The recently released Intergovernmental Panel on Climate Change’s (IPCC) 6th Assessment Report (AR6) presents the latest science informing Willis Towers Watson’s climate work.
The IPCC’s AR6 is the most recent set of reports that assess the scientific knowledge on climate change, its impacts and risks1. Assessment reports come in groups of three. This first one, released on Monday 9 August 2021, outlines the projected impacts of five emissions scenarios, which range from global net negative and net zero to emissions doubling by 2050 and 2100, compared to current levels. It presents the most up-to-date physical understanding of the climate system and climate change.
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Dangerous, human-casued climate change has arrived
Dangerous climate change has arrived. Human-caused climate change is contributing to the extreme weather we are seeing today. Extreme events will increase in severity and frequency with continued temperature rise.
The world has already warmed by 1.09˚C since pre-industrial times. Dangerous climate impacts are already apparent in every region on earth. 1.5˚C is not a ‘safe’ level of warming, climate impacts at this temperature will be severe. Organisations should prepare for significantly increased physical risks, while managing the risks posed by a rapid transition to a net zero-carbon economy.
We are on track to reach 1.5˚C of warming by 2040 and global temperatures will continue to rise until mid-century under all scenarios.
The earth will continue to warm, and climate impacts will continue to become more frequent and severe for several decades. Organisations should prepare for increased physical risks, both direct risks and those along their value chains.
Reaching ‘Net-Zero’ requires deep and steep emission cuts, reliance on offsets and carbon removal is high risk.
We can slow climate change by making deep cuts to CO2 emissions. Once we reach net-zero emissions, the climate will stop warming. Clients should prioritise cutting carbon: plan A should be to decarbonise to zero. Nature-based solutions for carbon removal may not be sufficiently effective, and technologies for carbon removal at scale are not well developed; relying on this to reduce transition risk is not advisable
Methane is in the spotlight as well as Carbon Dioxide.
While most warming has been caused by CO2, the report found that around half a degree of warming has been due to emissions of methane. Policy makers will likely put additional focus on cutting methane emissions, which will have implications for agriculture, as well as oil and gas.
Low probability, high impact climate risks becoming more significant.
Many of these changes – particularly to the oceans, ice sheets and global sea levels – are “irreversible”. Abrupt changes and “tipping points” – such as rapid Antarcticice sheet melt and forest dieback – “cannot be ruled out”. This has implications for physical risk assessments, with ‘tail risks’ becoming more significant. Risk in investments will also need more robust assessments of transition plans and adaptation plans given irreversibility of some of the changes.
We should use the precautionary principle to guide our actions.
Climate tipping points and the rise in the significance of severe tail risks, mean that organisations should take strong action as soon as possible. When considering climate risk and adaptation options it is sensible to take a precautionary approach. The recent real-world evidence suggests that conditions are worse than expected. For example the heat extremes observed recently in British Columbia, and the rainfall extremes over Zhengzhou and the Rhineland, lie well outside the range of what can be simulated by the AR6 models.
