• El sector turístico será sostenible o no será

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    Una de las consecuencias del estallido de la crisis sanitaria por la COVID-19 ha sido la mayor concienciación de la población y, por extensión, de la clase política, sobre la necesidad de introducir criterios de sostenibilidad en las políticas económicas, con el fin de impulsar una reactivación de la economía de forma más sostenible y resiliente. El sector turístico no es ajeno a estas tendencias porque, en primer lugar, su propia actividad se puede ver perjudicada por las consecuencias del cambio climático y, en segundo lugar, existe un amplio margen para que la actividad turística sea más sostenible. Este artículo trata de responder qué entendemos por sostenibilidad en el sector turístico, cómo se puede medir, en qué punto se encuentra el sector turístico español y hacia dónde se dirige.

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    ¿De qué hablamos cuando hablamos de sostenibilidad en el sector turístico?

    El sector turístico español ha experimentado en los últimos años un desarrollo excepcional, hasta convertirse en una de las principales fuentes de actividad, renta y empleo para la economía española. Este fuerte desarrollo desencadenó, de forma paralela, la aparición de algunas conductas críticas y de rechazo social al papel del turismo en ciertos destinos y momentos del tiempo, hasta que, en 2020, la crisis del coronavirus paralizó la actividad del sector y puso sobre la mesa su relevancia en el sistema económico y social en muchos territorios españoles. En la actualidad, las políticas puestas en marcha por las autoridades europeas y por el propio Gobierno español apuntan claramente hacia una salida de la crisis bajo criterios de sostenibilidad y de resiliencia que, en el caso del sector turístico, adquiere una doble vertiente. Por un lado, la actividad turística es especialmente sensible a los efectos del cambio climático, tales como el aumento en el nivel del mar, los fenómenos climáticos extremos, la degradación medioambiental o la pérdida de biodiversidad. Por el otro, existe un amplio margen de mejora para que el sector turístico sea más sostenible, al tratarse de una actividad que comporta elevados niveles de contaminación de la atmósfera y de fuerte presión sobre los recursos naturales.

    La Organización Mundial del  Turismo define

    los principios de sostenibilidad en función de los aspectos medioambiental, económico y sociocultural del desarrollo turístico

    A este respecto, la Organización Mundial del Turismo (OMT) define los principios de sostenibilidad en función de tres ámbitos: medioambiental, económico y sociocultural. El primero persigue dar un uso óptimo a los recursos naturales y medioambientales, así como a preservar la diversidad biológica. El aspecto económico corresponde al impacto de la actividad turística sobre la economía de la localidad receptora de turismo, de tal manera que se promuevan actividades viables a largo plazo, con oportunidades de empleo estable y la obtención de unos beneficios socioeconómicos bien repartidos. Por último, el ámbito sociocultural persigue conservar y fortalecer los activos culturales y arquitectónicos y los valores tradicionales del destino turístico.

    ¿Cómo podemos medir la evolución del sector hacia la sostenibilidad?

    Al tener en cuenta los tres aspectos que la OMT define sobre la sostenibilidad del sector turístico, tratamos de establecer un indicador relevante para cada uno de ellos con el fin de medir en qué punto se encuentra la sostenibilidad en el sector y cuáles deberían ser los pasos a seguir a partir de ahora. Cabe señalar que nuestro análisis se realiza con datos anteriores a 2020, ya que el efecto de la pandemia sobre estos indicadores distorsionaría el análisis que se pretende para este artículo.

    La mayor parte de la emisión de gases de efecto invernadero

    por parte del sector turístico se concentra en los sectores del transporte

    En el ámbito medioambiental, se emplea la evolución de las emisiones de gases de efecto invernadero (GEI) hacia la atmósfera por parte de los sectores que aglutina la industria turística española.6 Para analizar el sector solo tenemos en cuenta la evolución de los tres gases que más expulsa a la atmósfera: dióxido de carbono (CO2), óxidos de nitrógeno (NOx) y monóxido de carbono (CO). La primera conclusión que se puede extraer es que la mayor parte de la emisión de GEI procede de los sectores del transporte (suponen en torno al 12% del PIB turístico), concretamente a la emisión de óxidos de nitrógeno, derivada de la combustión de los motores. Estos sectores se encuentran entre los más contaminantes del conjunto de las ramas de actividad. Además, sus niveles de contaminación han aumentado desde 2013 para el caso del transporte aéreo, mientras que, para el transporte terrestre han disminuido, pero se mantienen en niveles tremendamente elevados. Respecto a los servicios de alojamiento y restauración, y las actividades de agencias de viajes y turoperadores, el monóxido de carbono es el gas contaminante que más se expulsa a la atmósfera.7 Aunque los niveles de contaminación no son alarmantes, lejos de moderarse, mostraron un crecimiento del 78% en el caso del alojamiento y del 38% en el caso de agencias y turoperación entre 2013 y 2019.

    • 6. Para este análisis se consideran los datos disponibles en el INE por ramas de actividad: servicios de alojamiento, servicios de comida y bebida (rama 55-56, según CNAE 2009); actividades de agencias de viajes, operadores turísticos, servicios de reservas y actividades relacionadas con los mismos (rama 79); transporte terrestre y por tubería (rama 49), y transporte aéreo (rama 51).
    • 7. Este tipo de GEI se produce cada vez que se enciende algún combustible como gas natural, gas propano, gasolina, petróleo, queroseno, madera o carbón. Es decir, el sector lo produce como consecuencia del uso de sistemas de calefacción y refrigeración y del empleo de cocinas de combustión.

    Emisiones de gases de efecto invernadero en los sectores turísticos

    Servicios de alojamiento, servicios de comida y bebida

    Last actualization: 11 January 2022 - 13:23

    Actividades de agencias de viajes, turoperadores y actividades relacionadas

    Last actualization: 11 January 2022 - 13:27

    Transporte terrestre

    Last actualization: 11 January 2022 - 14:29

    Transporte aéreo

    Last actualization: 11 January 2022 - 14:30

    Los indicadores de valor económico consideran la contribución del turismo a la sostenibilidad económica de cada destino. Para medir este ámbito consideramos como variables el número medio de pernoctaciones al mes (volumen de actividad) y el gasto por turista (valor de esa actividad). El volumen y el valor del turismo son esenciales para la sostenibilidad económica de un destino: cuanto más elevado sea el gasto por día, más eficiente será el destino en la generación de valor turístico.

    La relación entre el volumen (número de pernoctaciones) y el gasto por turista puede verse en el siguiente gráfico.8 Entre las provincias más turísticas (aquellas con más de 10 millones de pernoctaciones al año), el gasto medio se sitúa en torno a los 300 euros por turista. Entre ellas destaca negativamente el caso de Las Palmas: la segunda provincia con más pernoctaciones, pero con un gasto promedio modesto. Entre el resto de provincias, el gasto medio por turista se sitúa por debajo de los 175 euros. En este caso, destacan de forma muy positiva, entre otras, Girona, Alicante o Guipúzcoa, que se caracterizan por un volumen más modesto de estancias hoteleras pero que disfrutan de un gasto por turista muy elevado.

    • 8. El gasto turístico total por provincia se aproxima utilizando los pagos presenciales con tarjetas de turistas domésticos e internacionales en TPV de CaixaBank en el año 2019.

    Indicadores económicos: gasto turístico vs. pernoctaciones

    Eje Y: Gasto/turista; Eje X: Pernoctaciones (millones)

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    Fuente: CaixaBank Research, a partir de datos internos y del INE.

    Como indicador básico para medir el impacto social y cultural de los diferentes destinos turísticos, medimos la congestión en las distintas provincias, ya que influye en la satisfacción de los residentes y es un indicador básico del impacto social del turismo en una comunidad. Para ello, utilizamos la variable del número de pernoctaciones en proporción a la población residente, cuyos resultados se pueden observar de forma resumida en el siguiente mapa. En términos generales, no se observa una presión turística relevante en la mayor parte del territorio.9 Sin embargo, son llamativos los casos de (i) las regiones insulares, destino eminentemente de playa y naturaleza, que reciben mucho turismo internacional;10 (ii) ciertas zonas cercanas a la frontera con Francia, con un modelo turístico de playa y montaña (Huesca, Tarragona y Girona) que tienen una población local reducida y que reciben la visita de países vecinos, así como (iii) ciertas localidades de Andalucía, que reciben tanto turismo nacional como internacional (Málaga, Huelva y Almería). Evidentemente, la congestión de los destinos más turísticos no ha hecho más que empeorar en los últimos años, teniendo en cuenta que la población ha crecido, por término medio, mucho menos que la llegada de turistas.11

    • 9. En España, la proporción de volumen de pernoctaciones respecto a la población residente se sitúa ligeramente por encima de siete, lo que puede ser tomado como referencia de congestión media para el conjunto nacional. Una congestión por encima de estos niveles se puede considerar elevada. En el caso de la UE, se sitúa alrededor de cuatro, según los datos disponibles en Eurostat.
    • 10. De hecho, Illes Balears destaca como la región europea con mayor congestión por el número de visitantes anuales que acoge, según los datos regionales disponibles en Eurostat, por delante de la Provincia autónoma de Bolzano (Italia), Algarve (Portugal), Tirol y Salzburgo (Austria).
    • 11. En los últimos 10 años, la población ha crecido un 2% por término medio en España, mientras que la llegada de turistas internacionales ha repuntado cerca de un 60%.

    Pernoctaciones en proporción a la población residente

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    Fuente: CaixaBank Research, a partir de datos del INE.
    Hacia un nuevo modelo más sostenible y competitivo

    A la luz de los indicadores disponibles, parece claro que existe margen de mejora en los próximos años. En el ámbito medioambiental, los niveles de contaminación incluso han aumentado en los últimos años, y las líneas de mejora van desde la promoción de construcciones más eficientes y con mayor calidad energética, pasando por sistemas de acondicionamiento más modernos, hasta la promoción de medios de movilidad más sostenibles, entre otros aspectos. En términos económicos, no cabe duda de la importancia del sector para el conjunto de la economía española, si bien habrá que vigilar aquellos destinos especialmente demandados, con elevados niveles de congestión, donde la aportación económica del sector es modesta. Por último, en términos socioculturales, existen algunas regiones con una sobredemanda turística creciente que provoca malestar en determinadas poblaciones residentes, ya que causa problemas de congestión en localidades pequeñas, con servicios públicos limitados y que no siempre están preparadas para absorber esa ingente demanda estacional.

    A partir de aquí, la agenda hacia la sostenibilidad en el sector pasa por retomar iniciativas anteriores a la COVID-19 y que permitan, ahora, aprovechar los fondos procedentes de Europa.12 En concreto, el sector turístico español aparece en el Plan de Recuperación, Transformación y Resiliencia del Gobierno a través de la política de «Modernización y digitalización del tejido industrial y de la Pyme, recuperación del turismo e impulso a una España Nación Emprendedora», donde el componente 14 traza un Plan de Modernización y Competitividad del Sector Turístico. Dentro de este último, el eje que más inversión recibirá es la Estrategia de Sostenibilidad Turística en Destinos, que cuenta con un presupuesto estimado de unos 1.900 millones de euros para los próximos tres años.13

    • 12. A principios de 2019, el Gobierno y la Secretaría de Estado para el Turismo ya habían comenzado a trabajar en la Estrategia de Turismo Sostenible de España 2030, donde ya se tenía en cuenta la necesidad de introducir criterios de sostenibilidad en el sector y que comenzaba a introducir los objetivos y criterios que ahora, a través de los fondos NGEU, se han establecido en esta nueva Estrategia de Sostenibilidad Turística en Destinos.
    • 13. El Gobierno realizó en noviembre el reparto de la primera convocatoria extraordinaria de Planes de Sostenibilidad: se desembolsaron 615 millones a las CC. AA., teniendo en cuenta variables económicas (porcentaje de PIB turístico respecto de PIB autonómico y caída en la afiliación de trabajadores del sector turístico entre diciembre de 2019 y diciembre de 2020), territoriales (porcentaje de superficie de la comunidad autónoma respecto de la superficie nacional y densidad de población) y turísticas (número de turistas internacionales recibidos en 2019 y gasto de esos turistas).
    El objetivo final no es otro que tratar de mejorar

    la competitividad del sector turístico español a través de un nuevo modelo de mayor valor añadido

    Entre los objetivos de estas iniciativas no solo se encuentra que los destinos españoles sean capaces de integrar en su oferta criterios de sostenibilidad medioambiental, socioeconómica y territorial, sino también desarrollar estrategias de resiliencia frente a los retos actuales (cambio climático, sobredemanda turística, crisis sanitarias y de seguridad) y alcanzar una mayor cohesión territorial. Es decir, promover un mejor reparto de las cargas sobre el territorio y consolidar una gestión territorial integral que ayude a frenar los procesos de despoblación. El objetivo final no es otro que tratar de mejorar la competitividad del sector turístico español a través de un nuevo modelo que sea más sostenible, de más calidad y, por tanto, de mayor valor añadido.

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  • How the agrifood sector is becoming more sustainable

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    Climate change and the struggle to prevent it pose enormous challenges for agrifood production in Spain. In turn, improving the sustainability and resilience of the sector will be key to achieving the environmental targets set out in the European Green Deal. Agri-environmental indicators show that, despite some progress in recent years, the sector needs to tackle significant aspects, such as reducing the use of chemical pesticides, fertilisers and antimicrobials in agriculture, as well as improving animal health and welfare, increasing efficiency in the use of energy and water resources, promoting food consumption that is more sustainable and healthier and reducing food loss and waste, fostering a circular economy. The new CAP, with eco-schemes as its key measure, and the Next Generation EU funds will support the sector’s green and digital transition.

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    The threat of climate change and transition to a sustainable food system

    Spain’s agriculture has traditionally benefited from a privileged geographical location and climate but it is particularly vulnerable to climate change. Increased soil erosion, floods, droughts and wildfires, along with an increase in pests and diseases, are just some of the direct effects. In turn, primary sector activity also contributes to climate change: crop specialisation and intensification, the use of chemical inputs and the industrialisation of livestock production all have negative impacts on water, soil, air, biodiversity and habitat conservation.

    Agriculture contributes to climate change and, in turn, suffers directly from its consequences

    It must therefore move towards a new model that protects the natural resources on which it depends.

    EU countries are increasingly aware that they need not only to mitigate climate change but also adapt to it. Consequently, given growing concerns for the environment, the agrifood sector must move forward in its transition from a system that emits greenhouse gases (GHG), demands a large amount of natural resources and also pollutes them, to a new model, increasingly widespread, that provides healthy, nutritious food sustainably, protecting the natural resources on which agricultural activity itself depends.

    In addition to improving the sustainability of agrifood production and downstream distribution, another important lever for change is to promote healthier and more environmentally sustainable consumption patterns. For example, a diet with a larger proportion of vegetables, organic foods, seasonal and local produce. Similarly, the reduction of food loss and waste and promotion of the circular economy are also key factors in moving towards a sustainable food system, as stated in the European Commission’s «Farm to Fork» strategy.

    The Farm to Fork strategy

    The Farm to Fork strategy
    Source: European Commission.
    From the European Green Deal to the CAP Strategic Plans

    The EU is deploying a wide range of tools to provide stakeholders with mechanisms and incentives to support this transition to a sustainable food system and, in turn, to help achieve the targets set out in the European Green Deal. One important addition in the reformed Common Agricultural Policy (CAP), which will enter into force in January 2023, is the drafting of National Strategic Plans to establish priorities in terms of aid and incentives for the various production subsectors.6The star measure is eco-schemes, which are voluntary and reward sustainable practices. Spain’s Ministry of Agriculture has proposed two eco-schemes, with a budget of 1,107.49 million euros, which group sustainable practices into two areas: agroecology and low carbon agriculture. The first group includes activities such as pasture management using sustainable mowing, crop rotation and the maintenance of non-productive areas and other biodiversity aspects. The second group includes extensive grazing, conservation agriculture and the maintenance of living or dead vegetation cover.

    • 6. Spain’s Ministry of Agriculture, Fisheries and Food must submit its Strategic Plan to the European Commission by 30 December 2021.
    The new CAP, with eco-schemes as its key measure,

    together with Next Generation EU funds, will support the sector’s green and digital transition.

    In addition to the CAP, the European NGEU funds will also help to finance the green and digital transition of the primary sector. In particular, item 3 of Spain’s Recovery, Transformation and Resilience Plan, aimed at the environmental and digital transformation of the agrifood and fisheries system, provides for an investment of 1,502.8 million euros. The plan is based on four fundamental pillars: (i) improving efficiency in irrigation, (ii) promoting sustainability and competitiveness in agriculture and livestock farming, (iii) a digitalisation strategy for the agrifood sector and the rural environment, and (iv) modernising the fisheries sector, by promoting sustainability, research, innovation and digitalisation.

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    Environmental indicators in the primary sector

    The European Commission has analysed the situation of individual Member States in relation to their contribution to each of the Green Deal ambitions. The table below lists these targets and the reference values of these indicators for the main countries.7

    To make Europe the first climate-neutral continent by 2050, the first milestone has been set for 2030: reduce greenhouse gas (GHG) emissions by at least 55% compared with the 1990 level. While GHG emissions from EU agriculture have fallen by a significant 20% since 1990, no progress has been made since 2005. And in Spain the situation has been reversed: emissions have increased since 1990 (6.5%) with just a modest reduction since 2005 (–3.7%).

    • 7. «Commission recommendations to Member States as regards their strategic plans for the CAP», European Commission, December 2020.
    In relative terms, GHG emissions by Spain’s agricultural sector

    are lower than the EU average, which has set itself the target of at least 55% below 1990 levels by 2030.

    Despite this trend, it is important to note that, in relative terms, the sector is responsible for 12.0% of the economy’s total GHG emissions compared with an EU average of 12.7%. Furthermore, if we take into account the fact that the primary sector contributes 2.9% of GDP compared with 1.6% in the EU, the result is that GHG emissions by Spain’s agrifood sector per unit of GVA are significantly lower than the European average (1.2 kg/euro compared with 1.7 kg/euro in the EU).8 Similarly, emissions from agriculture per unit of agricultural land (tonnes of CO2 equivalent per hectare) are lower in Spain (1.6 compared with 2.5 in the EU).

    The second EU milestone is contained in the Farm to Fork strategy, which sets a target of 50% reduction in the use and risk of chemical pesticides by 2030. In recent years, Spain has significantly reduced the use of this type of chemical and the challenge is to continue moving in this direction. The target for antimicrobial resistance is a 50% reduction of the overall antimicrobial sales for farm and aquaculture animals by 2030, compared with the EU baseline in 2018. In this respect, Spain lags behind the EU average.

    On the other hand, Spain performs positively both in its share of agricultural land used for organic farming, an aspect we discuss in more detail in the next section, and the proportion of agricultural land occupied by highly diverse landscape features. In this case Spain, with 13.2% of its land, already exceeds the target of 10%.9

    • 8. Data from the European Commission’s Common Monitoring and Evaluation Framework (CMEF) for the CAP 2014-2020, https://agridata.ec.europa.eu/extensions/DataPortal/cmef_indicators.html
    • 9. EU Biodiversity Strategy 2030.

    European Green Deal targets and reference values

    European Green Deal targets and reference values
    Notes: GHG stands for greenhouse gases. UAA stands for utilised agricultural area. Source: CaixaBank Research, based on the European Commission’s COM (2020) 846.
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    Nitrate pollution from agriculture remains one of the greatest pressures on the aquatic environment. In this respect, the EU has set a target of reducing nutrient losses by at least 50% by 2030 while ensuring there is no deterioration in soil fertility, an aspect in which Spain needs to improve considerably. An increasing number of EU countries are also affected by water scarcity, often caused by excessive abstraction of water for agriculture and livestock. Climate change will further aggravate the problem of water availability in many regions, including Spain.

    Finally, the new CAP establishes digitalisation as a priority across the board, believing that the transition towards a sustainable food system must be supported by knowledge, innovation and digitalisation. In this respect, one key factor in developing rural areas and reversing their depopulation is the availability of a fast, reliable internet connection. While there has been a notable increase in the proportion of households in rural areas with next-generation broadband access, there is still a significant gap with respect to urban areas. The goal is to cover 100% of the population by 2025.10

    • 10. This target is included in the Agenda España Digital 2025.
    58.7% of Spanish households in rural areas

    had access to fast broadband internet in 2019. The goal is to cover 100% of the population by 2025.

    The green and digital transition of European agriculture is also creating new business opportunities which the sector must take advantage of, for example by better aligning its production with evolving consumer tastes. Sustainability will become a competitive advantage for those companies and farms that achieve a balance between economic growth, environmental care and social well-being, while those that fail to comply with environmental standards will be penalised by increasingly demanding and environmentally aware consumers who identify with the most sustainable brands and products.

    A firm commitment to boosting organic production

    The commitment to more sustainable production schemes, such as organic farming,11 is relentless. Spain, with more than 2.44 million hectares of these crops in 2020, is the first country in the EU and the third in the world after Australia and Argentina. However, in terms of its share of utilised agricultural area (UAA), it is above the EU average, as noted in the previous section, but well below leading countries such as Austria, Estonia and Sweden, which exceed 20%. Four million additional hectares would be needed to achieve the 25% target set in the Organic Action Plan.

    • 11. Organic farming is a system of agrifood production and management that combines the best environmental practices, a high level of biodiversity and preservation of natural resources and the application of high animal welfare standards, so that products are obtained from natural substances and processes (MAPA).

    Share of utilised agricultural area under organic farming

    Last actualization: 13 October 2021 - 16:38

    Regarding organic operators,12 almost 90% out of a total of 50,047 in 2020 were primary producers while the rest were industrial operators and traders. However, the number of operators is growing much faster (more than double) further down the food chain.

    • 12. An organic operator can be an individual or company and must meet certain requirements to be able to produce, process, prepare or package food of agricultural origin in order for it to be marketed using the terms ecological, biological or organic. In Spain there is a General Register of Organic Operators (REGOE) that collates the information provided by each autonomous region.
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    By region, Andalusia leads the field both in terms of land under organic farming, with more than 45% of the total, and in terms of organic livestock farms, with almost 60%. By type of crop, cereals for grain production come top (43% of the total) and, by type of livestock, cattle (48%). Compared with other countries, the Spanish agrifood sector is the world’s leading organic producer of olive oil and wine and the second for citrus fruits and vegetables.

    However, one of the challenges facing organic production in Spain is the low domestic consumption: per capita consumption of these products in 2019 stood at 50.2 euros, a far cry from countries such as Denmark or Switzerland, which exceed 300 euros. As a result, most of Spain’s organic produce, around 60%, is exported.13 The change in habits brought about by the pandemic has boosted healthier, more sustainable and local consumption, so the trend in domestic consumption of organic produce is clearly upward.

    • 13. Sociedad Española de Agricultura Ecológica (SEAE), MAPA (2021), «Análisis de la caracterización y proyección de la producción ecológica española en 2019» and Ecovalia (2021), «Informe anual de la producción ecológica en España».
    Organic farming in Spain, on the rise

    Area under organic farming

    Last actualization: 13 October 2021 - 16:38

    Organic operators in the primary sector (producers)

    Last actualization: 13 October 2021 - 16:39

    Organic operators in the secondary sector (manufacturers and processors)

    Last actualization: 13 October 2021 - 16:40
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Climate change, the green transition and the financial sector

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November 15th, 2019
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Climate change and the transition towards a low-carbon economy also involve the financial system. Firstly, this is because of its role as an intermediary between savings and investment, since the financial sector can facilitate the channelling of funds towards activities that contribute to the green transition.1 Secondly, climate change and actions to mitigate it involve financial risks. In this article, we focus on analysing the implications of climate change for the financial sector and the transition towards a low-carbon economy.

Economies face two types of risks associated with climate change:

Physical risks, which stem from the direct effects of climate change, such as more frequent and extreme weather events and changes in the balance of ecosystems. These risks can manifest themselves suddenly (in the form of specific events, such as floods or storms) or gradually (as changes in weather patterns). In addition, these risks can lead to substantial increases both in the costs to address them and in the physical damage caused to the productive capacity of businesses (such as disruptions in their supply chain) and to household assets. Thus, virtually all sectors of the economy face the physical risks.

Transition risks, linked to the transformation towards a low-carbon economy. Transition risks derive from regulatory changes (such as strict limits on emissions of carbon dioxide and other greenhouse gases)2 and technological changes3 (such as fully electric transport systems) required to achieve the goal of decarbonisation. Furthermore, the green transition could entail demand-side changes resulting from evolving consumer preferences and behaviour as they become more sensitive to environmental issues. All this will generate new opportunities, but it could also affect the performance of various economic sectors and the market valuation of a wide range of assets, with the financial implications this entails.4

The physical risks and those associated with the green transition are interrelated. The physical impact of climate change largely depends on the corrective actions taken in the short term by governments, investors, businesses and consumers. In particular, if the corrective action is ambitious and taken early, the transition risks may be higher but the physical risks will be lower. On the contrary, belated and weak corrective action (entailing lower transition risks) would increase the physical risks associated with climate change. There are also potential scenarios in which both risks are high, such as if the corrective action is sudden and occurs late, when some of the physical risks are already difficult to avoid.5 Thus, depending on the speed and intensity of the actions aimed at mitigating the effects of climate change, different climate scenarios emerge (see chart).

For the financial sector, the impact of the risks associated with climate change could materialise through the traditional risks facing the sector. In particular, both the physical and the transition risks could have an impact in terms of credit, reputational, operational and market risks.6 For instance, extreme weather events can cause significant damage to assets and reduce borrowers’ payment capacity. For the banking sector, this can lead to an increase in the likelihood of default and a loss of value of loan collateral. In addition, credit risk can arise from exposures to companies with business models that are not aligned with the transition towards a low-carbon economy. Another example would be the physical damage caused to buildings by extreme weather events, which would pose an operational risk.

In this context, the need to assess and integrate climate risks into the set of risks that can affect the financial sector is shared by both the financial institutions that make up the sector and the regulators and supervisors. However, this is no easy task, since the very nature of climate risks makes them difficult to identify, measure and assess:

First of all, the physical risks associated with climate change are difficult to discern. Specifically, their occurrence and magnitude are unpredictable, they have wide-ranging consequences (affecting multiple sectors, lines of business and geographical areas), and the time horizon over which they can materialise is long, unknown and largely exceeds the traditional decision-making horizon used by the various economic players. In contrast, the effects of climate change depend on the actions that are taken today, and it is precisely this temporary mismatch between action and impact (the so-called «tragedy of the horizon») that makes climate risks difficult to discern.7

Secondly, the transition risks are doubly uncertain. On the one hand, the path towards a low-carbon economy is itself unknown. The change could happen quickly but in an uncoordinated and costly manner (in which case the transition risks would be particularly high),8 it could happen in a gradual and orderly manner (in which case the transition risks would be low), or the extent of the transition could prove inadequate (in which case there would be a surge in the physical risks). On the other hand, within each trajectory, the terms and conditions for decarbonising the economy are also uncertain.

Thirdly, it is difficult to measure the impact of the physical and transition risks on the financial sector. This is partly due to the lack of corporate information (in the public domain) on the financial impact of climate risks and their consideration at the strategic level. For instance, there is no standardised taxonomy that clearly separates activities that are considered green9 from those that are not, and that clarifies precisely how green each activity is. There are also currently no common standards for the disclosure of climate-related financial information. This is relevant because it hinders transparency, the establishment of clear benchmarks and the evaluation of questions such as which companies can make the most of the opportunities offered by a low-carbon economy, or which companies are best prepared to cope with climate-related risks. This lack of information can also lead to an incorrect valuation of certain assets and to an inefficient allocation of capital. In this context, initiatives to establish common standards are very welcome. These include the recommendations by the Task Force for Climate-related Financial Disclosures (TCFD), an initiative of the Financial Stability Board for the corporate disclosure of financial risks associated with climate change. All in all, to date, climate risk disclosure initiatives have been limited in scope or have been developed on a voluntary basis.10

Finally, the lack of appropriate methodologies makes it difficult to assess climate risks and to incorporate them into internal risk models. Risk analysis requires scenarios to be designed, the economic impact to be analysed and the financial risks in each scenario to be assessed. Assessing climate risks also requires a much longer forecasting and analysis horizon than usual.11 In addition, estimating the impact that climate change will have on the economy as a whole, and on the financial sector in particular, is a complex task, particularly when the historical data are a poor indicator for what will happen in the future. For instance, the risk associated with the green transition has not been seen before, which makes it difficult to estimate using current tools. Similarly, there is insufficient data and scientific knowledge to assess the physical impact that could have a global temperature rise well above what has been historically observed.12 Finally, scenario analysis is a relatively new and complex practice, and many of the climate scenarios (such as those developed by the IPCC)13 are intended for use in policy-making and scientific research, rather than in corporate and financial analyses.

In short, climate change is a global challenge (in terms of both its causes and its consequences), which requires global solutions and a high degree of coordination between all economic players and sectors. In this context, an early, gradual, orderly and fair transition towards a low-carbon economy is key to reducing the potential impact of climate risks on the economy as a whole, and on the financial sector in particular. It is also, therefore, important for the financial sector to have the necessary tools, methodologies and standards in order to properly assess and manage the financial risks associated with climate change. In this way, the sector will be able to contribute effectively to driving change.

Roser Ferrer

1. See the article «Green finance in focus» from the MR04/2019.

2. The 2015 Paris Agreement, for instance, poses a transition risk driven by regulatory changes. In particular, the signatory countries agreed to limit global warming to below 2°C through a drastic reduction of greenhouse gas emissions. This will require regulatory measures and significant changes in industrial and energy policies, among other elements.

3. The technological risk is associated both with the speed and scale of new technologies and with the degree of transformation and disruption in the various sectors facing the irruption of these new technologies.

4. European Systemic Risk Board. «Too late, too sudden: Transition to a low-carbon economy and systemic risk». Reports of the Advisory Scientific Committee, nº 6.

5. See Clara I. González and Soledad Núñez, 2019. «Mercados, entidades financieras y bancos centrales ante el cambio climático: retos y oportunidades», Working Papers 019-06, FEDEA.

6. The risk resulting from the behaviour of a class of assets or a market. Some examples include substantial and sudden changes to asset prices, which render some assets obsolete.

7. Bank of England (2015). Speech by Mark Carney. «Breaking the tragedy of the horizon – climate change and financial stability».

8. As an example, a belated recognition of the importance of controlling emissions could result in a sudden implementation of restrictions and regulations on the use of energy sources from fossil fuels playing catch-up.

9. The work by the European Commission to support future legislation on a Europe-wide sustainable taxonomy is a step in the right direction.

10. Bank of England (2019). Speech by Mark Carney. «TCFD: strengthening the foundations of sustainable finance».

11. In general, financial regulatory frameworks tend to focus on risks to financial stability over the next 2-3 years, so they are not designed to capture unconventional risks over the long term.

12. Also see the article «The climate challenge: the future of the planet at stake» in this same Dossier.

13. Intergovernmental Panel on Climate Change.

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    Long-term trends

    Climate change & green transition

    What polices can be implemented to stop climate change? What are the implications of shifting towards a more sustainable economy?