Billions in damages from climate neglect

The Swiss Re report on natural catastrophes in 2025 has just been released. 2025 was below the long-term loss trend but not a sign of reduced risk. Here is what the year actually contained: 🔥 USD 40 billion in insured losses from the Los Angeles wildfires alone — the largest wildfire loss event in history ⛈️ USD 51 billion from severe convective storms — the third-costliest year on record for this peril 🌊 USD 11 billion in economic losses from compound monsoon flooding across Southeast Asia 🌍 More than 17,900 people killed or missing from disasters induced by natural hazards Wildfire insured losses are growing at 12% per year. Severe convective storms at 7%. And crucially, in North America for wildfires and in Europe for storms, losses are growing twice as fast as exposure — meaning hazard intensification and vulnerability shifts are adding fuel beyond what simple asset growth can explain. This is not an insurance story. It is a climate and resilience story. The World Meteorological Organization State of the Global Climate 2025 documented that 2025 was the second or third warmest year in the 176-year observational record. Ocean heat content reached a new record high for the ninth consecutive year. Eight of the ten most negative glacier mass balance years since 1950 have occurred since 2016. The Earth's energy imbalance — the fundamental measure of how fast heat is accumulating in the climate system — reached its highest value on record in 2025. The physics of a warming planet shows up in the loss ledgers of the insurance industry with a lag — and that lag is now closing fast. Over 80–90% of catastrophe losses in emerging economies remain uninsured. The communities absorbing the greatest physical risk have the least financial capacity to recover from it. Read the Carbon Brief article: https://lnkd.in/dZNR6E8k Read the WMO State of Global Climate: https://lnkd.in/eEuwv7tV

Climate risks could cost companies $1.2 trillion annually by the 2050s 🌎 By the 2050s, annual financial losses from climate physical risks for companies in the S&P Global 1200 are projected to reach $1.2 trillion, assuming no adaptation measures. Extreme heat and water stress are expected to account for the majority of these costs, even under a scenario where global greenhouse gas emissions stabilize and decline after 2050 (SSP2-4.5). Utilities are projected to experience the highest financial burden. The average electric utility in the S&P Global 1200 is expected to face $4.6 billion annually in climate-related costs, nearly five times the average across all sectors. Water stress, essential for power generation, is projected to have a larger financial impact than extreme heat in this sector. Annual financial impacts from climate physical risks are expected to grow over time. Projected costs are estimated at $885 billion in the 2030s, $1.2 trillion in the 2050s, and $1.6 trillion in the 2090s, even with current emissions reduction pathways. These estimates focus on direct impacts to corporate assets and operations and do not include changes in demand or revenue. Despite widespread climate risk assessments in the utilities and energy sectors, financial implications remain underexamined. 94% of electric utilities analyze acute climate risks, while only 62% have identified the potential financial impacts, according to the S&P Global Corporate Sustainability Assessment. Regional differences influence risk exposure. While extreme heat and water stress are the largest global hazards, pluvial flooding poses a higher risk in South Asia and Sub-Saharan Africa, while drought is a greater concern in Latin America, the Caribbean, and the Middle East. Extreme heat is expected to impact companies across all sectors. Worsening heat conditions can reduce labor productivity, increase cooling costs, and disrupt supply chains. Water stress and drought create additional risks, particularly for industries reliant on freshwater resources. The financial impact of specific hazards is expected to increase significantly over time. Coastal flooding costs are projected to rise nearly 14x from $5 billion annually in the 2050s to $71 billion in the 2090s, driven by sea level rise and more frequent extreme weather events. Climate physical risks will continue to escalate in the absence of adaptation. Higher capital expenditures, rising operational costs, and disruptions to business continuity are projected to impose increasing financial burdens on companies in the coming decades. Source: S&P #sustainability #sustainable #business #esg #climatechange #risk

One tonne of CO₂ emitted in 1990 caused $180 in global economic damages by 2020 and will cause an additional $1,840 through 2100. A study published in Nature builds the first framework linking past emissions from identified sources to monetized, location-specific damages over time. Future damages from past emissions are at least ten times larger than damages already incurred, because CO₂ persists in the atmosphere and its warming effects compound on economic growth, like negative interest. U.S. emissions since 1990 have generated $10.2 trillion in global damages. Saudi Aramco's emissions from 1988 to 2015 account for $3 trillion by 2020, potentially rising to $64 trillion by 2100. Half of the expected damages materialize within 25 years of emission. These estimates exclude biodiversity loss, sea-level rise, and cultural impacts. As long as balance sheets ignore these externalities, markets will systematically underprice climate risk. Kudos to Marshall Burke, Mustafa Zahid, Noah Diffenbaugh, and Solomon Hsiang, from Stanford Doerr School of Sustainability.

How much do extreme weather events cost the US economy? It’s a question several of us at Insider landed on several months back. These extreme weather events, from shock flooding to brutal cold snaps to searing heat, appeared to be driving up insurance premiums, adding to food inflation, and leading to outsized medical bills. A team of reporters, editors, and data graphics developers at Insider set out to quantify the impact. They landed on this number: Two trillion, six-hundred and fifteen billion dollars. It represents the estimated tab for 371 weather and climate disasters in the US since 1980 that topped $1 billion in damage. They also found that decade to decade, costly extreme weather events are increasing in both frequency and intensity as greenhouse gases build up in our atmosphere. Their work makes clear: Extreme weather has become a powerful and under appreciated economic force. Check out this interactive graphic exploring the true cost of extreme weather.

The cost of climate inaction is staggering. Recent The American Prospect article based in part on a Bloomberg Intelligence report details how climate-fueled disasters cost the U.S. $955 billion in the last year— so nearly 3% of GDP, largely from destroyed infrastructure and skyrocketing insurance premiums.  🌪️ Beyond the economic costs, what is also worrying is how leading projections have significantly underestimated this damage. For instance, William Nordhaus’s DICE model predicts a hit of just 0.5 percent of GDP from 1.47 degrees Celsius of warming, which was the global average in 2024.  Author Ryan Cooper concludes, “If we’re off by a factor of six in the world’s second-largest economy, then something is seriously amiss.” 📉 Yet US politicians continue to abandon climate policy, despite the fact that investments in clean energy are now cheaper and more productive than maintaining fossil-fueled infrastructure.  In fact, reversing clean energy policies—as proposed by political leaders—will increase household energy bills by up to 17% and kill 1.7 million jobs by 2030. Yet companies and politicians continue to push the fossil fuel agenda under the guise of economic prudence. https://lnkd.in/eFjG7p5x

The 2025 National Security Strategy nods to resilient infrastructure and energy production — but not to climate risk as a strategic threat. Physical climate hazards — extreme heat, flooding, wildfires, coastal-erosion, water stress — are entirely missing from the document. 👉The strategy https://lnkd.in/evHPrBCs That absence matters. Because while the 2025 NSS sidelines climate, the financial damage from climate-exacerbated disasters is already enormous. According to a 2024 analysis by the staff of the United States Congress Joint Economic Committee (JEC), flooding alone costs the U.S. between US$179.8 billion and US$496.0 billion per year. Long-term research by the Stanford Institute for Economic Policy Research found that, over the past three decades, intensifying storms and precipitation — likely driven by climate change — contributed roughly one-third of all U.S. flood damages, amounting to about US$75 billion in flood damage during that period. Major climate disasters and extreme-weather events have recurring direct costs that ripple across infrastructure, homes, businesses and public services — not to mention long-term losses in property values, insurance premiums, community disruption, and long-term resilience buildup. In short: ignoring climate risk doesn’t make the bill go away — it just ensures a bigger tab later. If floods, storms, wildfires, sea-level rise, and other climate-driven disasters continue to rack up hundreds of billions per year in damage, the cost to taxpayers, homeowners, businesses, and national infrastructure will only grow. If we want a secure future — not just a stable present — climate risk needs to be brought out of the footnotes and put front-and-center in national security planning. #NationalSecurity #AmericaFirst #Resilience United States Senate U.S. House of Representatives National Governors Association

🔥 Climate risks are no longer abstract—they’re disrupting businesses, communities, and economies right now. The World Economic Forum’s 2024 report, "The Cost of Inaction: A CEO Guide to Navigating Climate Risk", delivers a sobering message: ignoring climate risks isn’t just irresponsible—it’s economically devastating. 🌡️ Key insights from the report: 💥 Climate-related disasters have caused $3.6 trillion in damages since 2000, exposing critical vulnerabilities in supply chains and infrastructure. 📉 Physical risks could put 5-25% of EBITDA at risk for some sectors by 2050 under a 3°C warming trajectory. 💸 Transition risks, like carbon pricing and changing regulations, could impact 50% of EBITDA in energy-intensive industries by 2030. 🌱 Every $1 invested in climate adaptation yields $2-$19 in avoided costs, while green markets are projected to grow from $5 trillion in 2024 to $14 trillion by 2030. 💡 My reflections: 🔄 Resilience isn’t enough anymore. Too often, we focus on simply "weathering the storm" of climate risk. But true leadership is about rebuilding something better—rethinking markets, redesigning business models, and creating solutions that lead entire industries forward. 🌍 Supply chain fragility is the Achilles’ heel of the global economy. A single extreme weather event can cascade across operations, grinding everything to a halt. Climate-resilient supply chains can’t just be about survival—they must be radically adaptive, decentralized, and built to thrive under disruption. 📊 Climate risk is fundamentally redefining the concept of value. Businesses stuck chasing quarterly earnings are missing the bigger picture. In a world of rising costs and irreversible climate impacts, long-term value will belong to those who embed sustainability, resilience, and equity into their strategies. The time for cautious, incremental steps has passed. How are we using this moment to transform the way we work, innovate, and lead? #ClimateAction #Sustainability #Resilience #Leadership #Innovation

𝗪𝗵𝘆 𝗲𝗰𝗼𝗻𝗼𝗺𝗶𝘀𝘁𝘀 𝘀𝘆𝘀𝘁𝗲𝗺𝗮𝘁𝗶𝗰𝗮𝗹𝗹𝘆 𝘂𝗻𝗱𝗲𝗿𝗲𝘀𝘁𝗶𝗺𝗮𝘁𝗲 𝗰𝗹𝗶𝗺𝗮𝘁𝗲 𝗿𝗶𝘀𝗸𝘀 A new report (👉https://lnkd.in/eMsCKQuh) exposes a fundamental gap between what climate scientists expect and what economic models predict. 𝗧𝗵𝗲 𝗰𝗼𝗿𝗲 𝗽𝗿𝗼𝗯𝗹𝗲𝗺: 68 climate scientists from 12 countries were surveyed about economic damage estimates. Their insights differ radically from standard models: 🔴 At 3°C warming, experts estimate median GDP damage at ~35%. The Nordhaus DICE model predicts only ~3% 🔴 36% of scientists place the "collapse threshold" 𝘣𝘦𝘭𝘰𝘸 4°C, while many scenarios model up to 4°C and beyond 🔴 250 million people displaced by climate disasters in the past decade, impacts barely visible in GDP figures 𝗪𝗵𝘆 𝘄𝗲 𝗺𝗲𝗮𝘀𝘂𝗿𝗲 𝘄𝗿𝗼𝗻𝗴: We focus on global averages, but people experience 𝘭𝘰𝘤𝘢𝘭 𝘦𝘹𝘵𝘳𝘦𝘮𝘦𝘴: the 2021 Texas storm caused $195 billion damage while barely registering in global temperature statistics. GDP often 𝘳𝘪𝘴𝘦𝘴 after disasters (reconstruction spending) while real wealth declines – the "disaster industrial complex" accounts for 1/3 of US economic activity at 1.4°C warming Models assume smooth damage curves but ignore tipping points, cascades, and system failures 𝗪𝗵𝘆 𝘁𝗵𝗶𝘀 𝗺𝗮𝘁𝘁𝗲𝗿𝘀: This gap determines how pension funds assess risks and how central banks conduct stress tests. The NGFS recently raised damage estimates from 7-14% to 30% GDP loss at 3°C, but climate scientists say even this underestimates. 𝗧𝗵𝗲 𝘂𝗻𝗱𝗲𝗿𝗹𝘆𝗶𝗻𝗴 𝗰𝗮𝘂𝘀𝗲: Research ( 👉 https://lnkd.in/eVsBapbT) shows "disciplinary asymmetries": economists seek optimization within existing systems; natural scientists see limits and tipping points. Where economists use GDP as proxy, scientists see missed impacts on health, ecosystems, and inequality. As a consequence, environmental scientist see degrowth as an option, while economist favour market based solutions 👇 . 𝗪𝗵𝗮𝘁 𝗻𝗼𝘄: The report calls for "recalibration toward precaution, robustness, and transparency": ✓ Report ranges instead of point estimates ✓ Acknowledge where models fail (especially above 2-3°C) ✓ Integrate metrics beyond GDP: mortality, inequality, ecosystem degradation ✓ Model cascades and second-order effects The crucial insight: climate change introduces risks exceeding existing economic frameworks. The response is not waiting for perfect models, but recognizing that avoiding irreversible outcomes is cheaper than pricing them after the fact. For long-term investors: climate risk cannot be fully diversified away. It's a systemic risk requiring fundamentally different strategies. #climaterisk #climateeconomics #systemchange #financialrisk #sustainablefinance

Reducing #emissions alone is no longer enough. Climate #adaptation must be elevated as a core pillar of global #resilience strategies as it is becoming a pressing economic reality: 🌍 Even under a net-zero scenario, global GDP is projected to shrink by 8% relative to a baseline without climate change, according to the latest NGFS Phase 5 projections. This marks a significant downgrade from Phase 4, amounting to an additional USD1.24 trillion in global economic losses by 2050. 🌊 In Europe, flood-related damages under the most ambitious transition scenario could reduce household disposable income by USD107,000, with highly uneven impacts across countries. Developing economies face even greater human and economic losses—91% of climate-related fatalities occur in these regions, despite only 29% of disasters happening there. 💰 Adaptation finance is vastly underfunded. While the annual funding need is projected at USD387bn by 2030, only USD63.5bn was mobilized as of 2022—leaving a USD323.5bn gap. Funding is also unevenly distributed, deepening regional disparities in resilience capacity. 🛡️ Insurance coverage is critically lacking, particularly in developing economies. China and India face insurance gaps of 94% and 93%, respectively—driven by low insurance penetration rates (China: 1.2%; India: 0.6%). Even in advanced economies, coverage depends heavily on disaster preparedness and risk-sharing frameworks. 🏛️ Public sector leadership is essential—not only as regulator and financier, but as a catalyst for private capital. Blended finance can de-risk adaptation projects, enabling private investment in resilience initiatives that would otherwise remain unfunded. 🇺🇸 In advanced economies, national insurance schemes play a vital role. U.S. examples like Florida’s Citizens Property Insurance Corporation and the California Earthquake Authority show how public programs can ensure affordability and sustainability in the face of increasing climate threats. The conclusion is clear: Adaptation is not a secondary concern—it is an economic necessity. We must address the widening resilience gap with the same urgency and scale as mitigation. #ClimateEconomics #GlobalResilience #ClimateRisk #BlendedFinance #InsuranceGap #SustainableDevelopment #PublicPolicy #ClimateAdaptation #NGFS #Ludonomics #AllianzTrade #Allianz