Climate crisis tops list of risks for 2020s: World Economic Forum

For the first time, climate crisis and environmental degradation have taken out the top five spots in a list ranking the risks most likely to impact the world over the coming decade.

It comes as extreme weather events batter the world; with fires burning across Australia, storms and tornadoes striking the US, torrential rainfall in Dubai, a volcano erupting in the Philippines, and news that the world's oceans reached new temperature highs in 2019.

The sobering report released by the World Economic Forum found that extreme weather events, climate action failure, natural disasters, biodiversity loss and human-made environmental disasters are set to dominate 2020 and the coming decade.

World Economic Forum president Borge Brende said we need to act now.

"The political landscape is polarised, sea levels are rising and climate fires are burning," he said.

"This is the year when world leaders must work with all sectors of society to repair and reinvigorate our systems of cooperation, not just for short-term benefit but for tackling our deep-rooted risks."

The Global Risks Report brings the World Economic Forum's stakeholders together to develop sustainable, integrated solutions to the world's most pressing challenges.

The report, produced in partnership with Marsh & McLennan and Zurich Insurance Group, draws on a survey of nearly 800 Forum members, as well as 200 members of the Forum's younger generation community, asked to rank their concerns in terms of likelihood and impact.

The report argues the world is waking up to climate change.

"The near-term consequences of climate change add up to a 'planetary emergency'," it said.

"Governments, markets and, in an increasing number of societies, voters are awakening to the urgent realities of climate change-it is striking harder and more rapidly than many expected."

The last five years are on track to be the warmest on record, it added.

"Climate related natural disasters such as hurricanes, droughts and wildfires are becoming more intense and more frequent, reportedly now averaging a disaster a week. Polar ice is melting more quickly than anticipated, with drastic implications for sea levels and coastal populations," it reads.

"Severe weather is worsening: the last year witnessed unprecedented wildfires and devastating storms across the globe, sea ice loss in the Arctic and record-breaking heatwaves in Europe."

It outlines the major climate risks as being loss of life (both human and wildlife), stress on ecosystems, food and water crises, increased migration, exacerbation of geopolitical tensions, economic impacts, capital market risks and trade, labour and supply chain disruption.

Brende said respondents are heralding a change in climate policy.

"On the environment, we note with grave concern the consequences of continued environmental degradation, including the record pace of species decline," he said.

"Respondents to our Global Risks Perception Survey are also sounding the alarm, ranking climate change and related environmental issues as the top five risks in terms of likelihood-the first time in the survey's history that one category has occupied all five of the top spots.

"But despite the need to be more ambitious when it comes to climate action, the UN has warned that countries have veered off course when it comes to meeting their commitments under the Paris Agreement on climate change."

Marsh & McLennan Insights chair John Drzik said big business is feeling the heat.

"There is mounting pressure on companies from investors, regulators, customers, and employees to demonstrate their resilience to rising climate volatility," he said.

"Scientific advances mean that climate risks can now be modelled with greater accuracy and incorporated into risk management and business plans.

"High profile events, like recent wildfires in Australia and California, are adding pressure on companies to take action on climate risk at a time when they also face greater geopolitical and cyber risk challenges."

The majority of younger respondents believed that "extreme heat waves" (88.8%), "destruction of ecosystems" (87.9%) and "health impacted by pollution" (87%) will have a global impact in 2020; compared to 77.1%, 76.2% and 67% respectively for older stakeholders.

In comparison, the report's stakeholder respondents believed that "economic confrontations" (78.5%), "domestic political polarization" (78.4%) and "extreme heat waves" (77.1%) to be the top short-term risks for 2020.

Zurich Insurance Group chief risk officer Peter Giger said we need to act now to avoid the irreversible impacts of climate change.

"Biologically diverse ecosystems capture vast amounts of carbon and provide massive economic benefits that are estimated at $33 trillion per year - the equivalent to the GDP of the US and China combined," he said.

"It's critical that companies and policy-makers move faster to transition to a low carbon economy and more sustainable business models.

"We are already seeing companies destroyed by failing to align their strategies to shifts in policy and customer preferences. Transitionary risks are real, and everyone must play their part to mitigate them.

"It's not just an economic imperative, it is simply the right thing to do."

In addition to the top five risks by likelihood over the next decade, the report also detailed the top five risks by severity of impact over the same period.

It found climate inaction, weapons of mass destruction, biodiversity loss, extreme weather events and water crisis to be the top five threats in terms of severity.

The report has been released a week ahead of the Forum's annual meeting in Davos next week, which will be attended by the world's business and governmental leaders.

This article was first published by Financial Standard

Get stories like this in our newsletters.