Summary of The Cost of Inaction

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  • Innovative

Recommendation

Discussions about climate change typically focus on environmental impacts – storms, droughts, floods, and the like. Yet investment managers and investors around the world will feel the effects of climate change on their portfolios, in the form of weaker asset growth and lower returns. These losses could be severe, particularly if business and government fail to address the issue soon. This sobering report from the Economist Intelligence Unit puts some numbers on the financial and economic costs society will have to bear in the years to 2100. getAbstract recommends this cogent analysis to fund managers, investors and anyone who expects to draw a pension in the next 30 years or so.

About the Author

The Economist Intelligence Unit is an independent research and analysis organization.

 

Summary

Climate change exacts a direct financial toll when people and property suffer damage from storms, floods or droughts. But its indirect costs, in the form of impaired macroeconomic activity and sluggish growth, will ripple through all of society. The estimated value of worldwide assets managed by nonbank financial institutions is $143 trillion. The present value of expected losses through 2100 due to climate change amounts to $4.2 trillion, roughly equivalent to the GDP of Japan. And that’s just an average loss that doesn’t factor in the costs of extreme events. Further incremental warming of 6ºC [...


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