Climate change

Climate change

“We need to make significant investments in our climate”

Friederike Otto is able to link extreme weather events to climate change – or rule out a correlation between the two. Her data helps to inform decision-makers in the political, business and legal worlds. KfW’s CEO Günther Bräunig joined the climatologist for a discussion in Oxford.

About Friederike Otto

Dr Friederike Otto heads up the Environmental Change Institute at Oxford University. Born in 1982 in Kiel, Germany, she studied physics and philosophy in Berlin. As a co-founder of the research field known as attribution science, she has become one of the most sought-after climate researchers in the world. She explains her observations of climate change in her book Wütendes Wetter (“Raging Weather”; Ullstein Verlag, 238 pages, 18 euros).

Here in Germany, it wasn’t until the two summers of drought in 2018 and 2019 that many people began to realise climate change was not something abstract and far away, but is also happening here. What extreme weather event opened your eyes, Dr Bräunig?

Bräunig: As a skier, I have watched the glaciers melt and change shape in the Alps for many years. But that isn’t what got to me. It was only during the 2017 drought that I began to feel the climate was actually changing in Germany. There were temperatures of up to 47°C in the Mediterranean, forests were burning, extreme cloudbursts destroyed entire villages and many people died. It was only then that I became aware that our weather would be different as a result of climate change.

Was 2017 a notable year for you, too, Dr Otto?

Otto: Yes, we also saw the heat wave between May and August 2017 as a truly extreme event. It was an absolute game changer, making it clear that climate change had increased the likelihood of these events by several orders of magnitude. Even we were surprised.

Bräunig: What kind of weather events will we have to get used to here?

Otto: Hot summers with no rain and warm winters with no frost. Rainfall, on the other hand, will vary considerably from region to region and from season to season. For northern Europe, for example, we have estimated significantly more winter rainfall. For the rest of Europe, what used to be a once-in-a-century rain event is now a once-every-seventy-years event – so still a once-in-a-lifetime occurrence. But heat waves will become the norm in summer.

About Günther Bräunig

Dr Günther Bräunig has been KfW’s Chief Executive Officer since 2018. He is committed to making the group a pioneer when it comes to sustainability and to gradually increasing the share of “green business”.

Now onto the nascent field of attribution science research, which you’ve helped to establish. How do you generally go about that work?

Otto: We calculate correlations and probabilities. We look at the data on a particular extreme weather event that has just occurred – that is, in a world with climate change – and compare it to a world without climate change. We know exactly how many additional greenhouse gases have ended up in the atmosphere since the beginning of the Industrial Revolution and can therefore remove these additional greenhouse gases from the climate models. This is how we simulate a world that’s exactly the same as it is today – only without man-made climate change.

Bräunig: And you compare these two worlds?

Otto: Yes. If we then find out that the probability of a weather event we’re interested in is just as high in the world without climate change, we can say: “OK, climate change doesn’t matter here”. But if we find that what’s now a thirty-year event would only occur on average every three hundred years in a world without climate change, we can say climate change has increased the likelihood tenfold and exhibit clear correlations.

So your studies bring some more reliability to the heated climate debate.

Otto: Yes, our aim is actually to create a realistic picture of what climate change means – some people still think it’s something that doesn’t affect them. On the other hand, there’s also a group that believes humanity will die out in twelve years’ time. And neither is the case. The reality is that there are a few hotspots where climate change is a real game changer, but there are also a lot of places where climate change plays no role or only a very minor one.


Friederike Otto and Günther Bräunig at the Oxford University Parks.

How can decision-makers in politics and business, how can Dr Bräunig benefit from your findings?

Otto: If you know where the vulnerabilities of certain countries and regions lie, you can use our research to figure out how climate change affects (or doesn’t affect) the weather there. So if you want to finance measures to adapt to climate change, we can tell you when it’s appropriate and when it isn’t.

Bräunig: I’m very interested in these findings. But of course we’re already doing a lot to combat climate change. For example, we adopted a sustainable finance roadmap which defines how sustainability can be ingrained even more deeply in KfW’s strategy and governance. Our guiding question here is how to decarbonise the economy and what steps need to be taken.

Otto: And also when?

Bräunig: We haven’t yet set the final date.

Otto: And the milestones?

Bräunig: We’re in the process of setting the milestones.

Otto: With a date?

”Financing structural change is our primary mission.“

Dr Günther Bräunig, KfW’s Chief Executive Officer

Bräunig: Yes, including a date. But we always try to be credible. A lot of announcements are made in the financial sector. I’m always a bit more cautious because we also want to be able to deliver on what we promise. Which doesn’t mean we can’t surprise you all of a sudden. This summer, for example, we announced a ten billion euro programme for the circular economy with the European Investment Bank and four other European promotional banks. The important thing to know is that in Europe, we are all engaged in an intensive dialogue about how to put the 2015 Paris Agreement into practice to keep global warming well below two degrees. On the one hand, we’re looking to decide what in particular we should be financing in the future. On the other hand, we’re looking to decide where we should be stepping back. The latter is not an easy discussion at all, quite honestly, because there’s where we get caught in the conflict between our promotional mandate – to promote the German economy – and what’s needed to tackle climate change.

Otto: Yes, but especially if your mission is to promote the German economy, you could still manage it with a targeted approach. Climate change also creates tremendous economic opportunities.


Of course, Friederike Otto and Günther Bräunig followed the instructions in front of the library inside the round Radcliffe Camera building.

Bräunig: Yes, that’s what we’re doing and that’s why we’re strongly committed to renewable energy sources around the world. In India, we’re helping to bring about a transition to the age of solar energy. In Morocco, we co-financed the world’s largest solar power plant. Huge wind farms are being built in Argentina and Serbia with loans from us. We finance new business of around seventy-five billion euros a year. Of this amount, forty per cent is for climate and environmental protection alone. No other bank has a track record like ours. Financing structural change is our primary mission – whether it’s driven by digitalisation or comes as the result of climate change. I’m convinced that we’ll need to invest heavily in our climate over the next twenty years. The European development banks will play a major role in that process.

Otto: I agree. People keep saying that Germany cannot save the world’s climate on its own. But the problem won’t be solved without Germany either. Germany and Europe in particular must be role models – even if other countries obviously have to be involved too. Of course, national egos and the question of politics (how do I explain this to my voters?) also play a role in the global threat scenarios.

There’s no doubt that every individual can mitigate climate change through their consumption and mobility habits. But do you understand people who say that this is of little use compared to the main drivers of climate change, given that just one hundred companies are responsible for seventy per cent of global carbon emissions?

Otto: You’re talking about those known as the carbon majors – the fossil fuel industry, which unfortunately is not part of the climate debate at all at the moment. The process must involve changing the global energy system so that it no longer relies on burning fossil fuels. As long as the carbon majors aren’t involved, nothing will change. However, of course, each and every individual can do a great deal. By increasing demand for train travel, for example. By not voting for a party that doesn’t have the climate on its agenda. By interacting with one’s political representatives and getting on their case as a local constituent. By reflecting on where to invest money. By seeing if you can’t make your kids’ school carbon-neutral. It’s about changing institutions, and individuals can do that too. The main drivers like Exxon Mobil have to be changed by others. At the moment, no-one is asking them whether they can change their business model. And of course they won’t, if you just ask nicely. But you especially, Dr Bräunig, you are in a position to exert some influence here.

Bräunig: Yes, the financial industry in general can and will influence these sectors. For me, the best and most interesting example is that Norges, the large Norwegian sovereign wealth fund, has announced that it will withdraw from all corporates whose business models are more than thirty per cent dependent on fossil fuels. I’m absolutely convinced that this will also change the business models of the majors.

Otto: But the more governments and their sovereign wealth funds openly join Norges, the faster the business models of the energy companies will change.


"I’m a hopeless optimist", Friederike Otto says. "An unbelievable amount can be accomplished in a short time, even on a huge scale."

Bräunig: The trend is underway. At the moment, investors and asset managers in the financial industry are making one announcement after another about what they no longer want to do in the future. You cannot, of course, walk away from everything overnight, but I do believe that the financial sector is currently in the process of acknowledging its responsibilities. But I always say that the financial industry will not be able to cope with climate change on its own. Clear political decisions are also needed.

Dr Otto, you say that your studies not only supply policymakers with valuable facts for more focused action, but also the judiciary – because certain companies can be held accountable for a quantifiable amount of climate change.

Otto: Yes, our attribution studies could become key building blocks for future climate lawsuits. This work revolves around the extent to which a drought, flood or hurricane can be attributed to a corporate group or country.

Do you believe that corporations and governments will be sued more often in the future?

Otto: Yes. There are things happening right now. Every year, many hundreds of lawsuits are brought. None has been successful to date, but there are proceedings in progress and the victims are being heard at an international level. A good example is the climate change case filed by Peruvian farmer Saúl Luciano Lliuya, who sees his home village threatened by the floods from a melting glacier, for which he partly blames German energy company RWE. It won’t be easy for him, but the evidence is still being gathered. It’s only a matter of time until the first judge has the courage to rule in favour of these claimants.

As a qualified lawyer, what do you think of this, Dr Bräunig?

Bräunig: I think it’s difficult to prove the causal relationships in court. I think we’re all “carbon offenders”.

What’s important is that we have to change our behaviour today, acknowledging that the global climate system is at stake. Everyone can be expected to play some part. I’m interested in what we can do going forwards rather than looking backwards to settle the question of culpability.

Otto: Of course, the legal route should not replace other measures. But what it can do is to put pressure on “carbonators” who do not change their business model. If there’s a realistic threat of being sued, this will help speed up the transition. That’s what I see as the real aim.

Despite the climate forecasts being gloomy at times, is there any way you can leave us on a high note?

Otto: Oh, I’m a hopeless optimist. Let’s just take the last twelve months. So much has changed in that short amount of time! All of a sudden, people are talking about climate change in a whole new way. Many, many people accept that this is an important issue and that we should take a positive view of the changes we need to make. Other social changes also came about very suddenly. When I was a child, gay people were hardly accepted at all – now everyone is free to marry. An unbelievable amount can be accomplished in a short time, even on a huge scale. There’s absolutely no reason to assume we can’t achieve the same kind of success with the climate.

Why are you confident, Dr Bräunig?

Bräunig: My life experience has shown me that goals can be achieved with optimism rather than with pessimism. I also base my confidence on the fact that there’s still a lot that can be done. Until we’ve tried that, there’s no reason to bury our heads in the sand. There’s still plenty of room for improvement.

Published on KfW Stories: Monday, 16 September 2019