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WEF flags climate change risks to economic outlook in the country

The World Economic Forum (WEF) Global Risk Report 2022, released this week, flagged ’climate action failure’ as the number one long-term threat to the world and the risk with potentially the most severe impacts over the next decade. Photographer: Jason Alden/Bloomberg

The World Economic Forum (WEF) Global Risk Report 2022, released this week, flagged ’climate action failure’ as the number one long-term threat to the world and the risk with potentially the most severe impacts over the next decade. Photographer: Jason Alden/Bloomberg

Published Jan 16, 2022

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THE economy could struggle to recover to pre-pandemic levels if it fails to deal with climate change and environmental risks in the next five to 10 years, pushing resources to be diverted elsewhere.

The World Economic Forum (WEF) Global Risk Report 2022, released this week, flagged “climate action failure” as the number one long-term threat to the world and the risk with potentially the most severe impacts over the next decade.

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The report was compiled by the WEF’s Global Risks Advisory Board, together with risk management firm Marsh McLennan, SK Group and Zurich Insurance.

Climate change is already manifesting rapidly in the form of droughts, fires, floods, resource scarcity and species loss, among other impacts.

Thousands of people were left homeless as floods battered the Buffalo City and uMsunduzi municipalities in the Eastern Cape and KwaZulu-Natal respectively last week.

Governments, businesses and societies are facing increasing pressure to thwart the worst consequences with dwindling resources due to the Covid-19 pandemic response.

Marsh Africa chief executive Spiros Fatouros said short-term domestic pressures would make it harder for governments to focus on long-term priorities.

Fatouros also said climate action failure would limit the political capital allocated to major global concerns.

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“Whether you look at it in the short term or medium term, climate change is a real growing risk for the world.

“If you think of it in terms of climate action failure, it goes back to the issue of the impact it has on economic recovery,” Fatouros said.

“How do you drive economic recovery post-pandemic while dealing with climate change?

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“Economies may be inclined to drive dirty energy with fossil fuels at the expense of the economy.”

Last year’s edition of the Global Risks Report warned of potential knock-on economic risks that are now clear and present dangers.

It said supply chain disruptions, inflation, debt, labour market gaps, protectionism and educational disparities were moving the world economy into choppy waters.

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An Executive Opinion Survey in this year’s report also identified prolonged economic stagnation, unemployment, state collapse, failure of public infrastructure, proliferation of illicit economic activity as top 5 risks facing South Africa.

Fatouros commended South African investors for their determined drive for companies to respond to climate change through comprehensive environmental, social and governance (ESGs) reporting.

“Investors are trying to shape the conversation, and companies are making the right strides as there is a lot of ESGs drive at board levels,” he said.

ESG reporting means investment professionals choose to adopt responsible investment principles as guidelines to make sure their business conduct leads to more sustainable, responsible and profitable investments.

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