Climate change and extreme weather will cost the global economy hundreds of billions, with the World Economic Forum (WEF) warning there is just a decade left to act.
In its 15th annual global risks report, the WEF has highlighted the economic risks posed by global runaway climate change. Climate change is striking harder and more rapidly than many expected, with the bushfires that have ravaged Australia – as well as floods and droughts around the world – bringing the issue to the forefront of the global agenda.
“The world cannot wait for the fog of geopolitical and geo-economic uncertainty to lift,” the report reads.
“Opting to ride out the current period in the hope that the global system will “snap back” runs the risk of missing crucial windows to address pressing challenges.”
The economic threat posed by climate change could impact everything from national economies to the mortgage and insurance industries. Worldwide economic damage from natural disasters in 2018 totalled US$165 billion, with that number set to increase if emissions remain at their current level.
In the United States alone, climate-related economic damage could reach 10 per cent of GDP by the end of the century, while over 200 of the world’s largest firms estimate that climate change will cost them a combined total of nearly US$1 trillion.
BlackRock, the world’s largest asset manager, recently divested from its active thermal coal investments and joined corporate pressure group Climate Action 100+, something that environmental groups around the world hailed as a victory in the fight against climate change.
But the WEF report notes that many businesses are still not planning on the physical and financial risks that climate change could have on their activities and value chains.
The WEF warned that avoiding the most severe economic and social consequences of global climate change means limiting global warming to just 1.5 degrees Celsius over pre-industrial levels. This equates to a remaining carbon budget of less than 10 more years of emissions at their current level – and demand for energy is only continuing to increase.
However, the WEF remains optimistic.
“The good news is that the window for action is still open, if not for much longer,” wrote Børge Brende, president of the WEF.
“And, despite global divisions, we continue to see members of the business community signal their commitment to looking beyond their balance sheets and towards the urgent priorities ahead.”