Environment
Lehman Brothers on Climate Change: Who Looses
Lehman Brothers this month published a report on climate change and its impact on business. Reported in the IHT, I came across it at work, but could not find it publicly.
Despite its length (143 pages), the report is an excellent summary of what has happened and what options lie ahead, and makes a quick browse possible. It covers the science but also the economics, policy, and particularly the case of business.
The Cost of Climate Change:Â India the biggest looser
One of the most interesting points to emerge out of this report is how the costs of climate change are distributed. Perhaps shockingly, the reports estimates that India has the most to loose. As the first graph indicates, India will suffer an estimated 5% loss of GDP due to climate change. This is twice the cost to the EU, the biggest OECD looser, and over 1% higher than the cost to Africa.
The second interesting point to come forth is that the EU is, nevertheless a big looser. In the first scenario it looses almost 3% of its GDP growth. However, the impact of climate change on the EU becomes obvious in the second scenario, where temperatures rise by about 6C. In this case, India is still the biggest looser, but the EU is the 2nd biggest looser, outstripping Africa in lost GDP output.
This may explain partly, why climate change is so much more important for the EU. And why India should find ways to mitigate it.
Climate Change and Business
For businesses, however, the report argues differently, suggesting climate change is an opportunity – to innovate or differentiate:
Businesses are likely to be affected both by climate change itself and by policies to address it through: regulatory exposure; physical exposure; competitive exposure; and reputational – including litigational – exposure.
The pace of a firm’s adaptation to climate change and related policy is thus likely to prove to be another of the forces that will influence whether, over the next several years, any given firm survives and prospers; or withers and, quite possibly, dies.
The report’s author, John Llewellyn and Senior Economic Policy Advisor at Lehman argues much the same thing in another FT article.
Discussion
6 comments for “Lehman Brothers on Climate Change: Who Looses”
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Hi,
I have heard about this piece of research and a similar one by UBS (Climate Change: Beyond Whether).
I would be interested in reading them; any idea how best to get hold of the full copy (print or pdf) ?
Thanks
Yes, I’ve seen that too. The reports were covered here. Citigroup also released a related report: Climatic Consequences: Investment Implications of a Changing Climate.
Unfortunately, I can’t say where you might get the first two if you’re not in the ‘climate change circles’. Find someone that is.
I’ve got links to the Lehman and Citigroup reports at Climateer Investing
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