Page 104 - Carbon Capitalism and Communication Confronting Climate Crisis

90 J. BATES

“the largest volume of high quality weather data and information made
available by a national meteorological organisation anywhere in the world”
for anyone to re-use without charge (HM Government 2011). Senior
politicians advocating for Open Data, such as MP Francis Maude (2012),
spoke publicly about the advantages for the climate risk industry and,
according to well-placed policy-makers interviewed by the author, some
hoped these developments would make the UK weather derivative market
competitive with the US-based markets (Bates and Goodale 2017). Yet,
despite the hopes of these key political actors, opening the UK’s meteo-
rological data has faced challenges as the Met Office has struggled to adapt
to a fully open data environment (Bates and Goodale 2017). Nevertheless,
despite these barriers, the climate risk industry is still able to access and
process vast amounts of meteorological data in order to trade weather
derivate and related climate risk products—albeit with some charges still in
place.

HEDGING AGAINST THE CLIMATE AND THE EXPLOITATION
OF UNCERTAINTY
For advocates of these climate risk products, one of the key benefits is con-
sidered to be that they reduce firms’ exposure to financial volatility resulting
from climate instabilities. While in the long-term a business should expect to
pay more into climate risk products than they receive in pay-outs, the business
should also expect gains due to having a less volatile profit margin (Dutton
2002, p. 208). For example, the business should be better able to secure
credit and protect its market value. For this reason, many perceive that cli-
mate risk products increase the “resilience” of businesses and other end users
as they adapt to climate change (Michel-kerjan 2013), allowing them to
effectively “eliminate the effects of weather and climate from the income
statement” (Dutton 2002, p. 209). As Dischel (2002, p. 19) states:

The goal of hedging is to be less concerned, or not concerned at all, about
the impact of weather on cashflow or return. Management achieves freedom
from the weather when it engages in a hedge.

At the same time as increasing the ‘resilience’ of industries and countries
that are vulnerable to climate change, climate risk products, it is claimed,
offer a substantial growth opportunity for markets to take advantage of in
the coming years. For some, therefore, climate risk products are seen as a