Climate Change

All creatures evolve to best adapt to environmental impacts. Those who are best adapted to environmental conditions continue to survive, while those who cannot adapt sufficiently to these conditions die. This is called natural selection. This concept, which is a biological term, is also used for the financial sector. Climate change is changing environmental conditions at an unusual speed. It is not easy to adapt to these rapid changes caused by the development of the industry. In other words, companies that are strong and adapted can continue their activities, while companies that cannot adapt to developments have difficulty.

Some of the rays coming from the sun must stay on the earth's surface to keep the temperature balance in the world at a life-sustaining level. This is possible as a result of some gases called greenhouse gases that contain gases such as carbon dioxide. These gases have started to be released into the atmosphere more frequently with industrialization. For example, according to the World Wildlife Fund (WWF), carbon dioxide emission into the atmosphere has increased by 40% since 1750. This means more heat retention on the earth, and as a result, the average temperatures in the world have also increased. Because of this temperature change, climates change and the frequency of extreme events' seen increases.

The most important reason for the increase of greenhouse gases is the human factor. Since more of the heat from the sun is stayed in the world due to the increased carbon dioxide emission caused by the development of the industry, the average temperature in the earth is also increasing. Increasing fossil fuel use, especially in industry and in daily life, causes an increase in carbon dioxide in the world. According to WWF, 43% of greenhouse gas emissions come from coal, 36% from petroleum and 20% from natural gas.

Another activity of people that increases greenhouse gas is the decrease of forests. The most important reason for the decrease of forests is uncontrolled tree cutting. In other words, the green areas in the world are decreasing because more trees have cutten from the planted tree. This threatens life as well as causing some disasters such as landslides. Also, uncontrolled agriculture and the use of toxic pesticides and fertilizers are among the main factors that decrease the number of trees in the world. Another human factor causing deforestation is forest fires. Various materials left in the forest are triggered by natural events, causing forest fire and drought. Picnic in the forests is one of the most important reasons for this. Because after the picnic,leaving the burning coals or throwing the glass residues to nature is threatening nature by interacting with factors such as wind and sun. The most important effect of climate change is that it increases the disasters in the world. Landslides, floods, excessive precipitation, colds, and temperatures that increase as a result of the deterioration of climate balance damage many sectors. Damaged sectors cover these losses with either insurance, either borrow, either using their capital or pull out of the market. However, it is clear that pull out of the market will have very bad results for the economy. First of all, this situation caused economic shrinkage and unemployment. Because the company's bankruptcy not only affects negatively the employees and capital owners of that company but also decreases the tax that the government will receive. Therefore, negativities have an effect throughout the country.

Firms that went bankrupt as a result of the disasters cannot repay their loans. For this reason, financial institutions that provide loans also feel the effects of these disasters. Such that, if there is no fraud, that it is clear that a company that has a bankruptcy petition cannot pay the debt. Therefore, probably the follow-ups made by the banks will be inconclusive and financial institutions will not be able to get their money back. This will negatively affect the profitability of banks. When all these factors are brought together, both national and global crises break out and the results of these disasters are felt heavily by each individual.

Disasters do not only affect manufacturing companies. For example; Floods or landslides leave many people homeless. The productivity of people who are left homeless will decrease, they will become more indebted and their ability to pay their current debts will decrease. In addition, state assistance will also return as taxes. It cannot be denied that increasing taxes are another factor that aggravates the situation of the sectors and triggers the crisis. For example, as a result of Hurricane Katrina that occurred in the US state of Louisiana in 2005 thousands of people died and millions of people had to move. It is more clearly understood by the figures that such a movement has devastating effects on the country's economy. According to the research, 10% of the banks in the region made losses that year and 50% of them had problems in getting their loans back. Hence, uncertainty had increased and the economy stagnated due to people reduced their money spending.

Another effect of climate change is bankruptcy, not caused by disasters, but caused by anti-climate change policies. For example, it is aimed to decrease greenhouse gas emissions with the regulations. As a result of these regulations, it is clear that companies that have a great contribution to greenhouse gas production and produce fossil fuels will suffer. Therefore, as a result of the regulations that make the activities of these companies difficult or impossible, these companies will also have economic problems and will have the problems mentioned above.

According to the WWF Turkey report, a rapid temperature increase is expected in Turkey after 2030 compared to the 2nd half of the 20th century. This temperature is expected to increase by 4 degrees in winter and 6 degrees in summer. Likewise, the amount of rainfall per square meter in Turkey is expected to decrease throughout the winter months. However, this situation is not only limited to Turkey. The World Meteorological Organization states that the world has the hottest temperatures in the last 22 years and foreseen that if it is continued in the same way, there will be 3 or 5 degrees of temperature increase in the 22nd century. The most observable effect of global warming is seen in glaciers. Glacial areas, which were 7.7 million km2 in 1980, decreased to 4.2 million km2 in 2019.

Decreasing greenhouse gas emissions is the primary precaution to be taken against climate change. Although this situation can be prevented to some
extent by state-based regulations, the biggest duty falls to companies and people. Turning conservation electric power and choosing vehicles that use this energy may be a good start. On the other hand, the companies' adoption of the sustainability policy and the consideration of this factor by the financial institutions when lending is another measure that can be taken against climate change. On the other hand, increasing energy efficiency, carrying out planting works and preventing the destruction of forests are among other measures that can be taken. Banks' view of the events with a broad perspective and considering possible climatic risks in the credit process will prevent banks from loses.

It is an incontestable fact that climate change endangers the life we familiar with. Because the decrease of forests and the increase of greenhouse gases increase disasters such as floods, landslides and droughts. Moreover, unfreezing not only threatens wildlife but also causes rising water levels. For this reason, it is foreseen that some land parts will be submerged in the future if we act like our current acts. Such changes and disasters affect many industries deeply, and naturally, affect the banking and finance sectors. However, if we take the necessary precaution in time, it is possible to minimize the effects of climate change.