Presentation, Other
How can business survive climate change?
The EconomistLisa McKellie, Dan Petroski, Rich Sorkin, Gavin Schmidt, Chidiote Obihara, Nicolette Bartlett, Christopher Vanden Riche, Guy Scriven
- Heavy regulation and climate-related litigation are expected to upend the corporate world, with 120 cases brought against businesses in the past decade compared to about 20 between 2000 and 2010, potentially leading to bankruptcy, negligence charges, and reputational loss.
- Climate change is projected to cost 215 global firms a collective one trillion dollars over the next five years, with fossil fuel industry profits potentially falling from $39 trillion to $14 trillion by 2050.
- Global temperature increases to two degrees are predicted to shrink existing wine-growing regions by 56%, with worst-case climate scenarios now occurring in 2020 rather than at the end of the century as previously modeled.
- Approximately 180 billion dollars of annual investment is required over the next decade for adaptive measures, while governments are expected to heavily increase regulation as progress toward the 2015 Paris agreement remains slow.
- Within ten years, no large commercial or government entity is expected to lack a well-thought-out approach to assessing and addressing physical climate risks, including mandatory disclosure of supply chain emissions which average over five times a company's direct output.
- The transition to a green economy is viewed as inevitable, with companies that invest in decarbonization now gaining a competitive advantage, though some green technologies like green steel may take two decades to become commercially viable.
- Economic stability depends on managing the transition, as failure to do so could damage economies so severely that global capital markets would look fundamentally different, while stranded assets will grow larger the longer action is delayed.
- Businesses refusing to adapt face existential threats similar to extinction events, with estimates suggesting that groups like Extinction Rebellion warn of significant habitat loss and potential loss of life.
- New industrial titans are expected to emerge from those betting on the transition, such as Ørsted which doubled its share value after ditching oil, indicating that building materials for the future represent a significant market despite higher initial costs.
- Hydrogen technology is expected to become cheaper with increased scale and development, mirroring the trajectory of wind and solar, creating strong long-term business incentives to adapt to climate change.