Page 38 - WEF Reoprt 2020

Trade, labour and supply disruptions, or draconian interventions
chain disruption from panicked policy-makers that imperil
Climate change will affect trade by distorting macroeconomic and financial instability.
prices and disrupting supply chains. For Communities will also suffer if jobs are lost
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example, with the Artic sea ice melting at without well-thought-through and equitable
a record pace, a northern route through transition plans in place.
once-impassable waters has “emerged as
a potential global shipping artery.” Shifts Over 40 central banks and supervisors are
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in seasonable temperature and rainfall will already examining how climate risks can be
place particular stress on economies reliant integrated into their economic and financial
on agricultural output, creating new winners activities. The Bank of England has warned
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and losers in the trade sphere. The labour that corporations in incumbent “dirty”
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force will experience impacts as well, and industries can expect to go bankrupt if they
not only in the structural transition to a low- fail to understand the risk of their business
carbon economy: for example, heat stress models becoming obsolete as investment
resulting from global warming is projected to flees to net-zero-emission alternatives.
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cause productivity losses equal to 80 million The Financial Stability Board’s Taskforce
full-time jobs in 2030. 40 on Climate-related Financial Disclosures
announced recommendations in 2017
that have driven boardroom discussions
At a crossroads regarding financial exposures and transition
strategies. Now supported by almost 900
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For the future of climate change mitigation, companies, assessing financial risk of climate
2020 is a critical year: it presents the change is becoming more mainstreamed.
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first opportunity for nations to revise Governments are also moving towards
their national plans to tackle climate mandatory disclosure of climate risks by
change as set out under the 2015 Paris listed companies. The investor community
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Climate Agreement, and to close the gap is also responding to climate risk, with a
between what they have pledged and recent notable development being the launch
what is needed. An increasing number of of the UN-convened Net Zero Asset Owners
governments are announcing long-term Alliance at the 2019 United Nations Climate
net-zero emissions goals and showing Action Summit.
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more interest in tackling outstanding
challenges in developing potential low-
carbon solutions. These include creating
a low-carbon hydrogen supply chain at
scale; reducing emissions through carbon Climate change is striking
capture, use and storage; managing the
intermittency of renewables with grid-scale harder and more rapidly than
storage solutions; electrifying domestic
and commercial heating; better recycling many expected
of electric car batteries; and mapping out
the future availability of the raw materials
needed to support the transition.
Second, the risk of unilateral geoengineering
Nonetheless, achieving significant change gambles will become more likely. Failure
in the near term will depend on greater to implement effective regional or global
commitment from major emitters. Failure to climate policies increases the risk that
seize 2020’s opportunity to mitigate climate countries may decide unilaterally to
change will have three main consequences. implement geoengineering projects such
as ocean fertilization or stratospheric aerosol
First, transition risks will increase (Box 3.1). injection. This would risk further disruption
Further delay in reducing emissions will make to ecosystems: one recent study, for
it harder to achieve carbon budget goals: example, found that stratospheric sulphate
companies and markets will ultimately be aerosols could harm agricultural production,
forced to adjust more rapidly, which could cancelling out benefits from the reduction
lead to higher costs, greater economic in warming. 47

The Global Risks Report 2020 33