Climate Change and its Economic Implications – Valentina Bosetti

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From the course by Università Bocconi

Corporate Sustainability. Understanding and Seizing the Strategic Opportunity

24 ratings

Università Bocconi

Corporate Sustainability. Understanding and Seizing the Strategic Opportunity

24 ratings

The achievement of a balanced economic, social and environmental development - as expressed in the UN Agenda 2030 for Sustainable Development - is recognized as one of the major challenges humanity is facing today. What is less clear is whether and how organizations can generate business opportunities and value for their stakeholders while tackling such challenges. In this course, thought leaders in a wide variety of management and economics fields illustrate how to assess and seize the opportunities offered by these global emergencies. They will offer new ways to understand the purpose and the logic of success of the business enterprise in this new context, providing ideas and examples on how to manage the transition process to realize the value creation potential from corporate sustainability for all involved stakeholders. Learning objectives The course will allow you to: - Understand What the macroeconomic and microeconomic consequences of both climate changes, poverty, hunger, gender or race discriminations, lack of communication between the State, Civil Societies, and businesses, etc are. - Understand Why it is important for businesses to tackle sustainability issues in order to create more and better business opportunities; - Learn How each individual, organization and system can start to analyze its behaviors and change towards more sustainable practices and models.

From the lesson

Understanding the Sustainability Challenge: the Systemic Level

This section will introduce the course and frame the complex set of issues that the course aims to tackle. You will learn about some of the most important global sustainability challenges within the framework of the UN Sustainable Development Goals, and how to reflect on their implications for business.

The Sustainable Development Goals and their Relevance for Business – Valentina Mele6:24

Climate Change and its Economic Implications – Valentina Bosetti6:19

Industrial Ecology – Fabio Iraldo8:53

Poverty and Income Inequalities – Eliana La Ferrara, Maurizio Zollo11:11

Gender Equality and Sustainability – Paola Profeta6:47

Meet the Instructors

Maurizio Zollo
Dean’s Chaired Professor in Strategy and Sustainability
Management and Technology Department

So let's start from the basic question, that is, what is the climate? The climate is the average temperature

and the average precipitation that we record in a given place over a long period of time.

And what do we know about the climate, how do we know about a climate? Well we have instruments to measure temperature

and precipitation over the last two centuries.

But what about before? What about before humans were there? Well for that we have to use proxies, for example, ice cores

or tree rings or fossils that provide us information about temperature

and precipitation over a longer span of time. From the information we have, we know that the climate throughout

human civilization has been quite benign and stable.

These were actually one of the factors that allowed us to thrive on this planet. Now, through information

and a large amount of data and through

and thanks to the science, that is called climate science, we also know what are the factors that affect the climate.

And we know that one of these key factors is the atmosphere, that is like a blanket over our planet. So are we affecting

this blanket? Well, the scientific response is that yes we are affecting this blanket, this atmosphere, by releasing

fossil fuels. And this is indeed

changing the ability of the atmosphere to trap heat. Therefore, changing the condition of the climate on

this planet.

But should we care about these changes? Well the answer is yes. First of all the physical impacts are now clear

and evident. For example, we measure higher average temperature, a hotter ocean, which in turn is creating more frequent

high energy hurricanes and storms.

We see the effects and implication on the snow cover and on the ice cover.

And many of these are of physical impacts are starting to be evident now.

But it's also the economic implication of these physical impacts that is now being studied

and is worrisome. Indeed, economists have now shown that the implication of increased temperature are negative.

And they really are evident all across the spectrum of human activities, ranging from agricultural yields to

labour productivity, to health. So governments and nations are starting to care about the problem

and doing something about this. There are two specific activities I want to discuss with you today that are relevant for

governments, nation, firms

and individuals like us. The first thing is the activity of mitigation. What that means is decreasing the impact

humans are having on the atmosphere. Therefore decreasing the emissions. The first question one has to ask is, well if we

want to decrease these emissions, where are emissions coming from?

And it is evident now that emissions are coming from the production of electricity, transportation,

industrial activities and agriculture mostly.

If we want to do something about that, if we want to decrease emissions from these activities

and sectors, therefore, we have to come up with technologies

and innovations that do something about that. We already have some solutions. Renewables is clearly one of those solutions,

but also investing in bioenergy or thinking about ways of using fossil fuels but capturing the CO2

when we produce electricity and store it underground.

While not all the technical solutions are clear and so innovation would also be very, very important to solve the problem.

The second activity I want to discuss with you is that of adaptation.

That is really a key and important activity. Why is that?

Because, even if we stop emitting tomorrow, we will still have to cope with some climate change

that is due to the fact that we have emitted until today. So from the industrial revolution to today, we have emitted CO2

and that has committed us to some level of climate change.

So adaptation is that, are those activities that basically allow us to cope with this change.

There are a set of investments, or changes in the way we produce or new technologies that will allow us to adapt.

Let me give you an example. If you think about agricultural yields and the fact that they will be affected negatively by higher temperature or changes in precipitation,

then innovation and investment in seeds that allow farmers to have high yields - even though the temperature will be higher - are going to be crucial.

Now, there are a lot of industries and firms that have already started programs of adaptation.

Think for example of the insurance industries, or think of sectors where long lived capital are invested in.

For example, infrastructure. So if you have to build a new city, or if you have to design a new airport,

you have to take into account the fact that the climate will be different. The ocean will be higher etc.

Adaptation, though, is not a kind of

investment that everybody can undertake. You have to keep in mind that the most vulnerable, both in

the developing and in the developed world, most likely will not be able to adapt. Then, governments

and people will have to step in in order to help them to adapt.

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