The potential financial impacts of emerging climate liability law present profound uncertainties for economies worldwide. Quantifying the vast array of possible legal outcomes remains deeply complex and scenario-dependent.
Yet even back-of-the-envelope analyses indicate exposures in the trillions of dollars for major carbon producers. Chevron alone faces over $8.6 trillion in potential liability based on the social cost of its emissions. Attribution science can also now reliably link fossil fuel activities to intensifying climate disasters, further fueling damages claims.
Some jurisdictions have begun mandating disclosure of litigation risks. But translating unfolding science and precedent into actionable risk metrics for firms requires a fundamental paradigm shift.
We can no longer view climate accountability as a peripheral issue or the concern only of parties directly sued. Legal findings will reverberate across industries, borders and financial systems in ways we have yet to fathom.
Our policy frameworks must rapidly build capacity for processing climate liability scenarios and their economy-wide implications. This will necessitate remarkable interdisciplinary collaboration between lawyers, scientists, financial experts and policy-makers.
We need to co-create and co-design to ensure all hands are on deck and bring rigour to climate liability risk modelling before potentially destabilizing market shockwaves.
This undertaking marks uncharted territory, but global coordination on disclosure methodologies helped stabilize markets during the pandemic. We face another systemic risk today for which foresight through scenarios offers our best recourse.
#ClimateRisk, #ClimateLiability, #ClimateAccountability, #ClimateJustice
#ClimateDisclosure, #ClimateScenarioPlanning, #ParisAgreement,
#ClimateAction, #Sustainability
Bapon (SHM) Fakhruddin, PhD 