Small islands and big climate risks
The world’s largest climate meeting has made history. COP28 saw 198 nations agree to transit away from fossil fuels, triple renewables and double energy efficiency globally by 2030. Worldwide, countries continue to grapple with the aftermath of pandemic-fuelled disruptions. At the same time, record-setting temperatures and extreme weather events are battering cities and coastlines.
Climate change and credit downgrades
Dreaming of a sunny island getaway to the Maldives? You might want to book it as soon as possible. A survey by NASA and the US Geological Survey estimated that 80% of the country could be uninhabitable by 2050 as flooding increases and freshwater supplies drop.
The Maldives has been hit with credit rating downgrades from two big rating agencies, raising its cost of borrowing. This presents a hurdle in financing the country’s economic recovery, after being hard hit by the pandemic.
Coping with loss and damage
Singapore is part of the Alliance of Small Island States (Aosis) which represents the interests of 39 small island and low-lying coastal developing states in international negotiations. With some small island states being remote and especially vulnerable to climate impacts, the pressure is on to avoid climate-linked economic fallout before it’s too late. For instance, rising temperatures and sea levels lead to loss of land for development, increased incidents of heat injury and poorer crop yields.
COP28 kicked off with a historic agreement on a loss and damage fund after 30 years of negotiations. At least US$790 million has been pledged to date. The fund is intended to compensate the world’s poorest and most vulnerable countries, helping them to cope with climate-induced economic losses. Earlier this month, Singapore announced that it will not be claiming from the fund. Instead, the nation will support fellow Aosis countries to receive money from the fund. This could include capability building and technical assistance.
At COP28, achieving global consensus on texts to boost mitigation and adaptation efforts was a much-needed step towards a sustainable future. We reinforce actions by businesses to manage climate risks under PCM ESG Research Objective 1 (Managing ESG Risks). Companies must mitigate negative climate-related impacts and take action to boost resilience – such as by equipping low-lying properties with floodgates. This will guard against destruction and disruptions from increasingly frequent hurricanes and floods. Amid evolving climate dynamics, sustainability provides the foundation for economic prosperity.
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