risk management practices. In fact, the ECB is advocating on the integration of C&E risks, demanding banks to apply the principles of responsible investing and lending. Certainly, it is an interesting topic and I am fortunate to be currently working in this field. However, it is quite a technical subject to explain it in a brief opinion piece. C&E risks fall within the realm of ESG risk management just like other conventional risks inter alia credit, liquidity, operational and reputational risks.
Surely, the work strands in this sphere are manifold. Understandably, the European Commission is issuing multiple regulations for disclosures, while the ECB is supervising banks to integrate C&E risks with clear high expectations. The effects of Climate change are not just physical but also transitional. The strict regulations are accelerating research and companies are required to transit to cleaner technologies to decarbonise the European continent and the current geopolitical context accelerated the process.
Evidently, the effects of Climate change include climate security and it covers an array of complex obstacles, especially food and water security. Regrettably, I did not see enough media coverage of what is currently happening in the Horn of Africa, especially Somalia. Droughts are becoming more extreme in Somalia fuelling climate migration and internally displacing people. For instance, in Somalia around 90% of the country is severely affected, without enough water to sustain their livestock and crops. In fact, academic studies are hinting that future conflicts will be on the rise and these are connected to the lack of water and shortages of food.
Last week, I wrote about Space and the defence of European Space assets. One of the problems when it comes to climate finance is the current lack of data. Unquestionably, integrating temporal data in climate financial simulations is trending. Spatial finance, strange as it may sound, is the way forward when stressing a balance sheet against immovable assets under different climate scenarios. Prior to leaving my post in Brussels, I had a brief chat with my French counterpart ahead of their Presidency of the Council of the EU. Knowing their interest in the subject, I encouraged my French counterpart to start using Space assets and new technology to capture carbon emissions and make temporal data easily accessible to the financial industry.
Certainly, the available data can be used for climate financial simulations, as well as investment decisions and capital allocations. Undoubtedly, my argument related also to the avoidance of the militarisation of Space and ascertain its usage, as an enabler to mitigate Climate change and redirect capital investments with manageable impact on the environment. Indeed, she was quite intrigued about the topic. However, a few days later I left my post, and never pursued the idea.
Now, I just found the time to revive it.
Clint Flores is an economist