In a unique new report, CDP has worked with University College London (UCL) Energy Institute to help us understand the potential costs to global Gross Domestic Product (GDP) of failing to realize a 2 degrees Celsius aligned scenario. The report models the mean damage costs of ‘business as usual’ action on climate change at $5.4 trillion USD a year by 2070 and $31 trillion USD a year by 2200. Accounting for these damages will lead to a 10% reduction in GDP growth rate by 2050 and 25% by 2100.
Findings of the report suggest that failing to mitigate the effects of climate change could not only result in sharply rising climate change related economic and non-economic damage costs, but that the effect would be variable by sector and region with developing economies the hardest hit.
Given the potential scale of damage costs and the implications for disruption in the global system, economic actors cannot just wait for the right regulatory policies to be put into place. Policymakers, corporates and the financial system should be proactive in investing in mitigation and adaptation now to avoid the high costs in future.