Climate risks may reduce global earnings, World Economic Forum warns
An ominous depiction of climate change's threat to the global economy: Stormy clouds and melting ice frame a crumbling economic system, as symbols of warning highlight the urgent need for action. (Image generated by DALL-E/OpenAI)
Global business economy could face reductions in annual earnings by 7% by 2035 amid escalating climate hazards, the World Economic Forum (WEF) reported Wednesday.
The reports, published on Wednesday, warn that delays in addressing climate risks could lead to disruptions similar to those caused by the COVID-19 pandemic every two years, with industries such as telecommunications, utilities, and energy particularly vulnerable.
Extreme heat and other climate-related disasters are projected to result in annual fixed asset losses of $560 billion to $610 billion for listed companies.
Firms in energy-intensive sectors are also facing increasing challenges from tightening global regulations, with carbon pricing alone potentially cutting earnings by half by 2030.
The report highlights that every dollar spent on climate adaptation could prevent up to $19 in losses.
Green markets are expected to expand from $5 trillion this year to $14 trillion by 2030, with significant growth in alternative energy, sustainable transport, and eco-friendly products. Early movers in these sectors are positioned to gain competitive advantages, fostering innovation and profitability.
Gim Huay Neo, managing director of the WEF, stated that businesses can thrive while protecting ecosystems and supporting communities by systematically addressing climate-related risks.
The reports emphasize that urgent action is needed, with leading scientists warning of the imminent risk of tipping points in Earth systems, such as ice sheets and ocean currents.
