A new research report released today by Deloitte highlights the stark economic differences between taking a coordinated global approach to climate action and failure to act, with inaction on climate change poised to lead to as much as $178 trillion in GDP destruction over the next 50 years, while achieving global climate goals could result in $43 trillion of economic benefit over the same period.
The new study, “The Turning Point – A Global Summary,” was published by the professional services firm’s recently launched Deloitte Center for Sustainable Progress (DCSP). The report was based on Deloitte Economics Institute research modelling scenario-based data from 15 geographies across Asia Pacific, Europe and the Americas, examining the impacts of global warming of 3°C by the end of the century, and alternatively of decarbonizing to achieve global net zero by 2050.
According to the report, unchecked climate change would negatively impact global GDP by nearly 8% in 2070, resulting in “significant declines in productivity, job creation, standards of living and well-being.” Economic impacts associated with climate change highlighted in the report include lost labor productivity due to extreme heat, loss of productive agricultural and urban land due to sea-level rise, increased disease and mortality, damaged capital stalling productivity and investment, and reduced agricultural yields due to changing climate patterns.
The economic impact would be most significant in Asia Pacific, with the present value of losses through 2070 estimated at $96 trillion, followed by the Americas at $36 trillion and Europe at $10 trillion.
The upside from the coordinated climate action scenario similarly benefits Asia Pacific the most, with a modelled 5.7% boost to GDP in 2070, followed by Europe at 1.8% and the Americas at 1.6%. Beyond reducing the harm of climate change, the scenario envisions a reorientation of the global economy, bringing new jobs, industries and innovations.
In order to achieve the second scenario, the report outlines the need for an “industrial revolution over the next 50 years,” in which “existing industries would be reconstituted as a series of complex, interconnected, emissions-free systems: energy, mobility, industry and manufacturing, food and land use, and negative emissions.”
The report details a series of key stages needed to achieve the latter scenario, beginning with public and private sector coordination, with governments collaborating with financial services and technology sectors to build the foundational low carbon policies and frameworks and facilitate capital flow and innovation, leading to deep investments that prioritize low-emissions industries but causing some economic disruption from the decline of emissions-intensive industries. In the next phase, economies will reach the turning point in which the net zero transition benefits begin to outweigh the costs, and finally achieving the low-emissions, accelerated-growth future.
Deloitte Global CEO Punit Renjen said:
“The time for debate is over. We need swift, bold and widespread action now—across all sectors. Will this require a significant investment from the global business community, from governments, from the non-profit sector? Yes. But inaction is a far costlier choice.”
Click here to see the Deloitte report.