The climate disasters that cyclically affect the world could cut global GDP by 22%, according to a report developed by the Boston Consulting Group (BCG) in partnership with the World Economic Forum (WEF)..

Designated "The Cost of Inaction: A CEO Guide to Navigating Climate Risk"The document points out that climate risks could mean a cut in world GDP of between 16% and 22% by 2100. "The economic costs of climate change have skyrocketed in the last two decades and the risks continue to grow," summarizes the managing director and partner of BCG in Portugal, Manuel Luiz, quoted by the Portuguese newspaper Business.

The managing director and partner of BCG in Portugal points out that "the passivity of companies threatens not only their competitiveness, but also their long-term survival". The figures just released leave no room for doubt about the importance of mitigating risks: since 2000, extreme weather events have caused more than 3.6 trillion dollars in damage.

"To mitigate impacts and maintain competitiveness, it is essential to reduce carbon emissions and strengthen business resilience in a market where sustainability is no longer a choice, but a requirement," he says.

The report goes on to say that "as governments raise carbon prices and introduce stricter emissions regulations, companies that fall behind in decarbonization efforts put themselves at risk not only of having to pay compliance costs, but also of seeing the value of their assets decline".

In addition to the impact on wealth generation worldwide, climate change represents a direct risk for organizations that fail to adapt and could see their profits reduced by up to 25% by 2050.

According to BCG and WEF, organizations that take the lead in mitigating climate risks will be more competitive and have a greater capacity to lead their sectors of activity. Alternative energy (49%), sustainable transport (16%) and sustainable consumer goods (13%) are, according to the authors, the best positioned sectors. In fact, the report even says that the green economy is expected to grow from 5 trillion dollars in 2024 to more than 14 trillion dollars by the end of this decade.

However, BCG suggests four measures that can help organizations on this path to mitigation: assessing climate risks, managing the environmental risks in their portfolio, streamlining the business to unlock opportunities (particularly in innovation), and monitoring risks and communicating progress.

(Photo DR)