The research on sleeping financial giants aims to bring new science-based perspectives to current discussions about the role of finance for sustainability. A particular focus lies on how banks, pension funds and other institutional investors influence critical elements in the Earth’s climate and ecosystems.
A tipping point can be defined as a critical threshold at which a tiny perturbation can qualitatively alter the state or development of a system. Some components of the Earth System and associated processes are identified as likely ‘tipping elements’: melting sea ice, Greenland and Antarctic ice sheets, changes in ocean and atmospheric circulation, and loss or alteration of critical biomes (large ecological regions).
The Amazon rainforest and boreal forests are examples of such ‘tipping elements’. They are sensitive to rising temperatures and changes in rainfall, and to the intense pressure of logging, mining and conversion to agricultural production. If these forests are further degraded and flip to new states they will release billions of tonnes of carbon dioxide. Consequently, they have also been referred to as ‘Sleeping Giants’, because once awakened, they may accelerate the rate of global warming.
Knowledge about the state of these Sleeping Giants is important for defining thresholds for dangerous climate change, not least because if one Giant wakes, it may wake others, making our ability to control the climate within manageable boundaries more difficult. And if climate change becomes even more difficult to control, it risks destabilising the global economy.
Therefore, efforts to avoid dangerous climate change have to include both reductions of greenhouse gas emissions while simultaneously bolstering the resilience and stability of these forests and other key tipping elements.
Our research looks into the major institutional investors, including banks, pension funds and insurance companies, that have substantial holdings in companies operating in the Amazon, boreal forests and other critical biomes. Unaware of the power they have at their fingertips, we call these influencers Sleeping Financial Giants. Through their holdings (or claims, in the case of debt) these financial giants have great but unrealized power to influence the resilience of several Earth System sleeping giants.
Read more about sleeping financial giants and Earth’s sleeping giants in the report “Sleeping Financial Giants – Opportunities in financial leadership for climate stability” (pdf).