Financial institutions, such as banks and pension funds, play an important role in avoiding dangerous climate change. It's not just about investing in renewable energy and low-carbon business, but also to promote Brazilian Amazon's and stability in Brazil's Amazon and Boreal forests in Russia and Canada, the Earth's system of two well-known "tipping elements". Such falling elements are also referred to as "sleep giants" because once they are "awakened" they may have a sharp impact on the global climate with large-scale expansion of carbon dioxide, which contradicts carbon storage in soil and vegetation.
This is a new research report published in the latest issue Global Environmental Change.
"Unlike green financing standards, we will discuss the ways in which financial activities are associated with economic activity, which are significant changes to important ecosystems for stabilizing the planet's climate," said Viktor Galas, Stockholm University, deputy director of the Stockholm Resource Center.
The article is based on research on the Global Economic Dynamics Team and Biological Program (GEDB) at the Royal Swedish Academy of Sciences, Stockholm Resource Center at Stockholm University, Australian National University and Groningen University in the Netherlands.
"Our research allows a small set of international financial players to influence the impact of climate stability in the economic sector in terms of their property in order to change both the Amazon rainforest and the boreal forests," said co-author Beatrice Crona, executive director of GEDB and researcher at Stockholm Resellance Center.
These financial institutions are marked by "financial giants" in a new survey, which also analyzes how much encouragement and distinction affect climate stability or growth.
"The survey is the first to link data about global investors and earth-moving data," says the co-author at the Austrian National University in Canberra.
Investors' Most Important Role
In recent decades scientists have started using the term "turning elements" or "sleeping giants" to describe a limited number of biomes and processes on the planet, which is of particular importance for maintaining global climate stability. These biomes and processes can be changed quickly when human pressure will reach a critical level. The new research reveals links between stock ownership, global institutional investors and the two firms: the Amazon rainforest and the forests of Russia and Canada.
"We will pay attention to these forests because they are the next few decades away from where the financial sector plays a decisive role," explains Victor Galas.
This means that the financial system provides an important leverage to ensure the stability of these typical elements in the nearest future and in the long run.
The study showed that Amazon rainforest, boreal forests and other tipping elements are systemic risks in the global financial system. If the internal dynamics of these large regions are changing, the emissions of carbon emissions flow in soil and vegetation, then the climate stabilization is significantly more difficult, which, in turn, threatens financial stability.
A handful of shareholders
As research suggests, financial investments are now promoting economic activity that sleeps Giants towards their turning points. For instance, investors provide companies that are soy, beef, timber and other commodities requiring wide protection and forest degradation.
The authors believe that shareholders possess significant shares in the most important sectors of the largest companies. The 10% barrier of the total ownership of these investors exceeds eight of the eight companies in Amazon, five to sixty five and five in five Russian ferry forests.
These institutional investors, together with global exercises, call the Financial Giants as they have a large but unrealized power that affects the "sleeping giants" of several planetes.
"Investors have the opportunity to influence their portfolios: they may require appropriate objectives to meet reparations and rehabilitation, as well as biodiversity conservation and improvement, and they can also threaten the interests and interests of companies from far away after reputational damages, This can affect the values of capital in the well-established firms, "says Bort Choltens of Gronstein University.
In conclusion, the research emphasizes that finances can not only be responsible for the sustainability of the climate, but the sector is of decisive importance. More responsible leadership may contribute to better management of these large forests and, therefore, promote stability climate.