Business
The business case for Accelerate, the Business Pact for Climate and Nature.
Climate Risk and Action: The Business Case
- Climate change is likely to bring increasing risks and substantial costs to the Irish economy. [1]
- The socio-economic cost of climate change damage is estimated to be between $1.7 trillion and $3.1 trillion per year by 2050. [2]
- From 2000 to 2019, the cost of damage due to hurricanes, wildfires, flooding, drought, and heat waves attributed to climate change was $143 billion, equating to just over $16 million per hour. [3] [4]
- Globally, maintaining business as usual on climate change would cost $1,266 trillion more than the costs incurred to remain on a 1.5°C pathway. [5]
- Climate change can reduce the potential output limit, via, for example, the destruction of infrastructure and machinery, impacts on tourism, depressed agricultural yields, reductions in human productivity levels, and disruption to or extension of transport channels in supply chains. [6]
- Financial institutions are exposed to climate risks from an increased probability of defaults and loss of asset value.
- European businesses and services in essential sectors are exposed to risks from climate-related disruptions to supply chains. Climate-related disruptions can interact with supply chain shocks caused by other factors, including geopolitical tension.
- Supply chain disruption can have downstream implications for food security, access to medicine, and business operations.
- Risk severity is uncertain due to a lack of stress tests and insufficient monitoring of supply chain vulnerabilities against current and future climatic hazards.
Definitions:
Nature is the natural world: all the natural capital, processes and natural phenomena that exist, such as freshwater, air, the weather, oceans, forests, minerals, soil, organisms, and mountains. It also includes ecosystem services such as water filtration, pollination, climate regulation, and many others.
Biodiversity is the variability within species, between species, and of ecosystems. In other words, biodiversity is the diversity of all living things. More biodiversity is essential to a healthy, stable, and resilient planet.
Nature Risk and Action: The Business Case
- Approximately $44 trillion of economic value—half of it is at moderate or severe risk due to nature loss. [7]
- Over 75% of global food crops depend on pollinators. Up to $577 billion in annual global crop production is at risk from pollinator loss. [8]
- A collapse in ecosystem services such as wild pollination, provision of food from marine fisheries and timber from native forests, could result in a global GDP decline of $2.7 trillion in 2030. [9]
- Only 5% of Fortune Global 500 companies currently have targets to tackle biodiversity loss, compared to 83% for addressing climate change. [10]
- Natural climate solutions can provide up to one-third of the cost-effective climate mitigation needed by 2030 to meet the goals of the Paris climate agreement. [11]
- Shifting to nature-positive models could create annual business opportunities worth $10 trillion by 2030. [12]
Notes
1. www.gov.ie. (2024). Ministers welcome approval of the Nature Restoration Law in the EU Environment Council. [online] Available here
2. IPCC, 2023: Summary for Policymakers. In: Climate Change 2023: Synthesis Report. Contribution of Working Groups I, II and III to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change [Core Writing Team, H. Lee and J. Romero (eds.)]. IPCC, Geneva, Switzerland, pp. 1-34, doi: 10.59327/IPCC/AR6-9789291691647.001 IPCC_AR6_SYR_SPM.pdf.
3. Climate Change Advisory Council (2024), Preparing for Ireland’s Changing Climate: Annual Review 2024. https://www.climatecouncil.ie/councilpublications.
4. Bennett, P. (2023). Climate change is costing the world $16 million per hour: study. [online] World Economic Forum. Available here
5. This figure is likely higher given the knock-on economic impacts on job losses, educational access etc. is not captured in the research.
6. Faccia, D., Parker, M. and Stracca, L. (2021). Feeling the heat: extreme temperatures and price stability . [online] European Central Bank. Available here
7. Kotz, M., Kuik, F., Lis, E. and Nickel, C. (2023). The impact of global warming on inflation: averages, seasonality and extremes. [online] European Central Bank. Available here
8. The Visionary CEO’s Guide to Sustainability: How leaders can meet the moment with pragmatism. (2024). [online] BAIN & Company. Available here
9. Nature Risk Rising: Why the Crisis Engulfing Nature Matters for Business and the Economy. (2020). [online] World Economic Forum; PwC. Available here
10. UNEP (2022). Facts about the nature crisis. [online] UNEP – UN Environment Programme. Available here
11. The World Bank (2018). Natural Capital. [online] World Bank. Available here
12. McKinsey Sustainability (2022). Where the world’s largest companies stand on nature | McKinsey. [online] Available here