Climate crisis threatens global financial system, and other nature and climate stories you need to read this week

The global financial system is at risk, according to Allianz board member Günther Thallinger. In a recent LinkedIn post, he warned that escalating extreme weather events could soon make some risks uninsurable, threatening economic stability.

The insurance industry has long managed risks such as floods, heatwaves and storms. However, the frequency and intensity of these events have increased exponentially in recent decades, testing the viability of traditional insurance models.

And since 2000, reported costs of damage from extreme weather events linked to human-driven climate change have nearly tripled, rising from $149 billion between 2000 and 2004 to a projected $435 billion for 2020-2024, finds the World Economic Forum's latest Climate Adaptation report.

"We are fast approaching temperature levels – 1.5°C, 2°C, 3°C – where insurers will no longer be able to offer coverage for many of these risks," Thallinger writes.

And this could trigger a broader financial crisis, he explains: "If insurance is no longer available, other financial services become unavailable too. A house that cannot be insured cannot be mortgaged. No bank will issue loans for uninsurable property. Credit markets freeze."

Only reducing CO2 emissions will prevent further escalation, Thallinger concludes, noting that the rapid advancement of sustainable technologies offers a path forward.

EU politicians have voted to allow more time for negotiating changes to sustainability reporting rules, to ease the burden on smaller businesses, Reuters reports.

In February, the European Commission proposed legal changes it named the "Simplification Omnibus", which would exempt thousands of smaller European businesses from EU sustainability reporting rules.

The European Parliament agreed on 3 April to delay the implementation of these rules by two years for most companies. This means businesses with fewer than 500 employees will not be required to report on their sustainability impact until 2027, with reports due in 2028.

Climate overtakes unemployment and economic concerns as Southeast Asia’s biggest challenge, according to an annual survey by the ISEAS-Yusof Ishak Institute.

This makes it the first time since the survey was conducted in 2019, at an ASEAN-10 aggregated level, that a majority of Southeast Asians (55.3%) have identified climate change and extreme weather events as the region’s most pressing issue.

The US South and Midwest have been hit by storms and tornadoes, killing at least seven people and causing damage to roads and other infrastructure, The Guardian reports.

Arctic sea ice has recorded its smallest winter peak extent since satellite records began 47 years ago, data from the US National Snow and Ice Data Center shows.

“We now expect a 3C world,” states a March analysis by Morgan Stanley as reported by The Guardian. The report adds that increasing heatwaves will significantly boost air conditioning companies, with the global market potentially growing by 41% to reach $331 billion by the end of the decade.

Prince William has announced that his Earthshot Prize awards ceremony will be conducted in Brazil this year, ahead of the United Nations climate summit COP30 in November.

Brazil’s restoration efforts rely on accurate, up-to-date data to track progress, inform decision-making and meet international climate commitments. According to MapBiomas, 11-25% of the country’s remaining native vegetation – amounting to 60-135 million hectares – is experiencing some level of degradation. Brazil is leveraging international partnerships to connect local restoration efforts to global datasets, explain Restor's Tom Elliott and the Brazilian Restoration and Reforestation Observatory's Tainah Godoy in this article.

As the global economy transitions from linear production to circular value creation, developing countries are facing a fundamental shift in how value is generated, captured and delivered. This transformation will reshape existing industrial models, impacting employment, exports, competitiveness, infrastructure and skills. Understanding these implications is crucial for countries seeking to remain competitive and capitalize on new growth opportunities in a circular economy. Learn more in this article from DXC Technology's Henrik Hvid Jensen.