Study: climate protection six times cheaper than inaction

A study recently published in the journal Nature investigated the specific effects of global warming on the economy for the first time, taking into account chain reactions and quantifying the enormous economic damage. If we take action today and meet the two-degree target, the cost of climate protection measures will be six times cheaper than doing nothing. Otherwise, we face the risks of a 60-per cent economic loss around 2050. We need to plot the course today.

Phrases such as “we need to abandon the fight against global warming”, “the money would be better spent on future adaptation” and even “climate change offers more economic opportunities than risks” have become more frequent of late. A large-scale study in the journal Nature has now shown just how wrong this thinking is.

Low levels in inland waters disrupting cargo traffic, heat waves impairing productivity, lower agricultural yields and disrupted supply chains – these are just some of the effects of climate change predicted to impact the global economy.  And these forecasts are not off in the distant future, they are set to manifest within the next 25 years. The study concludes that we can expect the global economy to experience an average loss of income of 19 per cent, dwarfing all previous economic crises. The researchers themselves warn that the effects could be even more severe, with uncertainty meaning some climate variables could not be taken into account.

For the study, the researchers examined the effect of global warming on the global economy in two scenarios – one in which we make the efforts required to meet the 2-degree target, and one in which the planet warms by 4.8 degrees by 2100.

Climate justice

The impact of both models is particularly hard on the people who contribute the least to the climate crisis and who have the lowest per capita income. The countries that are least responsible for climate change and have the least resources for adaptation will suffer the most.

The damage forecast up to 2050 is unavoidable even in the 2-degree scenario, that is, if CO2 emissions were reduced immediately. This is due to the amount of climate-damaging emissions already in the atmosphere. After 2050, however, the paths diverge dramatically. If the 2-degree target is met, economic losses will stabilise and the authors of the study even predict a slight recovery from 2100. However, without drastic measures, scenario 2 will come into effect, with a temperature increase of 4.8 degrees. This is where the damage becomes catastrophic, with an economic loss of around 60 per cent and an impact on the economy more than three times as severe. The authors of the study calculate that the cost of climate protection for a two-degree path would be six times lower than the cost of the damage. There’s a price to pay for doing nothing, which researchers estimate will be around USD 6 trillion per year.

What can we do?

The study shows the urgency of taking immediate action to meet the 2-degree target and limit the damage. It is now up to us to decide which emissions pathway we take. The study recommends massive preparations for the consequences of climate change and reducing greenhouse emissions as quickly as possible.

myclimate advises companies on measures to help them assume responsibility, act economically and make preparations with an eye to the future. These measures include:

  • Starting on a corporate reduction path as quickly as possible:  For companies, reducing emissions in their own value chains is an absolute must. A climate strategy offers the most comprehensive approach here
  • Financing climate protection projects Under the principle of Beyond Value Chain Mitigation (BVCM), measures with a long-term effect must be paired with investments in climate protection projects that take immediate effect, thus bridging the time until the reduction target is reached. 
  • Ensuring climate justice: : Financial support for climate protection projects transfers money and other forms of assistance to the regions most affected by the effects of the climate crisis, which often lack the necessary resources. Many climate protection projects help mitigate the effects of climate change on the ground. 
  • Preparing companies for climate change:  By 2050, companies will be confronted with the clear effects of global warming. They can start by using existing CSRD data, for example, to prepare and take advantage of business opportunities while minimising risks. 

Do you need more arguments in favour of corporate climate protection? Here are 10 reasons why climate protection is worthwhile and essential for companies.


Source: Study: The economic commitment of climate change, Kotz et al. 

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