InDaily

Adelaide's independent news

Support

Grave climate warning for governments and business: "This is about money"

News

All levels of government face huge, unprecedented legal and financial risks if they don’t address a myriad of new obligations forced on them by climate change, the Adelaide City Council has been warned.

Comments
Comments Print article

“I’m a corporate lawyer, so I don’t care about the community, and I don’t care about the environment.

“I care about money.”

That was how Sarah Barker, a Minter Ellison international expert on climate change governance risks, opened an extraordinary presentation to the Adelaide City Council last night (being tongue-in-cheek).

Sure, the planet is likely heading for a rise in global temperatures more significant than the fall in temperature that characterised the last ice age – but ignore that for a moment, she said.

“Climate change isn’t an ethical or an environmental issue for council … it’s, clearly, a material, financial risk and one that has to be considered now,” she said.

“Of course, climate change presents one of the greatest threats to the ecology of the planet as we know it (but) it doesn’t matter whether or not this is a socialist conspiracy cooked up by China to harm the US manufacturing sector.

“It doesn’t matter what you believe, or I believe, or anyone believes when the markets believe it, when investors are making decisions, governments are making policy and when stakeholders have shifted their views.

“There’s a risk that needs to be mitigated.

“This is all about money. Markets have shifted, so we need to shift too.”

Barker said the council – along with all levels of government around the world – faced unprecedented legal liabilities from the developments it approves, from the manner in which it maintains public infrastructure and from its growing role as “insurer of last resort” when natural disasters hit.

She cited a case in which another council rejected a development application from a homeowner – because the proposed renovation was at risk of going underwater.

The homeowner then appealed the planning decision and the council overturned it.

“The structure was then washed away,” she recalled.

“The homeowner then sued the council for allowing them to build it.”

Barker warned there was “a significant potential for an uplift” in the amount of litigation directed against the Adelaide City Council unless it mitigates its risks.

“There’s a huge, widening gap between natural disaster damage and private insurance,” she said.

“When people lose money they look for someone to blame and someone to sue.

“There obviously needs to be changes to your mapping and to your development approval policies.”

She warned that if the council does not sufficiently maintain public infrastructure, impacted in new ways by climate change, and that infrastructure fails in a way that damages private property or assets, “that’s opening you up to legal challenge”.

“We’re already seeing a couple of challenges on that front in the US.”

The council’s credit rating – and that of all governments – was also under threat if it didn’t properly account for the new obligations created by climate change.

She said ratings giant Moody’s was in the process of re-assessing the credit ratings of governments and corporations around the globe, “starting with sub-sovereigns”.

“All the credit ratings of governments and corporations around the world (will soon) account for how susceptible they are to climate change risk, how prepared they are – from an adaptation and resilience point of view – to deal with the impacts, and also how quick they are to deal with any damage that does occur,” she said.

Lord Mayor Martin Haese said the city council was overdue to audit its entire operations to make sure it is prepared for the impacts of climate change.

“The city council hasn’t undertaken any systematic (audit) of its corporate climate change risk,” he told InDaily this morning.

“Credit ratings agencies (… are) rating local governments on their climate risk exposure.

“It’s timely that we (undertake) a detailed audit.”

But he said the council was also a leader in climate change policy – including with its goal for the city and North Adelaide to be carbon neutral by 2025 – and that some of the risk mitigation work had already been done through normal infrastructure renewal processes.

Barker told last night’s meeting that the risks associated with climate change were matched by massive potential gains, she said, including favourable treatment by banks of organisations that can demonstrate sustainability.

Big financial opportunities for businesses and governments

“Private companies, only in the last couple of months, out of Europe and in Asia (… are) getting discounts on their interest rate, negotiated for if they achieve their sustainability targets,” said Barker.

“There was a Spanish insurance company that recently renegotiated a five-year loan (so that) if it hits its targets for each of the five years, it will be paying 30 per cent less interest.

“Here’s a great opportunity to renegotiate with your banks.”

A new trend of funding infrastructure through “green bonds” rather than bank loans was taking off internationally.

“Green bonds” are government IOUs to investors that finance environmentally-friendly projects.

She said investors were accepting significantly lower interest rates on projects that show “green” credentials, because the market perceives them as lower-risk.

“Green bonds are it-and-a-bit in financial markets at the moment,” said Barker.

She said a multi-billion dollar bond issued by the French Government early last year, offering an interest rate lower than an average a savings account, was hugely popular among investors.

She said local governments could issue similar financial instruments to finance public transport and cycling infrastructure projects, adding that new technologies like electric cars and more efficient renewable technology also represented great potential economic benefit.

We value local independent journalism. We hope you do too.

InDaily provides valuable, local independent journalism in South Australia. As a news organisation it offers an alternative to The Advertiser, a different voice and a closer look at what is happening in our city and state for free. Any contribution to help fund our work is appreciated. Please click below to become an InDaily supporter.

Powered by PressPatron

Comments

Show comments Hide comments
Will my comment be published? Read the guidelines.

More News stories

Loading next article