The global economy faces the greatest long-term risk from climate change. If nothing is done, global temperatures could rise by 3°C and the global economy could shrink by 18% in 30 years. However, the impact can be mitigated if strong action is taken to achieve the goals set out in the Paris Agreement. The public and corporate sectors will drive the journey to net zero.
Climate-related natural disasters are becoming more frequent and more destructive due to global warming, which could negatively impact economic performance in the long run. The loss of farmland due to sea level rise is just one example. Heat stress can also lead to crop failure. Therefore, rising temperatures will disproportionately affect developing countries in the tropics.
After 30 years, the GDP of major economies could fall by 10%.
If temperatures rise by 3.2°C, China could lose 24% of its GDP by mid-century. The US, Canada and the UK could each lose about 10%. While countries like France and Greece were more affected (13% each), countries like Finland and Switzerland were less affected (6% each).
Every country, every company and every individual is at risk from climate change. The world's population is projected to reach nearly 10 billion by 2050, with much of the increase taking place in countries already feeling the effects of climate change. We must take immediate action to mitigate potential harm and work towards our net zero goal. We must address biodiversity loss and climate change in the global community.
The effects of global warming are most pronounced in countries with fewer opportunities to adapt or mitigate the severity of change. In particular, Malaysia, India, Thailand, Indonesia and the Philippines are most at risk. Conversely, the US, Switzerland, Canada and Germany, as well as other advanced economies in the northern hemisphere, are at the lowest risk.
Climate protection can be significantly accelerated with the help of the private and public sectors.
The world's largest carbon dioxide emitters must work together to meet climate goals. Both the private and public sectors can facilitate and accelerate the transition, especially in investing in sustainable infrastructure, which is critical to keeping global warming below 2 degrees Celsius. Insurance companies or pension funds are also well-positioned to play an important role due to the long-term nature of the contracts and the long-term nature of the resources deployed.
There are many ways to slow global warming. The categorization of sustainable and green investments needs to be standardized internationally, and more aggressive carbon pricing policies to incentivize nature-rooted solutions and carbon offsets are essential. Financial reports should regularly disclose the agency's progress towards net-zero emissions and the Paris Agreement. With their risk knowledge, reinsurers can support households, companies and society in addressing climate change by providing security capabilities and risk knowledge.
