Climate change could cut global financial assets by $2.5 trillion, report finds

Climate change could wipe $2.5 trillion off the value of global assets, according to a new set of economic models.

The study assesses the impact of climate change on the present value of global financial assets. Under a business-as-usual emissions path, this could cut $2.5 trillion off their value. However, under a worst-case scenario this could rise to $24.2 trillion.

The authors of the study highlight that climate action is not just imperative for the environment, but also our economy. “Limiting warming to no more than 2 degrees Celsius makes financial sense to risk-neutral investors – and even more so to the risk averse.”

The risk of climate change

The World Economic Forum’s Global Risks Report 2016 named climate change as one of the biggest risks to life on earth.

This study, published in the journal Nature, further highlights the risks posed by failing to limit global warming.

The business-as-usual scenario sees global temperatures increase to 2.5 degrees Celsius above pre-industrial levels by 2100. The study makes clear the significant losses this could cause – up to $24.2 trillion – and is another reminder of the need for urgent climate action.

Why we need to tackle climate change now

February 2016 was the hottest month on record, with NASA data showing global surface temperatures were 1.35 degrees Celsius above the long-term average.

Failing to tackle these rising temperatures could have dramatic consequences for all of us.

Christiana Figueres, the Executive Secretary for the United Nations Framework Convention on Climate Change, and Achim Steiner, Executive Director the UN Environment Programme, have highlighted the risk of failing to act.

“The need for urgent, concerted action cannot be emphasized enough. Any delay will cause negative consequences to continue to accumulate. This will not only cause tremendous suffering, especially to the world’s most vulnerable people; it will reverberate for decades to come,” they wrote.

Have you read?
The Global Risks Report 2016
February was the hottest month on record. Are we losing the fight against climate change?
How can we fast-track climate action?