Weathering the storm of climate risks in China

CHINA could be heading into hotter 2030s with more frequent and severe weather events. Global emissions in the past point to more frequent and more severe weather events in the future. The Climate Action Tracker (CAT) developed by the Climate Analytics and NewClimate Institute indicates global warming reaching 1.8°C as an optimistic outcome if prudent measures are taken; otherwise, current policies would result in a 2.7°C increase by the end of the century.

Similarly, China is on track to see warming even in the most optimistic emissions scenario, per the Sixth Assessment Report (AR6) of the Intergovernmental Panel on Climate Change (IPCC). China has already observed some shifts in climate patterns, such as rising temperature, rising sea levels and regional shifts in precipitation patterns. In the future, China is expected to see further warming and shifts in climate patterns as well as heightened risk of acute physical hazards, such as heatwaves, floods and droughts in the future.

Consequently, China will inevitably face physical risks, in the form of acute hazards and chronic shifts. Per the Task Force on Climate-related Financial Disclosures (TCFD), physical risks resulting from climate change are one of the two central sources of climate-related risk that companies should consider. The physical risk can be determined by the physical hazards, exposure and vulnerability combined. Physical hazards can be further broken down to acute physical risks that are event-driven (such as cyclones, hurricanes, floods), as well as chronic physical risks that are longer-term shifts in climate patterns, including sustained temperature rises.