(MENAFN – Gulf Times) • The world economy contracted 3.3% last year due to the pandemic, says the IMF
As the global fight against climate change gets more pronounced and concerted, central banks, institutions, policymakers and investors are waking up to the compelling reality.
The global economy could lose as much $2.7tn a year by 2030 if countries continue to destroy biodiversity, impacting wild pollination, food from fisheries and timber from forests, according to the World Bank.
Here are some alarming projections.
Some climate-economic models suggest up to a quarter of global GDP — currently around $80tn — could be lost if no action is taken to reduce carbon dioxide emissions.
And low-income countries will risk losing larger shares of their economic output.
The number of extreme weather events has quadrupled over the last 40 years. Only 44% of the financial losses caused by those types of events are now covered in the US. In Asia, it’s just 8% and in Africa only 3%.
On the other hand, globally, more than $40.5tn is now estimated to be invested using“environmental, social, and governance” (ESG) analyses.
And the past five years have seen an unprecedented increase in investors’ ESG awareness.
Governments, corporations, and other groups raised a record $490bn last year selling green, social, and sustainability bonds. A further $347bn poured into ESG-focused investment funds: An all-time high.
Moody’s Investors Service expects sustainable-debt issuance to reach $650bn this year, while money flows to ESG funds show no signs of slowing.
BlackRock, has put its $8.7tn heft behind a powerful message: The decades ahead will be defined by minimising emissions, requiring an overhaul to everyone’s business models.
But when it comes to green finance, it’s not reaching where it’s needed the most.
A new paper by researchers at University College London says that Africa and other developing regions tend to pay a much higher cost of financing for green energy.
This creates a“climate investment trap”: Countries that must pay a higher price to green their economies might forego such investments, even if they’re the ones that will suffer the most as the planet warms.
The pandemic has made the problem more urgent as the high cost of borrowing for developing nations coincides with a plunge in state revenues.
The world economy contracted 3.3% last year due to the pandemic, the worst peacetime decline since the Great Depression, according to the International Monetary Fund.
Developing economies would particularly suffer because they’re more reliant on raw materials and the goods and services provided by nature.
Sub-Saharan Africa and South Asia would see real gross domestic product shrink by 9.7% annually and 6.5%, respectively.
The World Bank study said that so-called nature smart policies, which curb the conversion of natural land, could lead to an increase in the global real GDP of $50bn to $150bn by the end of the decade.
Some countries including the US have agreed to protect 30% of the planet by 2030, which is known as the 30×30 plan.
In a worst-case scenario, if the world reached a tipping point in which countries were unable to adapt to a shock to ecosystem services, the global economy would shrink by 2.3% a year, says the World Bank.
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