S&P Global Sustainability Quarterly Fall 2024 Special Edition

For the past three years, this publication from the S&P Global Sustainability Research Lab has brought together data-driven research on key topics shaping the sustainability landscape. As we approach the three-year anniversary of the S&P Global Sustainability Quarterly, we’re proud to bring you this Special Edition featuring new research on two intertwined global environmental crises — climate change and nature loss.

We explore how the energy transition could evolve from the perspective of the latest S&P Global Energy Energy & Climate Scenarios, which reflect fundamental shifts in geopolitics, markets and technology that are reshaping the world into a more complex, multidimensional landscape. S&P Global Ratings unpacks how the potential impacts described by these different climate scenarios could be material to the creditworthiness of issuers and debt instruments — through the lens of both transition risks and physical climate risks.

Physical risks from climate change are increasing, and their economic and financial impacts are likely to rise with time, particularly if mitigation and adaptation efforts are not accelerated. The precise severity and timing of impacts remains uncertain, however. Research from S&P Global Sustainable1 projects how a growing swathe of the world’s population and GDP could be exposed to one climate hazard — drought — under different climate scenarios. The upside is, our data shows how limiting global warming can lessen the long- term impacts of drought for some of the world’s largest economies and most populated regions.

Even as greenhouse gas emissions rise, there is evidence that the energy transition is progressing. Research from S&P Global Mobility finds that adoption of battery electric vehicles is expected to accelerate in the coming years, contributing to a significant reduction in global CO2 emissions from vehicles. As the demand for batteries increases, this will mean a heightened focus on automotive supply chains — including the question of how to ensure sustainable sourcing practices.

Put another way: How do you weigh the need to extract minerals essential for facilitating the energy transition, such as lithium for electric vehicle batteries, against the potential impact on nature? In research from S&P Global Sustainable1, we explore this balancing act the energy transition faces. Any sustainability strategy is incomplete if it does not contemplate both climate and nature; the two are inextricably linked, though nature impacts and dependencies are not yet well understood by many businesses. Research from S&P Global Ratings notes that many earlier economic growth models lacked any consideration of natural capital, or the stock of natural resources and ecosystem services that combine to yield a flow of benefits to people. To address this, the research seeks to develop a basic tipping point model featuring the interaction of both physical capital and natural capital.

Stakeholders across the sustainability world, from economists and policymakers to companies and investors, have a growing understanding of climate change and biodiversity loss — and the links between these twin crises. As the world prepares for a busy fall agenda of major sustainability conferences, we hope the research that follows will shed light on these interconnections — the risks, the opportunities, and the path forward.