Climate threats now dominate long-term risks, survey of global leaders finds

January 16, 2020 - 8:54 AM
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Clouds gather but produce no rain as cracks are seen in the dried up municipal dam in drought-stricken Graaff-Reinet
Clouds gather but produce no rain as cracks are seen in the dried up municipal dam in drought-stricken Graaff-Reinet, South Africa, November 14, 2019. Picture taken November 14, 2019. (Reuters/Mike Hutchings/File Photo)

LONDON — Climate-change-related threats such as extreme weather, large-scale biodiversity losses and a failure of political leaders to slow planetary heating are now the top long-term risks facing the globe, business and other leaders said on Wednesday.

An annual risk survey published ahead of the World Economic Forum next week put climate threats ahead of risks ranging from cyberattacks and pandemics to geopolitical conflict and weapons of mass destruction for the first time.

“That’s new. Last year we didn’t have it,” said Mirek Dusek, deputy head of the Centre for Geopolitical and Regional Affairs and an executive committee member of the World Economic Forum, of the rise of environmental issues up the list.

The shift comes as climate-changing emissions continue to rise strongly globally, despite government and business commitments to reduce them, and as the potential impact of runaway climate change becomes clearer.

From wildfires in Australia, Brazil and California to worsening storms, floods and droughts, “all key indicators point that this is a situation that’s bad and it’s getting worse,” said John Drzik, chairman of Marsh & McLennan Insights, a global risk, insurance and professional services firm.

Water and food crises—problems similarly linked to climate shifts—also featured high among long-term worries for the approximately 800 business, government and civil society leaders worldwide who filled out the survey.

Drzik said a surge in climate change activism was putting “lots of pressure” on governments and business to do more, but that other risks – such as growing political polarization and insularity—were simultaneously making climate action harder.

But businesses face a growing range of climate-related risks, from unexpected regulatory changes to rapid shifts in consumer preferences and litigation linked to inaction on climate change, he said, all of which can help drive action.

For instance, 370 investors managing $40 trillion in assets have now pledged to make their investments climate friendly, Drzik said, in part because of shareholder pressure.

Borge Brende, the Norwegian president of the World Economic Forum, said it was increasingly clear that on climate change, “the cost of inaction far exceeds the cost of action”.

He pointed to the survey’s finding that “domestic political polarization” is one of the top worries for the year 2020, calling it a barrier to effective climate action, such as reaching agreement to make polluters pay the costs of their emissions.

Peter Giger, chief risk officer for the Zurich Insurance Group, warned that “the longer we wait (to tackle climate change), the more painful the transition will be” because of the rapid plunge in emissions that delay would necessitate.

But he said making the transition to a greener, low-carbon and more sustainable economy was now “an existential challenge for everyone on this planet”.

He pointed to the rapid disappearance of insect species around the world, including those that pollinate 75% of the world’s crops, as a result of climate change and other pressures.

If insects and the pollination services they provide disappear, “that’s a catastrophic outcome” for food security and for business, Giger said.

The breakdown of planetary systems has “true costs”, he added.—Reporting by Laurie Goering @lauriegoering, Editing by Claire Cozens, the Thomson Reuters Foundation