The Norwegian research settlement of Ny-Ålesund, within the Arctic Circle, is the most northern permanently inhabited area in the world. During 17-19 September 2018 the settlement was host to the Ny-Ålesund Symposium - a high level gathering of financial practitioners, climate scientists and policymakers. The purpose of the annual gathering is to debate the global challenges and questions facing the Arctic and northern regions, such as climate change. This year, sessions covered: climate change and extreme weather events; reducing climate risk in the financial system; and green finance and climate risk; to mention a few. In recognition of the HSBC Centre of Sustainable Finance’s expertise in understanding the financial implications of climate risks, Zoe Knight was invited to attend the symposium and join the debate.

    'When we talk about climate risks we know that there are risks that come from transitioning to a low carbon economy – for example moving away from fossil fuels – and there are risks that come from adapting to the consequences of warmer temperatures, such as extreme weather. The knowledge gaps in the research concern the timing, speed and scale of how these risks will play out, which in turn are linked to the timing, speed and scale of the response of the financial sector. That is one reason why this gathering has been particularly useful. Bringing together financiers alongside other specialisations allows us to address these climate risk unknowns and better prepare.' said Zoë Knight.

    A critical component of the Ny-Ålesund Symposium is its ability to convene well respected experts in climate change from both the private and public sector, alongside international experts from organisations such as the World Bank and the science community, to share their findings and inform each other’s perspectives in a one-off event. With a broad range of professions examining climate change though their relevant expert lenses, the gathering enables improved cross-sectoral understanding.

    To give an example of how stakeholders view climate risk from different perspectives, consider how the science community aims to predict temperature outcomes as a result of socio-economic activity and associated GHG emissions while the energy sector sets out GHG emission profiles according to a set of input assumptions for energy supply and demand for power, transport, industry and heat use, and do not necessarily link these to temperatures. The HSBC report on Managing financial system stability and climate change examines in greater detail how banks can fully integrate climate risks to existing risk management frameworks so as to support financial stability across the economic system. The symposium furthered thinking on these economic factors.

    The symposium also considered the wider implications of extreme weather events such as population migration. This can be caused by multiple types of extreme events. In the longer term, currently populated areas around the world may become uninhabitable due to regular flooding and Small Island Developing States may find rising sea levels threatening their very geographical existence. In the nearer term we are also seeing a need, in developed and developing countries, for people to relocate to avoid the disastrous effects of extreme weather phenomena, such as hurricanes. The financial implications of all extreme climate change events needs greater research in order for those in the financial sector to be able to plan and operate effectively.

    One aim of the HSBC Centre of Sustainable Finance is to highlight and address the financial risk questions surrounding extreme events created by climate change and to fill knowledge gaps on the real economy effects of extreme events caused by climate change.

    Zoë Knight is Group Head of the HSBC Centre of Sustainable Finance.