'Businesses and governments must unite in response to climate crisis'

Speaking at the launch of the latest World Economic Forum’s Global Risks Report, John Drzik, chairman of Marsh & McLennan Insights, said, “High profile events, like recent wildfires in Australia and California, are adding pressure on companies to take action on climate risk at a time when they also face greater geopolitical and cyber risk challenges.

“There is mounting pressure on companies from investors, regulators, customers, and employees to demonstrate their resilience to rising climate volatility. Scientific advances mean that climate risks can now be modelled with greater accuracy and incorporated into risk management and business plans.”

The WEF report, compiled on the basis of predictions made by over 750 global experts and decision-makers and produced in partnership with Marsh & McLennan and Zurich Insurance Group, forecasts a year of increased domestic and international divisions and economic slowdown.

It underlines that geopolitical turbulence is propelling us towards an “unsettled” unilateral world of great power rivalries at a time when business and government leaders must focus urgently on working together to tackle shared risks.

Given that for the first time in the survey’s 10-year outlook the top five global risks in terms of likelihood are all environmental, the report points to a need for policy-makers to match targets for protecting the Earth with ones for boosting economies – and for companies to avoid the risks of potentially disastrous future losses by adjusting to science-based targets.

“Without urgent attention to repairing societal divisions and driving sustainable economic growth, leaders cannot systemically address threats like the climate or biodiversity crises,” the report warns.

Tax as an answer

Speaking at the event, Borge Brende, president of the World Economic Forum, argued that tax can be used as a tool at the global level to tackle climate change.

He recommended that government should move from “red taxes to green taxes”.

“The reality is that leaders have to look at the domestic tools that you have available, and of course taxes are one of them,” he said.

“We also have to look at the situation where some of us are paying low taxes, and you also have to look at people that are under pressure, feeling that their salaries have not been increasing and inequalities have been moving in the wrong direction.

“They also have to have a package where they feel they would benefit from it, not only from the long-term positive effects on their children, grandchildren and themselves, when it comes to climate change, but also that they would come out in an OK way when it comes to this year’s salary.”

Mr Brende cautioned that this is the year when world leaders must work with all sectors of society to repair and reinvigorate systems of co-operation, not just for short-term benefit but for tackling our deep-rooted risks.

“The cost of inaction today far exceeds the cost of action,” he said.

Read the full report here.