The Journal The Authority on Global Business in Japan

The average global temperature in 2018 was the fourth-highest on record and part of a trend that is sounding alarms. Climate change is becoming an important factor in business, and environmental sustainability is emer­ging as a theme in the world of finance.

On February 14, at an event co-hosted by the American Chamber of Commerce in Japan (ACCJ) Alternative Investment Committee and the British Chamber of Commerce in Japan, Theodore “Ted” Roosevelt IV, managing director of invest­ment banking at Barclays and grandson of US President Theodore Roosevelt, spoke on the challenges and opportu­nities our warming planet presents. The morning session, entitled “Green Finance: Where We Are, and Why It All Matters,” took place at the Shangri-La Hotel Tokyo.

Rising Risk
As Roosevelt explained, we have been living in a period of unusual climate stability for the past 10,000 years. This has allowed agricultural advances, specialization in various areas, and metropolitan expansion.

One might say that the stable climate has allowed society to develop too far. At least that is what Roosevelt suggested as he painted a grim picture of growing CO2 levels, increasing temperatures, and rising sea levels. “The amount of CO2 in the atmosphere has risen by 36 percent since the Industrial Revolution,” he said, adding that the level is possibly the highest in the past two million years. Some scientists, he warned, believe the battle is already over—not something one wishes to hear over breakfast.

An increase of just four or five degrees correlates to a rise in sea levels of 10–60 meters. Such a development, Roosevelt added, could gravely affect what is known as the Third Pole—the snow-covered mountains surrounding the Tibetan Plateau. This area is the water source for the majority of Asia’s river systems. A change brought on by rising temperatures poses a large geopolitical threat, the effects of which would be felt across the globe.

“Most people think that India is going to continue 3.5–4 percent GDP growth. But if [changes to] the Third Pole happen . . . it’s going to become too hot and it’s going to impact agriculture, migration, and human health.”

Despite the danger posed by CO2 emissions, Roosevelt predicts that, over the next decade, Asia will produce 2,000 gigawatts of power using coal. That’s more than 10 times the expected output of the European Union.

Green Finance
Roosevelt believes that many scientists and investors fail to see the connection between climate change and economics. But climate change and resource scarcity go hand in hand, and he believes financial companies have a stake in the outcome and responsibility to tackle the issue. Once investors see the value of climate science in predicting the future, he said, prices will change and society will be compelled to take notice.

Roosevelt, who is chairman of Barclay’s Cleantech renewable energy initiative, also spoke about the resistance to eco-friendly changes seen in Japan and around the globe. He initially experienced such resistance at his own company, but today Barclay embraces an environmental, social, and governance (ESG) leadership role, participates in the green bond market, and uses securities to fund eco-friendly investment.

“We’ve got to be willing to take risks, to invest in green technologies that aren’t proven,” he said, urging financial players to invest early and to reap the benefits or bear the brunt of a much larger risk: intensifying climate change.

Road Ahead
Roosevelt closed by looking at some areas of potential growth:

  • Fourth-generation nuclear technology and fusion
  • Battery storage R&D
  • Capture of CO2 waste materials

“If you look at ESG [efforts], they’re all over the place,” he said, commenting on the disjointed approach to addressing climate change. To accelerate individual efforts, policy reform is needed. He suggested a globally imposed pricing system for the carbon industry to cap profit potential, and also increased government funding for R&D in eco-friendly ventures.

“We are stewards and we have an obligation to carry this on.” 

Lia Walsh is a writer at Custom Media, publisher of The ACCJ Journal.
Many scientists and investors fail to see the connection between climate change and economics.