The climate emergency is rapidly intensifying, with temperature rise and climate disruption impacts compounding each other, putting entire national economies at risk. The structural threats to mainstream institutions is real, and getting worse. The insurance sector is facing the possibility its business model will no longer be viable, as virtually every person and institution is increasingly facing nonlinear, potentially catastrophic risks.
The Governor of the Bank of England Mark Carney has issued a warning—just ahead of the Annual Meetings of the World Bank and the International Monetary Fund—that companies that ignore climate-related risk will face diminishing credit availability, diminishing incentives, diminishing market share, and will eventually go bankrupt.
The Bank of England has said up to $20tn (£16tn) of assets could be wiped out if the climate emergency is not addressed effectively. But Carney also said great fortunes could be made by those working to end greenhouse gas emissions with a big potential upside for the UK economy in particular.
The size, focus, and shape of the global economy is changing at historic speed. Climate disruption now requires all financial managers take into account climate-related risks, including market, technology, transition-speed, and operational risks. We are nearing the threshold moment when the question will no longer be how to achieve the optimal transition pathway, but how to avoid all emissions as soon as possible.
Because finance can earn returns from any business activity, regardless of historic precedent or previous market dominance, money can move quickly into the new business models required to mount a global response to avoid irreversible climate emergency—which would include the collapse of the global food supply and the destabilization of nation states.
Fiscal resilience of nation-states requires alignment with science-based climate imperatives. Public incentives and institutional investments will have to align with science-based climate imperatives. The future economy will result in generalized prosperity only if it aligns with science-based climate imperatives.
The message of the moment is: The faster you can transition to 100% climate-smart standards and practices, the better chance you have of performing as a business.