LONDON: Misuse of climate models could pose a growing risk to financial markets by giving investors a false sense of certainty over how the physical impacts of climate change will play out, according to the authors of a paper published on Monday. But the authors of a peer-reviewed article in Nature Climate Change warned that the drive to integrate global warming into financial decision-making had leap-frogged the models used to simulate the climate by "at least a decade". Improper use of climate models could lead to unintended consequences, such as "greenwashing" some investments by downplaying risks, or hitting the ability of companies to raise debt by exaggerating others, the authors said. The problem is that existing climate models have been developed to predict temperature changes over many decades, at global or continental scales, whereas investors generally need location-specific analysis on much shorter timeframes. Neither are climate models designed to simulate extreme weather events, such as storms, which can cause sudden financial losses.

Source: Mint February 08, 2021 16:12 UTC