Avoiding Atlantis – how to survive rising seas

Avoiding Atlantis – how to survive rising seas. This month, we continue with threats from rising seas on the back of the launch of our series of “survival guides” in the CWR Coastal Capital Threat Series. The 5 new reports (almost 300 pages in total) are jam packed with facts, infographics, charts & analyses – it covers all you need to know to kick start your journey to survive rising seas

As part of this series, we benchmarked risks for 20 coastal capitals & economic hubs in APAC from Tokyo to Sydney. We are not going to sugar coat it – the threats we face in the Asia Pacific region are literally life & death matters and can trigger financial collapse. If we continue with business-as-usual, our reports show that urban real estate equivalent to 59 Singapores will be underwater unless serious adaptation measures are made to protect the cities.

And that’s just for these 20 coastal cities – Aichi/Nagoya, Auckland, Bangkok, Guangzhou, Ho Chi Minh, Hong Kong, Jakarta, Macao, Manila, Osaka, Seoul, Shanghai, Shenzhen, Singapore, Suzhou, Sydney, Taipei, Tianjin, Tokyo & Yangon. With their collective US$5.7trn of annual GDP at stake, it’s time to get a big picture view of the capital threats ahead with our summary.

To benchmark & help spread risks across APAC, we have developed the ground-breaking CWR APACCT 20 Index. Over 100+ finance experts from chairs/directors of bank boards to asset owners, research analysts & regulators helped us build & shape this index. See who they were & how their feedback shaped the index in our summary.

For their full input/comments on methodology, proxy indicator selection & weightings as well as how we addressed 5 key challenges, do dive into our 80 page report “Avoiding Atlantis: The CWR APACCT Index”. Interestingly, despite spanning many finance fields and seniority, there was consensus on a path forward in the benchmarking of such risks.

To provide a real risk snapshot, the CWR APACCT 20 Index not only benchmarks physical coastal threats faced (SLR, storm surges & subsidence), but also government adaptation action to protect the city as this can alleviate risks. Our index rankings are for two scenarios – one at 1.5°C that we will lock-in and another at 4°C that we must try to avoid. The ranking & results surprised.

Not all governments are taking action to protect their cities despite high exposure to coastal threats. So which cities are more prepared? We walk you through the Top 5 Most Proactive & the Bottom 5 Laggards in our CWR APACCT 20 Index. Want to see an at-a-glance coastal risk assessment of each city? We have you covered with our “The CWR APACCT 20 Index City Factsheets” – download the entire set (48 pages) or select the cities you want here.

Risks are still rising. As we were wrapping up the reports, Vietnam & the Philippines were pummeled by typhoons with storm surges as high as 5m. It’s not going to get better, only worse – with rising seas, storm tides could be 10m+ in Hong Kong. This means that you will be hit by waves as high as 5.69m if you were standing in front of the AIA, Hong Kong Club, HSBC, Mandarin Oriental or Standard Chartered buildings in the city’s Central financial district.

Didn’t know this? Well, the first step in survival is to be prepared – know the new risk landscape. Forget about 1m, experts warn that sea levels can be as high as 3m by 2100. Surprised? You shouldn’t be as we’ll likely hit 1.5°C of warming by 2030 and since this is 70 years earlier than intended, sea level rise (SLR) will be higher sooner.

The fact that we are still heading for 3°C-5°C does not help as rising temperatures locks-in SLR as they trigger irreversible ice melt from the Himalayas to Greenland & Antarctica. BTW Arctic sea ice has yet to start freezing and it’s almost December. So get a brief overview of the 8 things you need to know about the existential threat from SLR – from glaciers in the mountains to ice sheets in our poles, ocean warming, permafrost thaw plus more. Or better still dive into our 68 page report “Changing Risk Landscapes: Coastal Threats to Central Banks”.

Yes, central banks are acting, so watch out for both physical & regulatory risks ahead. This month, even the US Fed has applied to joined the NGFS, a group of central bankers that now stands at 75 strong (at the time of report writing it was 68+). There’s no doubt – climate risks present grave threats to the global financial system & could trigger collapse if not accounted for. Catch up on the financial evolution with our roadmap in the above report.

“The lethal combination of high threat levels plus lax government action means that the APAC faces a high concentration of financial risks – not only are GDP & trade concentrated in these 20 cities, bank loan books, markets and pension funds are also clustered,” warned Dharisha Mirando, lead author of the series.

On this front, we are pleased to see ANZ finally commit to phase out thermal coal – they should – just 4 banks (CBA, Westpac, NAB & ANZ) have 84% of their loan books flowing to Australia where almost 70% of the population lives in just 10 coastal cities; Auckland drives 38% of New Zealand’s GDP but both its port & airport will be underwater on our current path. Need we say more.

There are clear implications for sovereign risk ratings as no-sense strategies pervade. See which countries & territories have made it to our watchlist in our summary or jump straight into our in-depth 52 page report “Sovereigns at Risk: APAC Capital Threats” replete with sensible & no-sense government case studies.

A large chunk of chronic coastal risks are unaccounted for today giving an incomplete APAC risk snapshot that perpetuates a vicious cycle. Today, capital continues to be deployed to vulnerable locations while ongoing investments in carbon intensive industries further exacerbate vulnerability. We must break this negative finance feedback loop.

Waterproofing APAC must begin today by 1) adapting for locked-in impacts at 1.5°C and 2) committing & fast-tracking carbon neutrality to avoid 4°C. Properly pricing in risks will help us do both of these by driving much needed capital towards adaptation as well as business unusual. It’s a daunting task, but one which we cannot fail – the alternative is unthinkable.

There’s nowhere better to start than “Step 1 – Need-to-know new risk landscape” in our “Executive Summary & Next Steps” for the entire series – “Waterproofing APAC to Avoid Atlantis”.  It covers both physical & regulatory risks ahead – don’t be put off by the fact that it is 44 pages – it has lots of full page infographics on bank flows, trade & GDP clustering to SLR scenarios. Don’t have time to read? Sign up for our webinar – it’s free!

It’s not just governments but banks have a big part to play. As Debra Tan, the Head of CWR noted “Sooner or later, we must bite the bullet – the permanent overhang from rising seas effectively turns the valuations of all vulnerable assets from “freehold” into “leasehold”. This is finance 101; not natural capital accounting.”

Seas are rising, so must we. Yes, even bankers can be heroes – so put on that cape & help APAC avoid becoming the new Atlantis.