Environmental concerns are the top of a list of global threats, warned the World Economic Forum (WEF) as it forecast a potential increase in economic and political polarisation this year.
In its annual Global Risks report, the Switzerland-based non-governmental organisation said that, for the first time in the decade-long analysis, the biggest global risks in terms of likelihood are all environmental.
The report sounds the alarm on the severe threats to climate, environment, public health and technology systems.
It forecasts a year of increased domestic and international divisions and economic slowdown after more than 750 global experts and decision-makers were asked to rank their biggest concerns in terms of likelihood and impact and 78% said they expect this is to witness “economic confrontations” and “domestic political polarisation”.
The biggest risk the word faces, according to the report, is from extreme weather events that cause major damage to property, infrastructure and loss of human life.
WEF sounded the alarm on the failure of governments and businesses to adapt climate-change mitigation and also human-made environmental damage and disasters, including environmental crime, such as oil spills.
The report highlighted the urgent need for action by business and policy-makers to adapt to “today’s epochal power-shift” and geopolitical turbulence – or risk a bleak outcome.
“The political landscape is polarised, sea levels are rising and climate fires are burning. This is the year when world leaders must work with all sectors of society to repair and reinvigorate our systems of co-operation, not just for short-term benefit but for tackling our deep-rooted risks,” WEF president, Borge Brende said.
The warning comes off the back of a landmark decision by the world's largest investment firm, BlackRock, to begin its retreat from fossil fuel investments under a strategy to confront climate change.
BlackRock joined Climate Action 100+, a group of more than 370 institutional investors aiming to pressure companies into climate action. By joining Climate Action 100+, BlackRock increased investor pressure to a value of around $41 trillion in assets.
BlackRock currently holds a 6.7% stake in ExxonMobil, 6.9% in Chevron, and 6% in the mining company Glencore.
John Drzik , chairman of Marsh & McLennan Insights, a consultancy that contributed to the report, said: “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 modeled with greater accuracy and incorporated into risk management and business plans.
“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,” Drzik said.
Nevertheless, adding to the urgency of WEF’s call, Climate Action 100+ reported that while investors want to understand the long‑term investment strategies of oil and gas companies in a world that limits warming to well below 2C, “no company in the sector has yet comprehensively explained to investors how its business and associated emissions profile fit with achieving net zero emissions by mid‑century”.
“It’s critical that companies and policy-makers move faster to transition to a low carbon economy and more sustainable business models. We are already seeing companies destroyed by failing to align their strategies to shifts in policy and customer preferences,” Peter Giger, group chief risk officer for WEF report contributor Zurich Insurance said.
“Transitionary risks are real, and everyone must play their part to mitigate them. It’s not just an economic imperative, it is simply the right thing to do,” Giger said.