SCREENING BANKS: MANAGING CLIMATE-RELATED FINANCIAL RISK
In the coming decades, the increased speed of climate change will continue to cause catastrophic disruption through higher temperatures and more extreme weather events. Aside from the devastating physical damage and potential loss of life resulting from such events, there are also financial losses to consider. According to the World Economic Forum, the global economy could lose 10 percent of its total value by 2050 due to climate change.
Swiss Re Institute warns that if global temperatures rise by 3.2 degrees Celsius, it could wipe up to 18 percent of GDP off the world economy by 2050. Its Climate Economics Index stress tests how global warming will affect 48 countries – representing 90 percent of the world economy. It predicts that advanced Asian economies will see GDP decline 3.3 percent if temperatures rise less than 2 degrees Celsius, with a 15.4 percent drop if the temperature rise is more severe. ASEAN countries are forecast to see drops of 4.2 percent and 37.4 percent respectively. China is at risk of losing nearly 24 percent of its GDP in a severe scenario, compared to forecast losses of 10 percent for the US, Canada and the UK, and 11 percent for Europe.
Apr-Jun 2022 Issue
Richard Summerfield