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Climate Reparations

According to the research “Time to pay the piper: Fossil fuel companies’ reparations for climate damages” published in CellPress, specifically in the online journal One Earth, some of the leading oil, natural gas, and coal companies (e.g., ExxonMobil, Saudi Aramco, and Shell) should pay US$5,4 billion for the restoration of damages caused by drought, wildfires, rising sea levels, and melting glaciers, among other climate disasters expected between 2025 and 2050.

Wealthy industrialized countries have significantly contributed to greenhouse gas emissions, while others, mainly developing countries, have borne the greatest burden of climate-related disasters without contributing significantly to the problem. To address this imbalance, climate reparations have been established, aiming to compensate communities and countries affected by climate change due to historical and systemic factors, despite their small share in anthropogenic climate change. Climate reparations, or "loss and damage," as referred to by the United Nations, assess the economic cost of climate-induced disasters such as floods, fires, and hurricanes. Additionally, there are long-term climate impacts, like rising sea levels, which may take years to appear but can cause irreversible damage over time.

The goal is to recognise the uneven distribution of environmental burdens so that inequalities can be adjusted through financial and technological support and assistance.

During the International Cooperation Forum in Egypt in 2022, based on calculations by the African Development Bank Group, it was announced that Africa is losing between 5% and 15% of its gross domestic product (GDP) annually due to the impacts of climate change. Furthermore, according to Anil Markandya and Mikel González-Eguino (2018), the cost of losses and damages in low- and middle-income countries could reach $290 billion to $580 billion annually by 2030.

In general, climate reparations aim to recognize the unequal distribution of environmental burdens and seek to fix these inequalities through economic and technological support. This process allows vulnerable countries to use reparations for relocation or reconstruction after extreme weather events, the loss of livelihoods due to ecosystem destruction, and non-economic losses such as the loss of culture and tradition.

Determining the precise quantitative responsibility of countries or entities is a complex and multifactorial process

Regardless of the visibility of the destructive impacts of climate change, determining the precise quantitative responsibility of countries or entities is a complex and multifactorial process. As mentioned in an analysis published in the journal Nature Sustainability, the proposed compensation, almost $6 billion annually, is intended to be paid to developing countries with historically low pollution levels, requiring them to move away from fossil fuels despite not having utilized their share of the global carbon budget.

Simultaneously with quantifying responsibility for climate change and its impacts, a significant challenge is determining a fair and equitable distribution of reparations. The effectiveness of the process and ensuring that the funds allocated as compensation reach the most vulnerable communities without being misused is also crucial. Moreover, some argue that addressing historical responsibility may hinder efforts to focus on immediate and future solutions for climate change.

The United States and the United Kingdom, among others, have shown opposition to climate reparations. The U.S. has made it clear that it will not compensate any country affected by climate change disasters. The reason for this opposition is still unclear, though it may be to avoid any liability related to climate change that could be used in future legal disputes.

Climate reparations are not a panacea for addressing and adapting to climate change. It is considered a global challenge that requires a multifaceted approach

Παρ’ Nevertheless, climate reparations are not a panacea for addressing and adapting to climate change. It is considered a global challenge that requires a multifaceted approach. A combination of reparations with collective actions, international collaborations, and coordinated efforts is needed to address the root causes of climate change, implement comprehensive solutions, and achieve meaningful results for a sustainable future.

At E-On Integration, through the RiskClima software and specialized services offered, every business can explore adaptation actions to every physical and transition risk arising from climate change. At the same time, through the RIBIA ESG software, a company can assess how "green" and sustainable the activity in which it wants to invest is based on European criteria and whether this investment consists of positive environmental and social characteristics.


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