The president of the World Economic Forum (WEF) has cautioned companies that they “only have a very small window” in which to act effectively on climate change
Børge Brende issued the warning at the launch of the WEF’s 2020 Global Risks Report before the organisation’s 50th annual meeting in Davos, Switzerland, on 21-24 January.
“The cost of inaction far exceeds the cost of action,” Brende said. “We only have a very small window and, if we don’t use it in the next decade, we’ll find ourselves in a situation where we can only move the deckchairs around the Titanic.”
For the first time in the report’s 15-year history, the top five risks to the global economy by likelihood – as ranked by 756 experts – were environmental. They were, in descending order, extreme weather, failure to mitigate climate change, natural disasters, biodiversity loss and man-made environmental disasters.
Business leaders worldwide should “consider the actions they need to take much more urgently”, stressed John Drzik, chair of Marsh & McLennan Insights, which produced the report in partnership with the WEF and Zurich Insurance Group.
A step in the right direction
Emily Farnworth, WEF director and head of climate initiatives, said that the UK’s new statutory framework for environmental reporting by plcs and other large organisations was helping to reduce corporate carbon emissions.
“We can see that leading businesses, which are reporting their carbon footprints, are on track for reducing emissions quite significantly,” she said. “They are close to reaching the recommended targets from scientists.”
But one environmental risk that business has done little to address is biodiversity loss, according to Zurich’s chief risk officer, Peter Giger. “Biodiversity is declining faster than at any other point in human history and is closely linked to the warming planet,” he said.
The report estimates that biologically diverse ecosystems provide economic benefits equating to £25 trillion a year – close to the combined annual GDP of the US and China.
“Biodiversity loss will have a profound impact on our economies and the businesses we operate, so preserving biodiversity is a measure that businesses and regulators should use when managing climate change,” Giger said. “For all of us in boardrooms, now is the time to take action.”
The UK Institute of Risk Management (IRM) has drawn similar conclusions about the scale of the environmental challenge, having also published a report this week, summarising senior members’ predictions for the coming year.
One of the contributors was Paul May, a former director of the IRM and a member of its newly formed special-interest group on climate change.
He predicted that the special-interest group would be “inundated” with membership applications, but also that “neither insurers nor risk managers will commit to research at the level and depth required to reach a clear consensus as to the problem and the short- and medium-term solutions”.
May added: “Profit, pragmatism and other practicalities will dampen, deter and delay initiatives by organisations, industry sectors and governments.”