Near-term Economic Impacts of Climate Change “Harder to Ignore”

The UN Environment Programme Finance Initiative and UK-based think tank National Institute of Economic and Social Research (NIESR) have published a report exploring short-term climate-related shocks for financial actors with macroeconomic models. This report features three climate-driven macroeconomic shock scenarios – a sudden rise in the carbon price, an oil price hike and a trade war – developed by UNEP FI and NIESR as part of UNEP FI’s Taskforce on Climate-related Financial Disclosures (TCFD) Programme. The report notes that macroeconomic impacts caused by climate change may create significant credit, market, and operational risks for financial institutions, warning also that “near-term impacts are becoming ever harder to ignore”. “The interconnectedness of the global economy means climate-related impacts in one area can have ramifications across the world,” says the report. “Near-term transition risks can also create systemic instability as many incumbent industries, such as fossil fuels, will face existential changes.”

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