How Soon Should Companies Prepare for a 2°C World?

Time​ Magazine

2 days ago

Look through the new five-year outlook from the World Meteorological Organization (WMO), and you won't see the U.N. atmospheric science body use the words 'emergency' or 'disaster.' And yet it would be hard for anyone even semi-literate in the science of climate change to flip through it without a sense of urgency and alarm.
The report, released earlier this week, finds that global temperatures will continue at or near record levels with a possibility that the temperature-rise since the Industrial Revolution nears 2°C by 2030. Already, warming momentarily breached 1.5°C of warming in 2024. It's a big marker: decades ago policymakers settled on 2°C as an ideal cap of sorts. That's because, at some point between 1.5°C and 2°C, we might expect to begin seeing climate effects that are both dire and, perhaps more importantly, irreversible. The WMO report reaffirms that the world has entered that danger zone—and the risks posed by the planet's warming are on the verge of growing dramatically.
The increasingly dire atmospheric reality, underscored by this new report, might lead to some urgent calls for companies to cut their emissions. Indeed, reducing emissions is the only way to keep the problem from getting worse. But our temperature-rise trajectory should also push companies to take a hard look at how prepared they are for the changes that will come on the road to 2°C—not decades from now but in the next five years.
'We are in a climate emergency, and the situation worsens every year,' Sonia I. Seneviratne, a professor at the Institute for Atmospheric and Climate Science of the ETH Zurich, told me earlier this year. 'It's not necessarily making the headlines, because there are also many other crises, but we shouldn't forget it.'
The WMO report outlines a number of alarming predictions for the next half-decade. For the summer season in the Northern Hemisphere, temperatures are expected to exceed averages in previous decades 'almost everywhere.' In the Arctic during the Northern winter season, the warming is expected to be particularly extreme, with the temperature anomaly more than 3.5 times as large as the global anomaly. And sea ice is expected to continue to decline across the Arctic.
Perhaps more importantly, and left uncovered by the report, are the second-order effects of a warmer planet. Between 1.5°C and 2°C, heat waves become more frequent and intense, according to the U.N.'s climate science body. Crop yields decline. And coral reefs may be wiped out completely.
This spells trouble for a wide range of companies. Infrastructure faces increased flood and fire risk. Demand for air conditioning will stretch electric utilities thin. Farmers and agriculture companies not only face crop losses but also declining worker productivity in the heat and other extreme weather. All of this adds up to a massive headwind poised to slow economic growth. A 2021 report from Swiss reinsurance giant Swiss Re found that 2°C of warming would lead to global GDP that is 11% lower by the mid-century.
Don't get me wrong. Sophisticated companies are aware of the challenges on the horizon. Research has shown that a growing number of firms are disclosing the risks posed to their business by the physical effects of climate change. Nonetheless, many companies are still early in grappling with these challenges. Few are able to quantify the risk in financial terms and most lack comprehensive plans to prepare.
And, even for the most forward-thinking firms, the problem with this new atmosphere in which we find ourselves is that it's impossible to fully understand what destruction these hotter temperatures will bring—and, therefore, what can be done to prepare. With each fraction of a degree that global temperatures rise, the further we get into uncharted territory that stretches our scientific analysis.
Climate deniers use uncertainty to argue that we should slow our efforts to reduce emissions: why should we spend trillions to address something we don't fully understand? But the truth is that the present uncertainty is far scarier than even potentially hyperbolic messaging about climate change ending the world. The new climate reality means we can expect a variety of extreme weather events, seemingly unpredictably. Over the next half-decade, we will get a good sense of who has prepared effectively.