The Intergovernmental Panel on Climate Change Sixth Assessment Report brings together conclusions from the latest scientific studies on the physical science of the climate system. Aviva Investors’ climate specialist Rick Stathers assesses the evidence and the implications for investors.

How much impact have human actions had on the atmosphere and the climate?

Billions of humans walking the planet, burning fuel and clearing land for agriculture, have changed it. But how much impact have those actions had on the atmosphere and the climate?

This complex question is one that 234 scientists from around the world have been grappling with, as part of a shared endeavour by the Intergovernmental Panel on Climate Change (IPCC), the United Nations body for assessing the science related to climate change, to provide objective information to decision-makers around the world.

The IPCC’s latest documents (‘Headline statements’ or ‘Full Report’, subject to final edit) issue a stark reminder that time is running out. Human action is warming the Earth, each of the last four decades has been successively warmer than any preceding decade, and our actions will have consequences.  The report finds that “unless there are immediate, rapid and large-scale reductions in greenhouse gas emissions, limiting warming to close to 1.5°C or even 2°C will be beyond reach”.

In this Q&A, we ask Rick Stathers, Aviva Investors’ climate specialist, to assess the conclusions of the scientific community as Planet Earth enters uncharted territory. He is unequivocal on the key message investors and other stakeholders should take from the report.

We need decisive emissions cuts now

“We need decisive emissions cuts now. Investors need to up pressure on companies, governments and themselves and align the entire investment process with a 1.5C pathway. We need to end fossil fuel subsidies and apply a global carbon price at a level that encourages switching out of high carbon fuels to low or zero carbon ones. Politicians need to provide leadership and put more weight on the lobbying of future generations than on incumbent fossil fuel executives,” he says.

The IPCC’s Sixth Assessment Report runs into thousands of pages. What’s new?

This report aims to consolidate the findings of the scientific studies that have been issued since the last summary in 2013.

One factor highlighted is the comparatively modest carbon budget available – just 500 gigatonnes – to achieve a 50 per cent chance of limiting warming to 1.5 degrees centigrade above pre-industrial levels.

In some scenarios used in the past, the allocated carbon budget was estimated to have a 67 per cent chance of delivering one and a half degrees. That suggests we are being presented with a larger budget, with a lower chance of delivering the temperature objective, than we have contemplated for the last five years.

Why are we being directed to think that way? Surely at this point we should be exploring options with a greater probability of delivering, not a smaller one.

Perhaps it's tacit acknowledgment we need hope. The situation is urgent (see Figure 1), but we still have a window of opportunity to mitigate human climate impacts.

Figure 1: Climate emergency: Life is at risk

1990 IPCC First assessment report

“Human-caused emissions of carbon dioxide are much smaller than the natural exchange rates of carbon dioxide between the atmosphere and the oceans, and between the atmosphere and the terrestrial system.”

2001 IPCC Third assessment report

“There is new and stronger evidence that most of the warming observed over the last 50 years is attributable to human activities.”

2014 IPCC Fifth assessment report

“Anthropogenic greenhouse gas emissions have increased since the pre-industrial era, driven largely by economic and population growth, and are now higher than ever. This has led to atmospheric concentrations of carbon dioxide, methane and nitrous oxide that are unprecedented in at least the last 800,000 years.”

2021 IPCC Sixth assessment report

“It is unequivocal that human influence has warmed the atmosphere, ocean and land…The effects of recent warming are occurring on top of stresses that make humans and nature vulnerable to changes in ways they have never before experienced.”

Source: IPCC, 1990-2021

Scientists seem more confident than in previous reports on assessing the sensitivity of the climate system to greenhouse gas emissions. Previously, modelling to anticipate the impact of doubling greenhouse gases from pre-industrial levels resulted in quite diverse forecasts. Now the outcomes seem to be coalescing, so if you double emissions from pre-industrial levels to 520 parts per million (ppm), there is an expectation that would deliver around three degrees of warming. (The IPCC report states atmospheric CO2 currently around 410 ppm.)1 There is less variance in the potential outcomes.

Additional ecosystem responses to warming are not fully included in climate models

Another point to highlight is that additional ecosystem responses to warming are not fully included in climate models. Those might include CO2 fluxes from wetlands, feedbacks from wildfires and the additional heat that might be generated by the methane released as permafrost melts. We are not well informed about the full climate response that might occur from these ecosystem- level changes.

The report also notes the risk of tipping points, and that the probability of low likelihood-high impact events will increase. We cannot rule out abrupt responses, or the prospect that all the dominoes fall the same way, with catastrophic consequences.

Prior reports have suggested that the Amazon has gone from being a CO2 sink to a source due to deforestation and that increases the risks of the ecosystem drying up. It can tip quite quickly because the transpiration from the trees generates rainfall. If deforestation accelerates, it is likely the transition to savannah will too.

This transpiration also creates atmospheric rivers, responsible for transporting rainfall around the world. Changes here could have huge ramifications for weather patterns, and global agriculture.

One potential source of hope surrounds technologies to remove carbon dioxide (CO2) removal. Is this misplaced?

That’s something I am sceptical about, because the technologies are being used as mechanisms to align the emissions pathways with future temperature trajectories, although there is no guarantee all the technologies work. It is worrying to see carbon capture and storage (CCS) with a prominent place in the report when there are other effective technologies that can be scaled up.

Given we appear to have passed some climate thresholds already, should we be focusing a lot more attention on adaptation?

This is a very underinvested theme. It is a challenge because we will need to be much more granular in our analysis. The adaptation needs of London will be very different to those of Bangladesh, for instance. And who is going to pay for them? Some of the solutions being considered are quite radical, like how to raise whole islands, for example, as the tidal ranges associated with extreme climate events have become larger. We have barely begun in some of these fields.

Contributions to the Green Climate Fund have not been forthcoming, despite the pledges made years ago in Paris

There is supposed to be a Green Climate Fund set up with 100 billion dollars a year to channel funds from the developed world to fund adaptation and mitigation in the developing world.2 But contributions have not been forthcoming, despite the pledges made years ago in Paris. Funding is closer to 12 billion dollars annually, a fraction of what was envisaged.3 There is now another push in this direction, but the UK government has not done itself any favours by cutting overseas aid.

You argue the financial sector is underestimating connectedness, and how climate impacts could trigger wider instability. Why are we not working harder to understand this?

As humans we tend to have an optimistic outlook, and in the finance sector it’s all about protecting economic growth. But we have not given enough attention to what the ultimate end point of the growth agenda might be and contemplated very low or zero growth scenarios.

Years ago, I ran a project engaging the chief economists of investment banks on climate change impacts and how they integrated these into long-term forecasts. Most agreed doing that was likely to be inflationary. One was bold enough to say the situation points to conflict.

If you look at recent history, one of the causes of the Syrian uprising was long-term drought, which caused the rural community to migrate to urban areas in search of work. That contributed to civil conflict, which caused hundreds of thousands of Syrians to other regions, including Europe.

In the US, you are witnessing the fallout from acute climatic events in Guatemala and Honduras

Similarly, in the US, you are witnessing the fallout from acute climatic events in Guatemala and Honduras. A lot of people started to go hungry and become worried about their future. They migrated to parts of the world where they saw better opportunities, creating human caravans. This was one of the background factors that influenced Donald Trump's election in the US. Recently, we have seen unrest in Iran, as a result of rising water scarcity.

These things are not likely to go away. People will leave their homes to protect their lives, and it will create conflict unless we learn how to tackle and manage the issues in a humane and responsible manner.

These types of impacts are not fully reflected in economic models, which are simply not good enough on so many levels. They do not capture the grey workforce, they do not capture domestic work, and so it goes on. We need to rethink the models quite comprehensively.

Given this is a behavioural issue as much as a technical one, should we not start modelling people’s opinions and behaviours more closely?

Climate change is as much a behavioural issue as it is the result of the free market not working. But there is a place for government. Governments can, and must, have a far greater influence than simply pretending that it is all about ‘consumer choice’. There are levers that can be pulled around carbon pricing, for example.

There are massive challenges because we are simply using too much of the Earth’s resources. At the end of July, we passed the point where we had consumed a whole year’s supply of carbon, food and water in 212 days. That’s the fastest ever.

We must leave the space for the planetary system to regenerate

How do we change our consumption patterns? It’s not just that we need to move back within the constraints of the planetary system; we must leave the space for it to regenerate as well. I think it will require stronger government, which will be difficult, because we have become accustomed to freedoms. But should we have the freedom to destroy our own habitat? Ultimately, seven billion people on the planet must learn how to live and consume in a manner that is not going to place unbearable pressure on our own societies.

From where we are, there are many different scenarios we can envisage. It depends who you are and – ultimately – if you have faith in humanity.

So how do you feel when you read the IPCCs latest summary?

I feel immensely sad, both as a father and as an environmental scientist. As a species it is immensely arrogant to believe we can impact so many other species that evolved on the planet alongside us. If Earth is the only source of life in this universe, then damaging or even destroying it is a terrible legacy.

Humanity has the knowledge to do something about its own demise, but not the wisdom to act

I read the outputs of an Ocean conference the other day where it concluded that humanity will leave its imprint in the geological record as being as being the only species that had the knowledge to do something about its own demise, but not the wisdom to act. We need to understand and appreciate natural capital much more and understand what really underpins our world. Failure to do that is disastrous.

Want more content like this?

Sign up to receive our AIQ thought leadership content.

Please enable javascript in your browser in order to see this content.

I acknowledge that I qualify as a professional client or institutional/qualified investor. By submitting these details, I confirm that I would like to receive thought leadership email updates from Aviva Investors, in addition to any other email subscription I may have with Aviva Investors. You can unsubscribe or tailor your email preferences at any time.

For more information, please visit our Privacy Policy.

Important information

Except where stated as otherwise, the source of all information is Aviva Investors Global Services Limited (AIGSL). Unless stated otherwise any views and opinions are those of Aviva Investors. They should not be viewed as indicating any guarantee of return from an investment managed by Aviva Investors nor as advice of any nature. Information contained herein has been obtained from sources believed to be reliable but has not been independently verified by Aviva Investors and is not guaranteed to be accurate. Past performance is not a guide to the future. The value of an investment and any income from it may go down as well as up and the investor may not get back the original amount invested. Nothing in this material, including any references to specific securities, assets classes and financial markets is intended to or should be construed as advice or recommendations of any nature. This material is not a recommendation to sell or purchase any investment.

In Europe this document is issued by Aviva Investors Luxembourg S.A. Registered Office: 2 rue du Fort Bourbon, 1st Floor, 1249 Luxembourg. Supervised by Commission de Surveillance du Secteur Financier. An Aviva company. In the UK Issued by Aviva Investors Global Services Limited. Registered in England No. 1151805. Registered Office: St Helens, 1 Undershaft, London EC3P 3DQ. Authorised and regulated by the Financial Conduct Authority. Firm Reference No. 119178. In France, Aviva Investors France is a portfolio management company approved by the French Authority “Autorité des Marchés Financiers”, under n° GP 97-114, a limited liability company with Board of Directors and Supervisory Board, having a share capital of 17 793 700 euros, whose registered office is located at 14 rue Roquépine, 75008 Paris and registered in the Paris Company Register under n° 335 133 229. In Switzerland, this document is issued by Aviva Investors Schweiz GmbH.

In Singapore, this material is being circulated by way of an arrangement with Aviva Investors Asia Pte. Limited (AIAPL) for distribution to institutional investors only. Please note that AIAPL does not provide any independent research or analysis in the substance or preparation of this material. Recipients of this material are to contact AIAPL in respect of any matters arising from, or in connection with, this material. AIAPL, a company incorporated under the laws of Singapore with registration number 200813519W, holds a valid Capital Markets Services Licence to carry out fund management activities issued under the Securities and Futures Act (Singapore Statute Cap. 289) and Asian Exempt Financial Adviser for the purposes of the Financial Advisers Act (Singapore Statute Cap.110). Registered Office: 1 Raffles Quay, #27-13 South Tower, Singapore 048583. In Australia, this material is being circulated by way of an arrangement with Aviva Investors Pacific Pty Ltd (AIPPL) for distribution to wholesale investors only. Please note that AIPPL does not provide any independent research or analysis in the substance or preparation of this material. Recipients of this material are to contact AIPPL in respect of any matters arising from, or in connection with, this material. AIPPL, a company incorporated under the laws of Australia with Australian Business No. 87 153 200 278 and Australian Company No. 153 200 278, holds an Australian Financial Services License (AFSL 411458) issued by the Australian Securities and Investments Commission. Business Address: Level 30, Collins Place, 35 Collins Street, Melbourne, Vic 3000, Australia.

The name “Aviva Investors” as used in this material refers to the global organization of affiliated asset management businesses operating under the Aviva Investors name. Each Aviva investors’ affiliate is a subsidiary of Aviva plc, a publicly- traded multi-national financial services company headquartered in the United Kingdom. Aviva Investors Canada, Inc. (“AIC”) is located in Toronto and is registered with the Ontario Securities Commission (“OSC”) as a Portfolio Manager, an Exempt Market Dealer, and a Commodity Trading Manager. Aviva Investors Americas LLC is a federally registered investment advisor with the U.S. Securities and Exchange Commission. Aviva Investors Americas is also a commodity trading advisor (“CTA”) registered with the Commodity Futures Trading Commission (“CFTC”) and is a member of the National Futures Association (“NFA”). AIA’s Form ADV Part 2A, which provides background information about the firm and its business practices, is available upon written request to: Compliance Department, 225 West Wacker Drive, Suite 2250, Chicago, IL 60606.

Related views