The Risky Business Report, a bipartisan project backed by three former U.S. Treasury Secretaries as well as other political and business leaders that seeks to quantify and publicize the economic risks from the impacts of a changing climate, calls for new policies to “reduce the odds of catastrophic outcomes” from extreme heat and rising sea levels linked to climate change. Such severe impacts will likely cost billions of dollars in annual property loss, threaten human health. lower labor productivity and endanger the nation’s electricity grids, according to the report The findings summarized by the report also show that the most severe risks can still be avoided through early investments in resilience and through immediate action to reduce the pollution that causes global warming.
“I know a lot about financial risks — in fact, I spent nearly my whole career managing risks and dealing with financial crisis,” former treasury secretary (under George W. Bush) Henry M. Paulson Jr. says in the report. “Today I see another type of crisis looming: a climate crisis. And while not financial in nature, it threatens our economy just the same.”
The risks are both real and enormous, if uncertain. Paulson argues that in spite of the uncertainties, “the right response to that is not to do nothing, but to act on the best information you have.” Former New York City Mayor, Republican Michael Bloomberg, said that although “no one can guarantee what the future is going to be,” businesses need to incorporate the potential climate threat into decisions on questions such as the location of facilities, flood defenses and insurance.
The report offers no solutions. Indeed, the sponsors of the project have serious disagreements about policies related to climate change. However, in an ad in The Wall Street Journal last week, the group said that a “first step is to quantify the risks.” Acknowledging that “we may disagree” about responses, it said “we all see the same big picture.”
According to Paulson, “The risks are much more perverse and cruel than we saw with the financial crisis because they accumulate over time.” Business leaders are sometimes accustomed to moving slowly on long-term risks. In the case of global warming, he said, “a business-as-usual approach is actually radical risk-taking.”
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