As the world enters the third year of the COVID-19 pandemic, the climate crisis remains the biggest long-term threat facing humanity, according to the 2022 Global Risks Report.
Respondents to the 2022 World Economic Forum Global Risks Perception Survey ranked “Climate action failure” as the number one risk with potentially the most severe impact over the next decade.
Extreme weather due to climate change is seen as the second most serious short-term risk, with biodiversity loss coming in third.
Now in its 17th edition, the report encourages governments to think outside the quarterly reporting cycle and create policies that shape the agenda for the coming years. It urges global leaders to come together and adopt a coordinated multi-stakeholder response to ensure the transition to net-zero economies.
Peter Giger, Group Chief Risk Officer, Zurich Insurance Group, said: “Failure to act on climate change could shrink global GDP by one-sixth. It is not too late for governments and businesses to act on the risks they face and to drive an innovative, determined and inclusive transition that protects economies and people.”
The report comes in the wake of some positive developments at the UN Climate Change Conference COP26 in Glasgow in November 2021. Governments announced various emissions reduction targets, while further urgency was injected by emphasising shorter-term targets such as halving emissions by 2030 to achieve net zero by 2050.
In addition, governments meeting in Glasgow agreed to phase down coal, the most polluting fossil fuel. And following six years of discussions, the Paris rulebook – guidelines for how the Paris Agreement is delivered – was finally agreed in Glasgow. This includes agreement on Article 6 that establishes a framework for countries to exchange carbon credits through the United Nations and will give market access to all countries that want to attract green investment through the global carbon market.
However, despite some optimism surrounding new commitments made at and in the run-up to COP26, present plans still fall short of the Paris Agreement goal of limiting global temperature rise to 1.5°C goal above pre-industrial levels. Instead, they steer the world towards 2.4°C of warming, with even the most optimistic scenarios only achieving 1.8°C.
The onus is now on governments to submit more ambitious climate plans and to take immediate, tangible and effective action to meet climate targets. The introduction of economic drivers, such as mechanisms to establish an effective carbon price, will be an important step for businesses.