The world is not in very good shape right now, to say the least. The economy has taken a hit during the lockdown, and the unemployment rate hit an all-time high. Other than the pandemic, there is also a concern for climate change and how it will potentially affect the world.
The state of public emergency today is evident that when such urgencies rise, the economy suffers. With the growing concerns surrounding climate change, it is hard to pinpoint the extent of disturbance it will cause.
The data from the World Economic Forum, which was a result of a survey from hundreds of business leaders and political bodies, suggests the prominent economic risks that the world may face. The data was divided by global risks in terms of likelihood and potential impact. Both of the lists had concerns about climate change and had a significant emphasis on it. It is also evident that natural disasters are becoming more intense and frequent around the world as 2017 was the costliest year, with $344 billion were lost.
If the climatic situation escalates, there will be many assets that will be stranded and will cost the world economy big losses. If we stick to the global warming threshold outlined by the Paris Agreement, there are still substantial amounts of oil, gas, and coal reserves that will be left stranded. The collective value of these assets would be between 1 to 4 trillion USD, so we are looking at trillions of dollars being at risk to the economy.
The risks to the economy have changed the sentiments of many investors, as many of the institutional investors are divesting from the sector. About 1000 institutional investors have decided to divest from fossil fuels entirely. These investors represented $6.24 trillion in assets. Ireland was the first country to stop its funding to the fossil fuel department, whereas New York City has become the largest city to divest from fossil fuels. The total of $189 billion was scheduled to be divested within five years.
The growing concerns are being taken into account by many public and political representatives. In a recent survey, climate change was the top risk to the economy in 2019, ahead of cyberattacks, financial instability, and even terrorism. The Australian bushfires, US wildfires, and increase in hailstorms all suggest the confirmation of climate change.
Today’s infographic is themed on the same issue of economic losses and potential risks due to climate changes.
Infographic by: visualcapitalist.com