Climate losses topped US$1.4tn last year – yet few countries are adapting

Global losses related to climate change topped US$1.4 trillion last year – almost 10 times the total in 2000, according to new data released today by BloombergNEF.

With the analysis, BNEF highlights the importance of seeing climate resilience as a strategic investment and not just a cost centre, adding that governments are finally starting to align with investors on this topic.

The research firm analysed how prepared some of the world’s largest economies are to deal with the worst impacts of climate change, and found that Canada, Singapore, South Korea, Australia and the UK lead the pack. In contrast, Saudi Arabia and Russia are among the least prepared.

The US, which suffers the greatest cost from climate damage globally, ranked 12th of the 25 countries studied.

Danya Liu, lead analyst managing BNEF’s Climate Adaptation practice said: “Investors are interested in climate adaptation not only as a risk avoidance measure but also as an emerging frontier for investment opportunity. We believe investors can expect lower climate-driven losses in markets that adapt effectively, all else equal.”

Critical steps to build climate resilience

According to BNEF, high-scoring countries like Canada, Singapore and South Korea have taken critical steps to build resilience and are best equipped to manage the economic impacts of physical climate change. 

This preparation is expected to result in the attenuation of climate losses, increased competitiveness in climate-sensitive industries such as agriculture and natural resources, lower risk perception among foreign investors, and the growth of new climate adaptation markets.

In contrast, lagging countries that have not addressed adaptation well at the national level are likely to experience worse climate-induced economic losses, especially in the near-term. The US, for example, suffers the greatest economic cost from climate damages, yet federal adaptation initiatives lag most peers, and existing programmes are now at risk of being rolled back. 

The report marks the launch of BloombergNEF’s new framework and adaptation scorecard, a tool for investors to analyse country-level climate risk and resilience. 

“The physical impacts of climate change are already affecting companies, financiers and communities. This analysis shows that many major economies are not doing enough to safeguard their economic resilience. This should worry business and investors, because a country’s preparedness for climate impacts will shape the risks for the assets, companies and societies located in it,” said Kobad Bhavnagri, Head of Strategy for BNEF.