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How one student forced the government to admit the economic risks of climate change

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By illuminem briefings 🌎

· 2 min read


illuminem summarizes for you the essential news of the day. Read the the full piece on The Conversation or enjoy below

🗞️ Driving the news: Katta O’Donnell led a class action against the Commonwealth, asserting they misled Australian bond investors by not revealing the financial risks of climate change
• A settlement was reached in August, pending court approval, this marks the first AAA-rated government recognizing climate change as a key risk to bond value, underscoring the focus of sovereign investors and credit agencies on such impacts

🔭 The context: Sovereign bonds are instruments through which governments borrow money to fund various programs; historically bonds from stable economies as Australia are considered a secure investment

🌎 Why it matters for the planet: The lawsuit emphasized the dual economic risks posed by climate change: “physical” risks due to extreme weather events and “transition” risks from the shift in global demand for fossil fuels
• O’Donnell's lawsuit challenged the safety of bonds in light of climate change implications

⏭️ What's next: The government will likely acknowledge the economic risks posed by climate change and the uncertainties surrounding the transition to net-zero emissions
• Merely disclosing climate risks in sovereign bonds isn't sufficient; governments must undertake tangible actions to truly address climate risks in the economy

💬 One quote: "The economic implications of climate change could affect the stability of the financial system" (Michele Bullock, Reserve Bank of Australia)

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