Investor Insight Climate Science Insight: Introducing Dr Sophie Lewis

Over the past few years, investors and companies have consistently told us that ACCR’s use of climate science to assess transition plans and climate commitments is a valuable input for effective engagement.

But as the physical impacts of climate change become increasingly severe – and impossible to avoid – the need to understand physical risk is just as important, because of the material risk it poses to investment portfolios. At ACCR, we are always reflecting on how to strengthen our capabilities and better support investors to navigate the systemic risks of a rapidly changing climate.

With that in mind, we are delighted to introduce Dr Sophie Lewis, who has joined the ACCR climate science team. Sophie brings deep expertise in climate systems and extremes, and will share insights, analysis and regular updates to help you stay informed.

From lab bench to desk

My scientific career has given me a familiarity with climate change on timescales ranging from hours or days, through to hundreds of thousands of years. Across timescales, the extreme nature of the Earth’s climate system is evident in observations of climate and in climate models.

Starting back in 2007, my PhD research explored abrupt changes in the Australian monsoon system that occurred 30,000 years ago. Recorded in thin layers in stalagmites that grew over thousands of years in Indonesian caves, my PhD uncovered evidence of climate tipping points - circulation changes in the North Atlantic Ocean that abruptly shifted monsoon rainfall in the Southern Hemisphere tropics.^[1]

After my PhD, I moved from the lab bench to behind a computer, running and analysing climate models. My focus was now on tracking extreme weather and climate events in Australia and beyond in real-time. This research program asked: how is climate change impacting extreme events, and how will extremes change under future warming scenarios? Working within a large research group, I compiled a body of work demonstrating rapid changes in recording-breaking extreme temperatures,^[2] as well as complex climate-change-driven shifts in rainfall.^[3]

In 2018, I was selected to serve as a Lead Author on the Intergovernmental Panel on Climate Change’s (IPCC) Sixth Assessment Report. For the first time, the IPCC was including a specific chapter on extreme weather and climate events.^[4] Given what I’d learned, I was compelled to contribute my scientific expertise on Australian extremes to this global scientific assessment that underpins multilateral climate negotiations.

In the following years, my interests remained at this science-policy interface. I have just completed a five-year stint as Commissioner for Sustainability and the Environment in the Australian Capital Territory, working alongside Government, community and business to further environment and climate outcomes. I focussed on all facets of environmental policy and legislation, ranging from scope 3 greenhouse gas emissions^[5] to air quality and bushfire preparedness.

I’m now back focused firmly on the physical impacts of climate change – this time, looking at what it means for institutional investors and their stewardship of capital.

A clear gap in risk recognition

From day one here at ACCR, I’ve set about trying to understand this new domain I am working in and the investor community I’m working with. While I am bringing extensive knowledge of the physical science to the table, investors have their own distinct expertise, knowledge, duties and responsibilities – and I have a whole new language, and set of acronyms, to learn.

With my feet now firmly under the desk, what strikes me the most is the vast gap between the scientific and financial understandings of climate impacts. The science shows adverse, widespread and irreversible impacts of expected future warming. Yet so far, I haven’t seen evidence of a proportional response from the finance and investment industry.

I expect all observers of the climate space are already aware of the diminishing chance of limiting warming to 1.5°C. This was a threshold focused on by the IPCC’s 2018 special report^[6] because of the need to understand the specific impacts associated with this global temperature target. This warming brings more frequent and severe extreme weather events, such as heatwaves, droughts, and heavy rainfall. The science shows strong and clear agreement that breaching the threshold of 1.5°C of global warming accelerates the systemic threat, which will impact all aspects of society – including markets.

Based on current multilateral agreements, there is a strong likelihood of breaching 2°C of global warming or warmer. These temperature thresholds represent vastly different futures, in both the near- and long-term. The science does not suggest that the associated disruption to socio-economic systems of this warming will be minimal. Nor does it support the idea that these impacts will be slow-moving or easy for human systems to adapt to. The climate science is incontrovertible that any future 2 and 3°C worlds are materially different from the present day.

A 2024 analysis of the consequences of 3°C of warming warns that “impacts will be much more severe than just three times as bad as after 1°C of warming.”^[7] The study says that with 3°C of average global warming, average annual land temperatures will correspondingly warm by about 6°C. A shift in average land surface temperatures equates to even warmer daily maximum temperatures shifts at the city level, making New York roughly as warm as Los Angeles today. This level of warming would yield a “completely new climate”, likely leading to “widespread drought problems, wild fires and forest dieback”. In this future, “extreme heat will become far more frequent and a major cause of human mortality, making large parts of the tropical land area essentially too hot to live.”

While many millions of us are already experiencing the impacts of climate warming, with mounting and tangible physical and financial costs, what we have seen to date is not an indicator of things to come. Rather, every fraction of a degree of further warming brings compounding physical climate risks and associated costs. As IPCC Vice-Chair, Professor Mark Howden, said:

“Each half a degree matters, each year matters, each choice matters.”^[8]

This is why I am surprised that mitigating these impacts – as best as possible and acknowledging a level of damage is already locked-in - is not more front and centre for the finance sector. I look forward to understanding this more, and welcome your thoughts.

Four key areas of climate concern (and a bonus one)

In my recent weeks getting back on the science ‘tools’ these climate topics have particularly grabbed my attention.

In future Climate Science updates, I’ll focus at times on the high-impact, low-probability climate subsystems. These climate risks are important to understand. But first, the most certain, most likely and expected physical impacts of climate change – those that constitute known systemic risks - must be fully considered and acted upon.

1. Acceleration of warming?

There is increasing scientific evidence of an acceleration in warming in recent years. 2024 was the hottest year on record^[9], surpassing the previous record set in 2023. The 2023 temperature anomaly - about 1.55°C above pre-industrial level - was beyond climate scientists’ expectations.^[10] This extraordinary temperature record prompted Dr Gavin Schmidt, Director of NASA’s Goddard Institute for Space Studies, to declare that "this sudden heat spike greatly exceeds predictions... we need answers for why 2023 turned out to be the warmest year in possibly the past 100,000 years. And we need them quickly."

We need scientific answers to tell us what is causing the observed heat spike, and what it means for the climate systems and our scientific ability to predict future changes. I’ll be watching these global records to see whether a warming acceleration is revealed in coming months and years.

2. Tipping points in the climate system

The climate system has several large-scale components known as tipping points.^[11] These are parts of the climate system that are vulnerable to significant and rapid changes of state. At a tipping point, a small shift in the background climate state can trigger a large-scale change in the system, essentially flipping from one mode to another. These critical thresholds include in ice sheets and sea-level, ocean circulation and ecosystems.

There is increasing scientific focus on tipping elements in the Atlantic Meridional Overturning Circulation (AMOC). This globally significant ocean circulation brings heat to the north Atlantic. It is well established that the AMOC has weakened and shutdown in the distant past. As the climate continues to warm, will the AMOC stop?

While observations have demonstrated a weakening over decades,^[12] it remains unclear whether it will continue to slow or stop altogether. Any change will likely have global implications for temperatures, rainfall and sea level. With reduced ocean heat transport to the region, the most significant impacts are cooling over Europe. A 2025 study modelled the extension of the Artic ice pack to Britain under AMOC shutdown conditions.

Any consideration of future climate change that ignores tipping points will likely grossly underestimate future risks and costs.

3. More intense and more frequent extremes

Extreme heat, heavy rainfall, floods, droughts, storms and wildfires bring significant and escalating social, environmental and economic costs. Climate science has long established that climate change has increased the frequency and intensity of some types of weather and climate extremes.

Many scientific questions remain - how are each of these extreme types being affected by climate change? What locations are being worst affected? What are the impacts of a more extreme world?

I'll be reviewing new scientific papers on extreme weather and climate events occurring now and in future climate model projections to assess what we can expect to become more frequent, longer lasting or more severe.

4. Heat-related system limits

Human and ecological systems are vulnerable to heat stress and science is still actively exploring the impacts of extreme heat on human systems.

There are hard biological thresholds to withstanding extreme heat. Beyond these boundaries, adaptation cannot occur. Climate change already accounts for around a third of heat-related deaths^[13] and heat-related mortality is projected to rapidly increase

The disruptions of extreme heat are already evident, halting outdoor work and damaging critical infrastructure. In recent years, we’ve seen melting runways at airports in London and Phoenix, buckling roads and rail lines, sagging power lines and straining power grids.

Bonus thought: I’m also closely watching the broader policy settings that enable the production of robust, independent and state-of-the-art public science.

Our understanding of climate change depends on public sector investment in monitoring and observations of the Earth’s system, climate modelling and computational centres and research institutions, and the training and retention of scientists. This enabling environment underpins the ability of science to answer key questions on future impacts.

I’ll aim to work my way through and better translate the latest science and big issue topics for you in your Investor Quarterly. I will also be back in touch when new science or new physical impacts emerge that require discussion.