Research in the latest edition of the S&P Global Sustainability Quarterly explores how two global environmental crises are reshaping the world.
Published: Sept. 17, 2024
Welcome to this special edition of the S&P Global Sustainability Quarterly.
This edition provides S&P Global’s latest commentary and research as market participants around the globe prepare for Climate Week in New York City, the UN’s COP16 biodiversity conference in Cali, Colombia, and the UN’s COP29 climate summit in Baku, Azerbaijan, later this fall.
Will these events, and other developments, bring about the actions necessary to achieve increasingly challenging climate and energy transition goals?
Consider that the S&P Global Commodity Insights base case scenario shows that net-zero goals for every country are out of reach — even as the transition delivers significantly lower global emissions through an energy system delivering more clean technology in the future.
To understand future impacts, track progress and meet global transition goals, investors, corporate executives and other market players require trusted data, analytics and benchmarks.
This information is the lifeblood of financial markets and is essential to increasing the amount of private capital committed to climate, biodiversity and energy transition projects.
Important work is being done in this area in the private sector. One example is S&P Global Ratings’ recent launch of the Climate Transition Assessment (CTA). The CTA is a qualitative opinion that goes beyond a net-zero target to evaluate where a company is on its transition journey and where we expect it to head into the future. The CTA is designed to provide answers to investors and anyone else who is interested in whether a company is taking sufficient actions and near-term steps to deliver on its targets.
Despite the challenges ahead, I’m hopeful that the CTA and other solutions in the market will bring the transparency necessary to close the transition financing gap and spur the changes needed to support the planet’s transition goals.
For the past three years, this publication from the S&P Global Sustainability Research Lab has brought together data-driven research on key topics shaping the sustainability landscape. As we approach the three-year anniversary of the S&P Global Sustainability Quarterly, we’re proud to bring you this Special Edition featuring new research on two intertwined global environmental crises — climate change and nature loss.
We explore how the energy transition could evolve from the perspective of the latest S&P Global Commodity Insights Energy & Climate Scenarios, which reflect fundamental shifts in geopolitics, markets and technology that are reshaping the world into a more complex, multidimensional landscape. S&P Global Ratings unpacks how the potential impacts described by these different climate scenarios could be material to the creditworthiness of issuers and debt instruments — through the lens of both transition risks and physical climate risks.
Physical risks from climate change are increasing, and their economic and financial impacts are likely to rise with time, particularly if mitigation and adaptation efforts are not accelerated. The precise severity and timing of impacts remains uncertain, however. Research from S&P Global Sustainable1 projects how a growing swathe of the world’s population and GDP could be exposed to one climate hazard — drought — under different climate scenarios. The upside is, our data shows how limiting global warming can lessen the long- term impacts of drought for some of the world’s largest economies and most populated regions.
Even as greenhouse gas emissions rise, there is evidence that the energy transition is progressing. Research from S&P Global Mobility finds that adoption of battery electric vehicles is expected to accelerate in the coming years, contributing to a significant reduction in global CO2 emissions from vehicles. As the demand for batteries increases, this will mean a heightened focus on automotive supply chains — including the question of how to ensure sustainable sourcing practices.
Put another way: How do you weigh the need to extract minerals essential for facilitating the energy transition, such as lithium for electric vehicle batteries, against the potential impact on nature? In research from S&P Global Sustainable1, we explore this balancing act the energy transition faces. Any sustainability strategy is incomplete if it does not contemplate both climate and nature; the two are inextricably linked, though nature impacts and dependencies are not yet well understood by many businesses. Research from S&P Global Ratings notes that many earlier economic growth models lacked any consideration of natural capital, or the stock of natural resources and ecosystem services that combine to yield a flow of benefits to people. To address this, the research seeks to develop a basic tipping point model featuring the interaction of both physical capital and natural capital.
Stakeholders across the sustainability world, from economists and policymakers to companies and investors, have a growing understanding of climate change and biodiversity loss — and the links between these twin crises. As the world prepares for a busy fall agenda of major sustainability conferences, we hope the research that follows will shed light on these interconnections — the risks, the opportunities, and the path forward.
Lindsey Hall
Global Head of Thought Leadership
S&P Global Sustainable1
Co-Head, S&P Global Sustainability Research Lab
Harald Francke Lund
Global Head of Sustainability Methodology and Research
S&P Global Ratings
Co-Head, S&P Global Sustainability Research Lab
Thank you to all our colleagues across S&P Global who contributed to the design, production and publication of the S&P Global Sustainability Quarterly: Rameez Ali, Lauren Capolupo, Carla Donaghey, Ila Negi, Stephanie Oxford, Cat VanVliet.
In this edition, we explore the major climate risks companies face and the opportunities a green transition presents.
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