The Economic and Human Costs of Inaction to limit global warming - Does Sustainable Investment hold the key?

Photo by Frank Cone: https://www.pexels.com/photo/eruption-of-volcano-18092546/

As Los Angeles burns in winter and Australians face recurring summer heatwaves with temperatures soaring to 40°C, we must ask: is this the new norm?

Globally, climate impacts are intensifying. In 2024, severe droughts in Italy and South America, fatal floods in Nepal, Sudan, and Europe, deadly heatwaves in Mexico, Mali, and Saudi Arabia, and devastating cyclones and wildfires in the US and the Philippines underscore the worsening crisis.

According to the Emergency Events Database, which has tracked global hazards and disasters since 1988 (https://www.emdat.be/), natural disasters have risen by 15% since 2015, leading to a 205% increase in economic costs and a 280% rise in human casualties. These trends are expected to worsen as global temperatures continue to climb, escalating loss, damage, and human suffering.

So what can be done? Sustainable Investment?

We recommend this insightful article by BCG, Cambridge Judge Business School, and the University of Cambridge's climaTRACES Lab on the economic impacts of climate inaction versus mitigation: Read here.

Key takeaways include:

• Without increased climate investment, global temperatures could rise above 3°C, leading to cumulative GDP losses of 16%–22%.

• Investing less than 2% of cumulative GDP in mitigation efforts by 2100 could limit warming to below 2°C, reducing GDP losses to 11%–13%.