The “tipping point” is yet to come: how a 0.5° Celsius can change the world

Written by: Camilla Mariani

A tipping point is a point at which nothing is the same again. Scientists have warned recently that the latest IPCC (Intergovernmental Panel on Climate Change) report on global warming could be underestimating the impact of “tipping points”, such as the loss of polar ice caps, which might led to “runaway warming”.

The Earth has already warmed 1 degree Celsius since the 19th Century and now the IPCC has looked at the consequences of jumping to 1.5 or 2 degrees Celsius. Some readers are now thinking: «Whatever could half a degree’s difference matter for our Planet?! »; but as the report shows, even that much warming could expose tens of millions more people worldwide to life-threatening heat waves, water shortages and coastal flooding. Half a degree could represent the difference between a world with Coral Reefs and Arctic summer sea ice and a world without them. Have you ever imagined your Planet like this? I haven’t. And I absolutely don’t want to consider the idea that human actions can generate these kinds of consequences. I don’t want to think about an “Earth tipping point”.

Scientists have estimated the effects of climate change on Arctic sea ice, heat waves, water scarcity, plants and animals and the entire ecosystem. To be more precise in our investigation, I will show you some of the incredible differences that could affect our lives irreversibly. Let’s consider the different effects of an increase in the global temperature of 1.5° and 2° Celsius:

ARCTIC 
+ 1.5°C   Sea ice will remain during most summers
+ 2°C      Ice-free summers are ten time more likely

EXTREME HEAT
World population exposed to severe heat waves at least once every five years:
+ 1.5°C   About 14% of world population
+ 2°C      About 37% of world population

WATER SCARCITY
Increase in urban population exposed to severe drought:
+ 1.5°C   + 350 million people worldwide
+ 2°C      + 411 million people worldwide


These are just a few examples of natural disasters caused by climate change. The IPCC report also underlines that these effects are no longer hypothetical or remote, they are real possibilities that will change the Planet we now know. Each time Earth heats up an extra half degree, the effects aren’t uniform across the world. The Arctic will heat up two to three time faster than other regions. The Mediterranean and Middle East regions could face a 9% drop in water availability at 1.5 degrees of warming and a 17% drop at 2 degrees. Furthermore, the number of extremely hot days around the world will tend to rise exponentially as the global average temperature increases. 

Scientists have been sounding the alarm about global warming for decades, but the report hit a chord: time is running out before serious and possibly irreversible effects are felt. Debate on the causes and effects are on the agenda, but money managers say this fact gives investors a concrete guide to understand how climate change will change their investments. It has been getting easier for individuals to invest with climate change as a focus. Since 1995, assets in sustainable finance and responsible investments have grown 18-fold to more than 11 trillion dollars. There are two main approaches for creating a strategy that allows you to be a sustainable investor: the first one regards investments in alternative sources of energy: this can be done with a wide range of possibilities such as wind, solar or geothermal production and distribution. The other way is the so-called climate-proofing portfolio: companies are aware that climate change will have negative effects on their business and they need to prepare for this. 

Despite the fact that investing with a focus on climate change is becoming easier, yet these investments, like any other, carry risk. «You still have to do your homework» said Lloyd Kurtz, head of social impact investing for Wells Fargo Private Bank. «If you buy an expensive stock with bad fundamentals, it could be green but it’s still going to perform badly». That was the case with many early solar investments and the selections that early green energy funds made, Mr. Kurtz said. But he said the case for renewable energy had been bolstered by companies, like Apple and Google, that adopted these sources to power their operations in the United States. 

The debt market has developed to a level that offers opportunities for retail investors. Louise Herrle, managing director and head of socially responsible investing at Incapital, which underwrites bond offerings, says she has witnessed a great change in the behavior of investors and observed increased interest from baby boomers who desire a portfolio aligned with their values. This could mean offerings from the World Bank to fund water projects or bonds like the one from Toyota, which has sold bonds whose proceeds were used to promote hybrid technology. «Retail is going to drive this. They want to put their money where their mouth is. People are talking about the financial return and the social return», she said. 

The most pessimistic tell us that thinking in terms of an increase of 2 degrees is just utopia, there will be changes of at least 2.5 - 3 degrees. «My view is that 2 degrees is aspirational, and 1.5 degrees is ridiculously aspirational» said Gary Yohe, an environmental economist at Wesleyan University. «They are good targets to aim for, but we need to face the fact that we might not hit them and start thinking more seriously about what a 2.5 degree or 3-degree world might look like». What will happen in the next few years? Are we really ready to cope with this problem? Now, time to reflect.