Severe threats to the climate dominate the long-term risks identified in the latest Global Risks Report by the World Economic Forum (WEF), with economic confrontations and domestic political polarisations ranking among the shorter-term risks for 2020.
The report, which was produced in partnership with Marsh & McLennan and Zurich Insurance Group, points to a need for policy-makers to match targets for protecting the Earth with ones for boosting economies
It also calls for companies to adjust to science-based targets in order to avoid potentially disastrous future losses and threats to the environment.
The WEF further forecasts a year of increased domestic and international divisions and economic slowdown, with geopolitical turbulence causing division between world powers at a time when leaders should be working together to tackle shared risks.
Analysts argued that this could prove catastrophic, particularly for addressing urgent challenges like the climate crisis, biodiversity, and record species decline.
According to the report, the top five global risks over the next 10 years will be extreme weather events, failure of climate-change mitigation efforts, human-made environmental damage and disasters, major biodiversity loss and ecosystem collapse, and major natural disasters.
“The political landscape is polarized, sea levels are rising and climate fires are burning,” said Borge Brende, President of the World Economic Forum.
“This is the year when world leaders must work with all sectors of society to repair and reinvigorate our systems of cooperation, not just for short-term benefit but for tackling our deep-rooted risks.”
John Drzik, Chairman of Marsh & McLennan Insights, also commented: “There is mounting pressure on companies from investors, regulators, customers, and employees to demonstrate their resilience to rising climate volatility.”
“Scientific advances mean that climate risks can now be modeled with greater accuracy and incorporated into risk management and business plan,” he continued. “High profile events, like recent wildfires in Australia and California, are adding pressure on companies to take action on climate risk at a time when they also face greater geopolitical and cyber risk challenges.”
Peter Giger, Group Chief Risk Officer, Zurich Insurance Group, further warned of the urgent need to adapt faster to avoid the worst and irreversible impacts of climate change and to do more to protect the plant’s biodiversity.
“Biologically diverse ecosystems capture vast amounts of carbon and provide massive economic benefits that are estimated at $33 trillion per year — the equivalent to the GDP of the US and China combined,” he said.
“It’s critical that companies and policy-makers move faster to transition to a low carbon economy and more sustainable business models. We are already seeing companies destroyed by failing to align their strategies to shifts in policy and customer preferences,” Giger explained.
“Transition risks are real, and everyone must play their part to mitigate them. It’s not just an economic imperative, it is simply the right thing to do.”
