According to a recent survey conducted by Bernstein, artificial intelligence (AI) and environmental, social, and governance (ESG) factors are set to become the top concerns for global institutional investors by 2024. This finding represents a shift from the previous year, where biodiversity and climate change held the top spot.
In 2023, rising global temperatures surpassed previous records, making it the warmest year on record. According to Copernicus, the global average temperature for that year was 14.98 degrees Celsius (58.96 degrees Fahrenheit), surpassing the previously highest annual value recorded in 2016 by 0.17 degrees Celsius. This substantial increase highlights the urgent need for action in addressing the effects of climate change.
Carlo Buontempo, director of the Copernicus Climate Change Service, highlights the gravity of these temperature extremes and their implications for our civilization. He emphasizes that effective management of climate risk requires immediate decarbonization efforts and the utilization of climate data and knowledge to prepare for the future.
The Paris Agreement serves as a framework to combat climate change by aiming to limit global warming. Its objective is to hold the global average temperature increase to well below 2 degrees Celsius above preindustrial levels, with an aspiration to limit it further to 1.5 degrees Celsius. World leaders have recently stressed the urgency of meeting the more ambitious 1.5 degrees Celsius target within this century.
Investors are recognizing the significance of both AI and ESG factors as they navigate an ever-changing landscape. As climate change continues to impact our planet, the integration of these considerations into investment strategies becomes paramount. By prioritizing AI and ESG, investors can contribute to a more sustainable and resilient future.
Earth's Temperature on the Rise
Last November, the Earth reached a significant milestone as the average air temperature near the surface exceeded 2 degrees Celsius above preindustrial levels. This rise can be attributed to the burning of fossil fuels during the Industrial Revolution.
According to Copernicus, renowned experts in climate analysis, it is highly likely that the 12-month period ending in January or February 2024 will witness a further increase of 1.5 degrees Celsius, or 2.7 degrees Fahrenheit, above preindustrial levels. By limiting global warming to this threshold, world leaders aim to prevent drastic climate disruptions that could exacerbate issues such as drought, hunger, and conflict worldwide.
In a concerning trend, Copernicus also revealed that each month from June to December of last year was warmer than their corresponding months in any previous year. This indicates a clear and alarming trend of rising temperatures.
Furthermore, 2023 exhibited several other "remarkable highlights." One such highlight was record low levels of sea ice around Antarctica. Additionally, concentrations of carbon dioxide and methane in the atmosphere continued to surge last year, reaching unprecedented levels. The world also witnessed an alarming number of extreme events like heat waves, floods, droughts, and wildfires.
Samantha Burgess, the deputy director of the Copernicus Climate Change Service, aptly described 2023 as an exceptional year with climate records shattering like dominoes, reflecting the severity of the situation.
Copernicus reported a staggering 30% increase in estimated global wildfire carbon emissions in 2023 compared to the previous year. The persistent wildfires in Canada played a significant role in driving these alarming figures.
In Canada alone, an estimated 45.7 million acres of land, roughly equivalent to the size of North Dakota, were engulfed in flames over the course of the fire season. This stands in stark contrast to the annual average of 2.5 million hectares burned in the country.
The urgency to address these dramatic changes in our climate cannot be overstated. It is crucial that we take the necessary steps to mitigate these risks and ensure a sustainable future for generations to come.
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