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Mismanagement of resources as a global issue

From the global financial crisis in 2008 to the African Ebola epidemic in 2014-15 and the ongoing refugee crisis, these risks ebb and flow in response to global events. However, there is one global risk that is not going away — the mismanagement of our global environment.

Globally, many environmental conditions are getting worse: Global Risks Report 2017 The persistent appearance of these risks suggests that we have not yet figured out how to manage them effectively.

While many good initiatives are underway, they have not yet reached the systemic level — or the scale — needed to crack this challenge.

We need to start thinking about them and treating them as the economic, geopolitical, societal, and legal risks that they are.

The one global risk that won't go away

As economic risks At the macroeconomic level, the economic risks posed by environmental issues are significant. Individually, these are big numbers. Combined, they would make a serious dent in economic growth. Recognising the scale of these risks, the G20 requested a new taskforce investigate the risks climate change poses to the global financial system and how those can be managed.

In addition to the risks from physical climatic changes, it also looked at how the shift away from fossil fuels could affect the financial system if it is mismanaged. The value of fossil fuel assets like coal deposits, oil fields, and power stations will likely be reduced — but by how much, and how quickly?

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These questions should also matter to everyone with a pension fund because many are invested in these industries. The taskforce recommended a series of factors companies should disclose about the climate risks they face and how they are managing them.

This would enable markets to more accurately reflect the true values of companies after factoring in risks from climate change. Unfortunately, these recommendations are only voluntary. Unless companies and regulators adopt them, little will have changed. Undisclosed financial risk is also a problem for other environmental issues.

  • If we understand that a population is growing because a false belief that resources are abundant, we can take steps to change how the resources are managed to reflect the reality of their availability;
  • In man-kinds recent history, our population has surged;
  • The real problem is that they have difficulty maintaining their new population with their current resources without increasing the footprint of their agricultural land;
  • Leaky pipes and contaminated local sources are one thing, but improvements to agricultural and industrial processes are a must.

Most companies do not disclose risks from water shortages, policies to price pollution, or their exposure to deforestation in commodity supply chains. Some may have never even assessed these risks. As geopolitical risks Disputes between communities — mismanagement of resources as a global issue even countries — over the water from shared rivers, forest ecosystems and atmospheric conditions can inflame existing tensions in fragile regions. For example, in the disputed Kashmir region, water is a key point of tension.

Water in the region is governed by the Indus Water Treaty signed in 1960 but both sides claim it needs updating to reflect the impacts of climate change. The 2,880km long river also flows through India, Bhutan and Bangladesh. Elsewhere, communities from AlaskaKiribatiand Fiji are planning to relocate — or already have — due to the rising sea level.

In Southeast Asia, the toxic haze from Indonesian forest fires is also exacerbating regional tensions — particularly with Singapore. As societal risks Worsening environmental conditions like water scarcity, choking smog, and growing numbers of extreme heat days affect the way we work, interact with each other, and spend our leisure time. They may also make some existing communities unviable.

However, there is another societal risk that is less discussed but just as important — the societal impact of actions taken to address environmental issues. But we need to remember that these are serious, life-changing events for the people and communities directly affected by the transition. The transition to new clean technologies, industries, and operating models that replace old and familiar ways of doing things has the potential to exacerbate these feelings — leading to dramatic political and social backlashes like those seen in 2016.

  • This list is by no means exhaustive;
  • Poverty facts and statistics ; Loss of Biodiversity ; Climate change and global warming.

The challenge for decision-makers and environmental advocates will be to ensure that both the outcomes and the process of addressing environmental issues include those who are most affected. As legal risks We may also be seeing new legal risks emerge for both countries and companies.

Accelerating climate action

Companies can expect to face increasing regulatory risks as governments design environmental policies and set laws to implement their international commitments and address citizen outcry over issues such as air pollution, deforestation, and biodiversity loss. Governments are also facing a new set of legal risks — several have already been sued for failing to adequately respond to environmental issues and protect their citizens.

In the US, a group of teenagers is suing the federal governmentwhile Norway is being sued over its Arctic drilling plans. Cases have already been tried in the UK and the Netherlandswith both ruling against the government.

Environmental issues are critical ingredients for creating stable and sustainable societies and economies — we can no longer treat them as a side agenda.