What does climate change mean for your finances?

climate change related fires in the blue mountains

The dangers of climate change could soon overwhelm both humanity and nature, says a new scientific report released Monday by the Intergovernmental Panel on Climate Change (IPCC). Indeed, the effects from climate change could be more severe than originally predicted.

The report says that countries aren’t doing enough to protect cites, farms and coastlines from the dangers that climate change has unleashed, such as record droughts, rising seas and catastrophic floods. 

Furthermore, a Melbourne-based climate restoration think tank, Breakthrough, released a report last year, saying that Australian policy makers still prioritised short-term financial gain through its high-carbon economy, making it difficult to help with the current climate crisis.

Breakthrough and IPCC both say that the world is on pace to warm somewhere between 2 to 3 degrees Celsius this century - and a warming world could lead to more extreme storms and floods than the ones we are currently experiencing! Sadly, heavy rain is just one of the many major climate risks Oceania is facing.

There is no easy way to say this, but the changing climate has the potential to affect your finances and sometimes in the most unexpected ways.

What does climate change mean for your finances?

For starters, extreme weather like fires and floods might lead to destruction of property. Even if you have the best house insurance in Australia, be sure to understand that it may not cover 100% of potential losses of personal belongings. 

Then there is the possibility of rising costs of produce, essential goods and food. As more farmland gets decimated by extreme weather, there is the risk of supply not meeting demand which could lead to the rising cost of everyday goods. That means less money in your pocket that you could use towards a savings goal or home deposit

However, not everything is gloom and doom! There are ways to make your finances greener and help combat climate change.

How to use your finances to combat climate change

Believe it or not, a first step towards combating climate change can be as simple as choosing a greener bank.

Other things you can do include:

If you’d like to learn more about ethical finance, read-up on the rise of B Corps, check out the dedicated sustainable banking season of The Finance Burrito podcast, or check out our Family Finance section.