As reported in Jones Day's Fall 2013 Climate Report, Risky Business, an initiative cochaired by hedge fund billionaire Tom Steyer, former U.S. Secretary of the Treasury Hank Paulson, and former New York City Mayor Michael Bloomberg, was launched to assess the economic risk to the United States associated withclimate change.

In addition to the three well-known cochairs, the Risky Business initiative includes influential business leaders, investors, and elected officials. These include former U.S. Secretary of Housing and Urban Development and former Mayor of San Antonio Henry Cisneros, Executive Chairman of Cargill, Inc. Gregory Page, former U.S. Secretary of the Treasury Robert E. Rubin, former Director of the Office of Management and Budget George P. Shultz, President of the University of Miami and former U.S. Secretary of Health and Human Services Donna E. Shalala, former U.S. Senator Olympia Snowe, and Dean Emeritus of the Bloomberg School of Public Health Dr. Alfred Sommer. 

Released in June 2014, The Economic Risks of Climate Change in the United Statesdivides the continental United States into six regions and assesses the climate change risk factors for each, along with those for Alaska and Hawaii. The Risky Business team hopes to avoid the current political squabbles associated with potential climate-change-driven actions by framing the debate in terms of risk, insurance, and opportunity. The report considers both "likely risks" and also "tail risks," defined in the report as risks less likely to occur but with particularly severe consequences should they come to pass. "This focus on 'tail risks' is not unique to climate change. After all, households and businesses pay a premium for insurance to protect themselves against those tail risks, such as the possibility of flood or fire, that they deem unacceptable." Id. at 11.

Northeast. In the Northeast region, the report highlights the risks of rising sea levels and accompanying storm surges. The analysis identifies a likely risk of climate-driven rise in sea level of .9 to 1.6 feet near New York City by the middle of this century and increases of 2.1 to 4.2 feet by 2100.

The findings also predict a 2.4 to 4.5 foot rise in the sea level near Atlantic City by the end of this century, with Boston experiencing a two-foot to four-foot rise over the same time period.

The report also suggests that likely average annual property damage caused by climate-change-driven hurricane activity in the region will increase over current levels by $6 billion to $17 billion.

Southeast. In the Southeast region, the report focuses on risks associated with increased heat and humidity, stating it is likely that heat-related mortality will increase by 15 to 21 additional deaths per 100,000 people per year by the end of the century. 

The report also cites climate-change-driven heat increases as a factor in decreased labor productivity, particularly in the region's construction, mining, utilities, transportation, agriculture, and manufacturing sectors. 

Midwest. For the Midwest, the Risky Business report identifies the impact of climate change on the region's agriculture industry, largely due to significant increases in extreme heat. 

While the report gives credit to the proven ability of farmers to innovate and adapt to challenges via creative farming methods and new technology, it predicts that increases in heat and humidity will make it increasingly difficult or impossible to work outside during summer days. "[B]y the middle of the next century, [the average Midwesterner] can expect to experience 20 full days in a typical year of [Humid Heat Stroke Index] over 95ºF, during which it will be functionally impossible to be outdoors." Id. at 31. 

Great Plains. In the Great Plains region, the report highlights the impact of climate change on energy demands. The report concludes that by 2050, energy increases due to air conditioning demands will likely increase by 3.4 to 9.2 percent in Texas alone. "Meeting higher peak demand will likely require the construction of up to 95 GW of additional power generation capacity over the next 5 to 25 years, the rough equivalent of 200 average-size coal or natural gas power plants." Id. at 35. 

Northwest. The report states there is a lower risk of severe climate change impact in the Northwest than in the other regions but still notes a 1-in-100 chance of an elevation in sea level near Seattle of up to five feet by 2100, potentially accompanied by a significant increase in the number of extremely hot days.

Southwest. Finally, in the Southwest, the report identifies significant risk due to increased heat and a rise in sea levels. "Eighty-seven percent of all Californians live in coastal counties, and 80 percent of the state's GDP is derived from those counties." Id. at 38. In discussing the already hot areas in the Southwest region, such as the Arizona deserts, the report expects "one to two additional months of days of 95ºF each year within the lifetime of babies being born right now in this region." Id

Advocating Change. The report concludes by advocating changes by businesses, investors, and the public sector to reduce the identified risks. The report hopes rational business actors will adapt to the risks posed by climate change in the same way they adapt to other risks. Simultaneously, the report presses investors to consider the effects of climate change in their investment strategies, which in turn will put additional pressure on businesses to adapt. 

About the same time Risky Business released its report, cochairman Hank Paulson published an op-ed in The New York Times advocating for a carbon tax to address climate change in the United States. Similar to the Risky Business report, Mr. Paulson suggests that a combination of government policies and private sector action is the best way to address climate change risk. "A tax on carbon emissions will unleash a wave of innovation to develop technologies, lower the costs of clean energy and create jobs as we and other nations develop new energy products and infrastructure," he wrote. 

Mr. Paulson further suggests that a carbon tax is essential in demonstrating to developing countries, particularly China, that the United States is serious about addressing climate change, thereby encouraging the developing countries to do the same. However, it does not necessarily follow that a self-imposed carbon tax in the United States will encourage action in China any more than American standards of human rights and intellectual property have influenced change in China.

Pressure to account for risks associated with climate change is increasing at many levels. While Congress does not appear likely to take any significant steps, several federal agencies, including the Environmental Protection Agency, are addressing the issue. As previously reported in The Climate Report, investor groups and the SEC are ramping up pressure for corporations to disclose climate risks. The prominent members of the Risky Business initiative are similarly leveraging their influence over government, the investment community, and businesses to encourage corporate risk managers and decision-makers to factor climate change risk into their decisions.