Climate models are not designed for use by financial markets, warn scientists

Climate models are not designed for use by financial markets, warn scientists

Misuse of climate models could present a growing risk to financial markets by giving investors a false sense of certainty about how the physical impacts of climate change will play out, according to the authors of an article published on Monday.

With heat waves, forest fires, massive storms and sea level rise set to intensify as the planet warms, companies are under increasing pressure to disclose how the disruption could affect their businesses. activities.

But the authors of a peer review article in Nature Climate Change warned that the drive to incorporate global warming into financial decision-making had overtaken models used to simulate the climate by “at least a decade”.

“In the same way that a Formula 1 Grand Prix car is not what you would use to go to the supermarket, climate models were never developed to provide information for financial risk, ”said Andy Pitman, a climatologist at the University of New South Wales and co-author of the article.

Improper use of climate models could have unintended consequences, such as the “greenwashing” of certain investments by minimizing risks, or by compromising the ability of companies to take on debt by exaggerating …

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