Forum Views - January 2024
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FORUM VIEWS - JANUARY 2024
The Impact of Climate Change on the Global Economy
The current state of climate change poses significant
challenges to the global economy, with repercussions
affecting various sectors. The rising frequency of
extreme weather events, unpredictable food production,
and the depletion of natural capital assets all contribute
to the escalating impact on economic stability, at
the same time that we are facing an increasingly uncertain
geopolitical situation that is impacting supply chains
and food production across the globe as trading
relationships are reshaped to align with political
alliances.
Against that backdrop, the climate discussions at the 28th
Conference of the Parties (COP 28) in Dubai in December
were always going to be difficult, but while many will have
been disappointed by the soft language used in the final
communiques and the less ambitious targets agreed upon, it
is clear that the world’s nations are taking the climate crisis
seriously and that there is a growing sense of urgency to take
meaningful action.
In addition to this sense of urgency, there is now a clear
acknowledgement that the nature and climate crises are
completely interlinked and that we cannot solve one without
solving the other.
This is a welcome shift. The International Energy Agency's
recent 'Breakthrough Agenda Report' highlighted a
concerning trend - emissions are on the rise, and nature-
altering activities persist. This dual threat exacerbates the
carbon pollution problem while eroding the very foundations
of our economic resilience, such as vital rainforests.
On top of that, there is now a growing focus on food and
health as two key areas where the nature and climate crises
have significant impact.
INVESTING FOR 2050. NAVIGATING
THE CLIMATE AND NATURE CRISES:
ECONOMIC AND FINANCIAL PERSPECTIVES
Peter Elwin
Director of Fixed Income
Head of Food & Land Use
Programme
Planet Tracker
Businesses and finance face unprecedented challenges in
this shifting landscape. The destabilization of the once-
predictable 'Holocene' period demands a reevaluation of
existing models. This unpredictability escalates the cost of
risk across insurance, debt finance, and equity capital.
The economic toll of extreme weather events is staggering. In
2022 alone, climate-related disasters caused damages
exceeding USD 3 trillion, with estimates likely underreporting
the true cost, focusing mainly on insurance losses rather than
encompassing broader economic and human losses.
Resource overuse and environmental harm compound the
issue. Fossil fuel extraction and use remains a primary
contributor to climate change, further depleting nature's
resilience and intensifying the risks faced by humanity.
The International Energy Agency's
recent 'Breakthrough Agenda
Report' highlighted a concerning
trend - emissions are on the rise,
and nature-altering activities
p e r s i s t . T h i s d u a l t h r e a t
exacerbates the carbon pollution
problem while eroding the very
foundations of our economic
resilience, such as vital rainforests.
(United Kingdom)
Global Insights
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