A recent report from the Institute and Faculty of Actuaries (IFoA) and scientists from the University of Exeter has issued a dire warning about the potential economic fallout from climate change, predicting a staggering 50% loss in global GDP between 2070 and 2090 if urgent action is not taken to address climate impacts. This report, published on January 18, 2025, highlights that previous assessments have significantly underestimated the severe effects of climate change, including extreme weather events and the degradation of natural systems [cdab40af].
The report, titled "Planetary Solvency – finding our balance with nature," emphasizes the necessity for immediate decarbonization and restoration of nature to avoid catastrophic economic consequences. Lead author Sandy Trust pointed out that current economic theories fail to adequately account for the risks associated with nature degradation, calling for a paradigm shift in policy-making [cdab40af].
In alignment with the findings from the World Economic Forum's Global Risks Report 2025, which identifies extreme weather and environmental risks as top concerns for the global economy, the actuaries' report stresses the urgency of addressing these risks [cdab40af]. Recent extreme weather events, such as intense heatwaves in Asia and devastating wildfires in Canada, further underline the pressing need for action [cdab40af].
In the United States, the implications of climate change are particularly evident in California, where the insurance landscape is being transformed by increasing risks. Estimated losses from wildfires in Los Angeles have reached a staggering $40 billion, prompting a reevaluation of homeowners insurance policies [cdab40af].
Moreover, New York City's recent lawsuit against major oil companies Exxon Mobil, BP, and Shell was dismissed by Justice Anar Patel, illustrating the challenges cities face in holding corporations accountable for climate-related damages [cdab40af]. The actuaries' report calls for annual risk assessments and systemic risk management to mitigate these growing threats to the economy and society [cdab40af].
As the global community grapples with the realities of climate change, the call for decisive policy action has never been more critical. Without it, the economic consequences could be catastrophic, affecting livelihoods and the stability of economies worldwide [cdab40af].