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WEF-BCG Report Warns CEOs: Climate Inaction Could Cost Global Economy 22% of GDP
Mar 20, 2025
A new report by the World Economic Forum (WEF) and Boston Consulting Group (BCG), titled "The Cost of Inaction: A CEO Guide to Navigating Climate Risk", warns that climate inaction could shrink global GDP by up to 22% by 2100. The report highlights both physical risks (extreme weather events) and transition risks (regulatory changes, carbon pricing) that businesses face.
Key Findings
- Climate-related damages have exceeded $3.6 trillion since 2000 and will continue to rise. Mitigation is more cost-effective than dealing with the long-term consequences.
- EBITDA at risk – Climate impacts could slash EBITDA by 25% in the next 20 years, while transition risks like carbon pricing could reduce profits by up to 50% in energy-intensive sectors by 2030.
- Many companies underestimate climate risks while overestimating the cost of mitigation.
- First movers in climate action can gain a "green advantage", tapping into the $14 trillion green tech market by 2030.
CEO Action Plan
The report outlines a four-step guide for CEOs to navigate climate risks:
- Conduct Climate Risk Assessments – Identify exposure to physical and transition risks.
- Manage Current Portfolio Risks – Adapt business strategies to mitigate climate impact.
- Pivot for New Growth Opportunities – Invest in green technologies, decarbonization, and sustainable supply chains.
- Monitor & Report Progress – Strengthen governance, integrate climate risks into decision-making, and upgrade reporting systems.
Role of Governments
The report urges policymakers to:
- Expand carbon pricing and eliminate fossil fuel subsidies.
- Strengthen incentives for green investments.
- Develop national adaptation strategies to manage economic risks.