Sustainability Community

A paper on the risks of relying on models in the global race to combat climate change and survive its impact has just been published.

It should be a must read for everyone.  It will make you aware of the limitations of relying on models in complex systems and place them in context when making decisions and assessing the real risks we face.  It is a call not to fall in to the trap of living in a model and having too much faith in it.  How do we maintain vigilance, challenge and a reality check as we are handed often simplified pre baked goals and asked to adhere to them in a way that may be blinkered and make us think "well that is my bit done problem solved".

Link to Report here

https://actuaries.org.uk/media/qeydewmk/the-emperor-s-new-climate-scenarios.pdf

Lucy Saye on LinkedIn: Emperor's New Climate Scenarios - a warning for financial services |... | 17 comments

The risks of relying on imperfect models and living in model land is too high to avoid. This report is a must read.
We all must be aware of the reality, complexity and likely need to adapt and accelerate plans in response to events on this journey. Finance lives in a one dimensional GDP centric impact view time to wake up and talk about this with a human quality of life lens as well.
👉 The problem has arisen from a system that places perpetual growth of GDP, a human construct focused that ignore impacts that affect nature's, society's and individual's health and well being . The accumulation of these externalities is at the nub of the problem and internalising these externalities, both negative and positive, into how human society manages its affairs is the solution.
👉 We need a positive narrative built of positive tipping points around restoration of systemic health. (Noted in Tim Lenton's forward to the report.)
👉 We need a strategy to manage the human response to this potential existential threat to humanity. Tipping points leading to loss of social cohesion in the face of local dystopian outcomes.

thanks David - the phrase 'All models are wrong but some are useful springs to mind' .  Good post about the complexities of models.  David Carlin from UNEPFI recent comments in Risk.net are an honest assessment of early days of understanding scenario modelling / stress tests - there is a long way to go:

https://www.risk.net/insight/climate/7957042/climate-risk-models-and-metrics-what-works-and-what-doesnt

"Talking at Risk Live Europe on June 7, David Carlin, climate risk lead at the UN Environment Programme Finance Initiative, said the output of these early stress tests is still fairly limited in its ability to estimate climate risk in a portfolio.  "In the summary findings from most of these stress tests, the biggest value has not been the uncovering of new information or even the sizing of the risk … but rather it has been a valuable learning exercise on the topic of the readiness of institutions, what resources and parts of the team they need to marshal to do this, and where the data and data gaps are," he said. When it comes to individual institutions understanding their idiosyncratic risks, and supervisors understanding systemic risk, there is a long way to go, said Carlin. "In terms of the rank ordering by scenario and exposure by sector, most of the assessments [so far] have returned fairly intuitive and expected results," he said. "The next step is to really begin refining the sizing, refining what this means when it comes to decision-making in the near term and where the potential risks lie that may be missed or underestimated by these initial runs."

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James Doyle
Director, Green Finance, Investment Management
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