Former Treasury secretaries, financial leaders call on business to cut climate-change risks
WASHINGTON — A bipartisan group of prominent financial and political figures called for new policies to “reduce the odds of catastrophic outcomes” from extreme heat and rising sea levels linked to climate change and issued a report suggesting that the most severe risks could be avoided through early investments.
The group, called the Risky Business Project, is seeking to spell out economic perils of climate change to appeal to businesses “to rise to the challenge and lead the way in helping reduce climate risks.” Some members of the group are expected to meet with leading Obama administration members at the White House on Wednesday.
“I know a lot about financial risks — in fact, I spent nearly my whole career managing risks and dealing with financial crisis,” former Treasury Secretary Henry Paulson says in the report. “Today I see another type of crisis looming: a climate crisis. And while not financial in nature, it threatens our economy just the same.”
In addition to Paulson, the 10-member group includes former treasury secretary Robert Rubin, former Secretary of State George Shultz, hedge fund manager turned climate activist Tom Steyer, Cargill executive chairman Gregory Page, former New York Mayor Michael Bloomberg, former U.S. Sen. Olympia Snowe, former Health and Human Services Secretary Donna Shalala, former Secretary of Housing and Urban Development Henry Cisneros and former dean of the Johns Hopkins School of Public Health Al Sommer.
The group’s White House meeting will include Treasury Secretary Jack Lew, adviser Valerie Jarrett and Council of Economic Advisers chairman Jason Furman. To mark the one-year anniversary of President Barack Obama’s climate action plan, the White House will also host roundtable talks and insurance industry representatives to discuss the financial risks of climate change. On Wednesday evening Obama will be the featured speaker at the League of Conservation Voters’ Annual Capital Dinner.
The report says that there is a 1-in-20 chance — about the same odds as an American developing colon cancer, or twice as likely as an American developing melanoma — that by the end of this century, more than $701 billion worth of coastal property will be below mean sea levels, with more than $730 billion of additional property at risk during high tide.
It said that extreme heat could risk a 50 to 70 percent drop in crop yields; cut 3 percent from labor productivity, particularly in the Southeast; and more than triple the number of days with temperatures over 95 degrees.
But the report offered no solutions. In their work outside of this project, Rubin and Shultz support permitting the Keystone XL pipeline that Steyer opposes; Bloomberg also favors shale gas drilling that Steyer opposes; Shultz supports a budget-neutral carbon tax, while Bloomberg stresses investments in infrastructure to protect coastal cities.
In an ad in The Wall Street Journal last week, the group said that a “first step is to quantify the risks.” Acknowledging that “we may disagree” about responses, it said “we all see the same big picture.”
The report was commissioned by the Paulson Institute, Bloomberg Philanthropies, Rockefeller Family Fund, the Skoll Global Threats Fund, and TomKat Charitable Trust, a Steyer organization.
It was written by the Rhodium Group and RMS, a top modeler for the insurance and other industries, and was peer-reviewed by climate and economic experts.
The report also calls on businesses to focus on less likely “tail risks,” noting that it was not different from households or businesses that pay premiums for protection from fire or flood.