However, a successful ecological transition could increase global revenues by up to $43 trillion

Climate change will cost the global economy $178 trillion by 2070

photo_camera Climate change

According to a new report published by Deloitte, climate change will cost the global economy $178 trillion over the next 50 years, or a 7.6% cut in global Gross Domestic Product by 2070 if global warming and extreme events go unchecked.

Global temperatures are projected to rise by up to 3 degrees Celsius by the end of the century. According to the report, this rise in temperatures will lead to a "significant" increase in the cost of living, which will particularly affect the most vulnerable people. This will result in job and productivity losses and food and water shortages, as well as problems for people's health and well-being and a decline in the overall standard of living of the world's population, according to Deloitte's Global Turning Point Report, which looked at 15 regions in Asia Pacific, Europe and the Americas.

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An avoidable situation

The adverse effects of not slowing climate change are manageable provided world leaders unite on a systemic zero transition by 2050 and if the commitments of the Paris Agreement, in which countries pledged to limit warming to 1.5掳C, are met. In this desired context the global economy could gain as much as $43 million over the next half century, giving a 3.8% boost to global GDP in 2070.

"The numbers speak for themselves and businesses should reinvent their practices to help build a more sustainable future for all," said Mutasem Dajani, the CEO of Deloitte Middle East, adding, "Taking small steps in the right direction will pay dividends in the future. It has become clear that if companies do not prioritise sustainability and understand the impact they have on the environment, valuable talent, revenue and market share may be lost".

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Business and governments committed to tackling climate change

For the first time, leaders of top companies are recognising the scale of the problem: 89% of executive-level chief executives surveyed by Deloitte agree that there is a "global climate emergency" and 79% see the world today at a tipping point in responding to climate change. However, transforming the global economy to achieve a low-carbon future will require "extensive global coordination and collaboration across industries and geographies", according to the paper.

This challenge must also be met by governments, which have a responsibility to work together with the financial services and technology sectors through innovative global policies, increased investment in green energy and the mix of renewables and industrial energy.

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According to the report, the transition to a net-zero emissions economy would create "fundamental changes in the structure of economic growth". As changes in the economy normalise, which will involve replacing the energy mix of fossil fuel dependence with renewable electricity augmented by modern fuel sources such as hydrogen, according to the report.

Initially the cost of initial decarbonisation investments will slow the economy compared to the current emissions-intensive pace. However, as the transition process progresses the "economic benefits of avoided climate damage and the emergence of new sources of growth and job creation would begin to outweigh the costs".