Major Economic and Financial Risks Posed by Climate Change

Failure to transition will generate significant and widespread economic and financial risks. An economic forecast from Swiss Re, one of the world's largest reinsurers, projects a loss in global gross domestic product (GDP) of between 4.2 and 18.1 percentage points by mid-century, depending on different warming scenarios. As a result, limiting increases in global temperature is essential to mitigating those losses and maintaining stability of the global economy. However, even under best-case warming scenarios, climate change will continue, with unpredictable consequences for economic growth, the financial system, and the conduct of financial and monetary policy. Avoiding the most costly and destructive outcomes depends on immediate action from private-sector and government actors alike.