World warned not to ignore climate threat in the face of current challenges

Zurich Insurance Group’s head of sustainability risk, has warned the world cannot afford to lose sight of the threat climate change poses to the world as it looks to tackle a range of major current threats.

John Scott (pic) was speaking at the launch of the World Economic Forum’s 18th edition of the its Global Risks Report, which warned conflict and geo-economic tensions have triggered a series of deeply interconnected global risks.

These include energy and food supply crunches, which are likely to persist for the next two years, and strong increases in the cost of living and debt servicing. At the same time, these crises risk undermining efforts to tackle longer-term risks, notably those related to climate change, biodiversity and investment in human capital.

These are the findings of the Global Risks Report 2023, released today, which argues that the window for action on the most serious long-term threats is closing rapidly and concerted, collective action is needed before risks reach a tipping point.

Across three timeframes, it paints a picture of the global risks landscape that is both new and eerily familiar, as the world faces many pre-existing risks that previously appeared to be receding.

At present, the global pandemic and war in Europe have brought energy, inflation, food and security crises back to the fore. These create follow-on risks that will dominate the next two years: the risk of recession; growing debt distress; a continued cost of living crisis; polarized societies enabled by disinformation and misinformation; a hiatus on rapid climate action; and zero-sum geo-economic warfare.

However, Scott said the world could not afford to take its eye of the efforts to mitigate climate change adding the window to make a real difference to the impacts of global warming was fast closing.

“The interplay between climate change impacts, biodiversity loss, food security and natural resource consumption is a dangerous cocktail. Without significant policy change or investments, this mix will accelerate ecosystem collapse, threaten food supplies, amplify the impacts of natural disasters and limit further climate mitigation progress. If we speed up action, there is still an opportunity by the end of the decade to achieve a 1.5ᵒC degree trajectory and address the nature emergency. Recent progress in the deployment of renewable energy technologies and electric vehicles gives us good reasons to be optimistic.”

The report backed Scott’s concerns.

“Unless the world starts to cooperate more effectively on climate mitigation and climate adaptation, over the next 10 years this will lead to continued global warming and ecological breakdown,” The WEF explained. “Failure to mitigate and adapt to climate change, natural disasters, biodiversity loss and environmental degradation represent five of the top 10 risks – with biodiversity loss seen as one of the most rapidly deteriorating global risks over the next decade. In parallel, crises-driven leadership and geopolitical rivalries risk creating societal distress at an unprecedented level, as investments in health, education and economic development disappear, further eroding social cohesion. Finally, rising rivalries risk not only growing geo-economic weaponization but also remilitarization, especially through new technologies and rogue actors.”

The report added: “The coming years will present tough trade-offs for governments facing competing concerns for society, the environment and security. Already, short-term geo-economic risks are putting net-zero commitments to the test and have exposed a gap between what is scientifically necessary and politically palatable. Dramatically accelerated collective action on the climate crisis is needed to limit the consequences of a warming world. Meanwhile, security considerations and increasing military expenditure may leave less fiscal headroom to cushion the impacts of an elongated cost of living crisis. Without a change in trajectory, vulnerable countries could reach a perpetual state of crisis where they are unable to invest in future growth, human development and green technologies.”

Scott said: “It has been 30 years since the world met in Rio de Janeiro at the first Earth Summit, yet here we are in today’s world and we are not doing enough. By the end of this decade we have a 50% chance of breaking the 1.5 degree limit within the Paris Agreement.

“The need for climate change risk mitigation is one of the most highly rated in the report yet it is also the risk that those surveyed say they are least prepared for.”

Scott added: “We are living in a world where investing I scientific necessity, and what is politically expedient do not match.”

Zurich and Marsh sponsored this year’s risk report and Carolina Klint, risk management leader, Continental Europe, Marsh, said companies had to take a longer term look at the risks they face despite the  gravity of the current threats.

“2023 is set to be marked by increased risks related to food, energy, raw materials and cyber security, causing further disruption to global supply chains and impacting investment decisions,” she said. “At a time when countries and organizations should be stepping up resilience efforts, economic headwinds will constrain their ability to do so. Faced with the most difficult geo-economic conditions in a generation, companies should focus not just on navigating near-term concerns but also on developing strategies that will position them well for longer-term risks and structural change.”

“The interplay between climate change impacts, biodiversity loss, food security and natural resource consumption is a dangerous cocktail. Without significant policy change or investments, this mix will accelerate ecosystem collapse, threaten food supplies, amplify the impacts of natural disasters and limit further climate mitigation progress.

John Scott, Zurich Insurance

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