Climate change is going to have a big impact on the American economy as changing weather patterns affect harvests and coastlines and cause catastrophic impacts. Businesses are reacting accordingly as industries regulate their carbon emissions, insurance companies adjust their risk assessments, and investors diversify their portfolios. However, understanding the full risk posed by climate change will take a concerted effort. Three big names have risen to the challenge, launching the Risky Business Initiative to determine how climate change will affect the American economy.
The Risky Business Initiative was launched in 2013 by Michael Bloomberg (mayor of New York City), Hank Paulson (former U.S, Secretary of the Treasury), and Tom Steyer (founder of Farallon Capital; see IP's profile of Steyer here). The three men believe that the consequences of climate change gravely outweigh the short-term costs of curbing emissions. They have thus joined together to start an independent risk assessment that will quantify the future costs of climate change and the financial risk the United States faces. The review will likely be released in the summer of 2014.
The Risky Business Initiative will act, based on the independent review, to engage with the economic sectors most at risk from climate change. The goal is to help leaders in various sectors prepare for the risks they face. The initiative will form a risk committee composed of national and regional leaders from the diverse areas of America's economy and political arena.
In a letter to the Washington Post, the three men outline the beliefs and reasoning behind the Risky Business Initiative. They acknowledge that the full effects of climate change are not yet known. However, it is known that extreme weather events, such as Hurricane Sandy, are expensive. Further, a changing climate will affect farmers, and high sea levels will affect the value of coastal property. Understanding the full impact of climate change will be essential to businesses going forward. The three cochairs of the Risky Business Initiative want their analysis to "arm decision-makers with the information they need to determine how much climate risk they are comfortable taking on." It is hoped that the report will force industry to take heed and respond appropriately to climate change.