Carbon Tracker: “Financial institutions, banks and politicians misled by ‘flawed’ economic research. Pension funds are risking the retirement savings of millions of people by relying on economic research that ignores critical scientific evidence about the financial risks embedded within a warming climate, warns a report released today by Professor Steve Keen – Loading the DICE against pension funds. Flawed economic thinking on
climate has put your pension at risk – and the financial think tank Carbon Tracker. Financial institutions, central banks, regulators and governments underestimate the dangers and economic damages of climate change, relying on research from a small, self-referential group of climate economists that ignores the impact of climate “tipping points”, it says. The author, economist Prof. Steve Keen, a Distinguished Research Fellow at University College of London and author of Can We Avoid Another Financial Crisis? argues that just as mainstream economists failed to predict the global financial crisis in 2008 – the worst economic crisis since the Great Depression – they could now be steering the world toward another crash. “Global warming is not a minor cost-benefit problem that will mainly affect future generations, as the economic literature asserts, but a potentially existential threat to the economy, on a timescale that could occur within the lifespan of pensioners alive today,” he states. “We are talking about the financial futures of millions of people.” The report reveals that many pension funds use investment models that predict global warming of 2 to 4.3°C will have only a minimal impact on member portfolios, relying on economists flawed estimates of damages from climate change, which predicts that even with 5 to 7°C of global warming economic growth will continue. The report underscores that such economic studies cannot be reconciled with warnings from climate scientists that global warming on this scale would be “an existential threat to human civilisation.”..