New research led by Dr Tanya Fiedler, Senior Lecturer and Scientia Fellow at the UNSW Institute for Climate Risk & Response, explores how narratives can help us better understand and communicate the impacts of climate change.
With the imminent changes in financial reporting requirements, businesses now need localised data to assess the impact of climate change on their operations, assets, and supply chains. However, the uncertainty of future climate conditions makes it challenging to provide this crucial information accurately.
Dr Fiedler’s latest paper, Storylines: A Science-Based Method for Assessing and Measuring Future Physical Climate-Related Financial Risks, addresses these challenges by bridging the gap between climate science, accounting, and finance.
“Over the last decade, rapid changes in the global regulatory environment mean many organisations will now be required to identify, measure, and report on the financial risks they face from a warming climate. This brings the need to bridge the gaps between science and finance to the front and centre of accounting work,” says Dr Fiedler.
Communicating climate risks with future projections
“It is almost impossible to overstate the importance of understanding what our future climate will look like. At the same time, the challenges that arise when we try to do so are many,” says Dr Fiedler. “Every day we are told about record-breaking temperatures and other types of climate extremes such as bushfires and flooding that are increasingly impacting human lives and livelihoods. But without the information we need to minimise the effects on individuals, communities, and organisations, and wider society, planning becomes really problematic.
Originally developed in climate science, storylines describe uncertain physical climate futures by using expert judgment to prioritise an understanding of the causal networks
driving changes and extremes. These storylines combine climate model projections with other relevant evidence to develop plausible and useful narratives about the future.
Assessing and measuring climate-related financial risks with storylines
As awareness of climate risks grows globally, they are increasingly recognised as financial threats. Countries like Australia are moving towards mandatory climate risk reporting, making the need for a clear plan more urgent. However, Dr Fiedler's research highlights the limitations of current climate risk communication methods and advocates for using storylines as a more effective and practical approach for organisations.
“It does this in three ways,” Dr Fiedler explains. “First, by making the need for multiple lines of evidence explicit, as there is no one source of truth where future complex dynamic systems are concerned. Second, by calling on the need for multiple scientific, financial, engineering, operational, and HR experts, etc., to come together in a room, to a) evaluate these different lines of evidence, b) form a judgement as to what the most likely range of possible futures looks like, and c) consider what this means for specific assets, operations, supply chains, and communities.”
“And third, in doing so, by producing information that is both underpinned by science but also presented in a way that can really help with decision-making. The storyline approach facilitates these conversations by promoting comprehensive and multidisciplinary dialogue.”
Dr Fiedler's work represents a significant step towards integrating science, accounting, and finance. “It’s all about translation, translation, translation—how to bring the worlds of science, accounting, and finance together.
“It’s a super interesting and dynamic space to work in, and it's really rewarding, as I believe I am actually helping organisations understand why the climate does and should matter to them.”
For interviews, please contact Victoria Ticha, UNSW Institute for Climate Risk & Response Media and Communications Officer, at v.ticha@unsw.edu.au or 0410 610 158.