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04 December 2023 / Quick Take
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Copy LinkThe 2023 UN Climate Change Conference (COP28) takes place during what is likely to become the warmest year since recordkeeping began; average global temperatures in September broke records going back to 1850, and heat waves, droughts, and tropical cyclones have taken a dramatic economic toll globally.
Rising temperatures will make climate impacts more severe and frequent, disrupting businesses’ supply chains and operations. Without comprehensive disaster planning and adaptation strategies in place, businesses will be exposed to greater risks of catastrophic damages that insurance companies are less likely to cover (see our brief Stormy Business).
Near-term action by businesses in combination with policy support by government is required to reduce greenhouse gas emissions in line with Paris Agreement pledges to reach net zero by 2050, the timeline the Intergovernmental Panel on Climate Change has determined is necessary to keep global average temperatures from rising more than 1.5 degrees Celsius beyond preindustrial levels.
Investments to achieve net zero can provide profitable opportunities if they are focused on renewables, energy efficiencies, electrification throughout the economy, and technologies such as hydrogen or carbon capture and sequestration. As documented in our brief Can We Afford Not to Invest in a Net-Zero Future?, investments by the private and public sectors globally will need to amount to some $50 trillion over the next two decades to achieve net zero, not counting the significant transition risks when shifting away from the current energy system. But the economic cost of doing nothing would be several times higher.
