The world needs to step up its efforts to head off climate change or it will end up paying a much greater economic price, a global network of central banks and supervisors warned Tuesday.
In an annual update, the Network for Greening the Financial System (NGFS) called for more ambitious policy adjustments to slow and mitigate climate change, including a much higher carbon price than previously assumed. The report painted a dire picture of the impact of global warming on the world economy, noting that its worst-case scenario foresees four times as much damage as before.
“The expected economic impact of unabated climate change has significantly increased,” the NGFS said. “Due to the implementation of the new damage function, the projected physical risk impact has quadrupled by 2050 in some scenarios.”
Physical risks refer to risks from the direct impact of climate change, such as extreme weather events or gradual changes such as rising sea levels or shifting agricultural zones. They are distinct from transitional risks, which arise from adjusting policies to help move the economy to carbon neutrality.
