E3M

Delaying climate transition will increase the overall economic costs of transitioning, generate material GDP losses and result in impacts to global supply chains, finds a recently launched report looking at four short-term climate change response scenarios on the real economy, labour markets, financial institutions, and the broader financial system.

The first-of-its-kind report, released by Network for Greening the Financial System (NGFS), assesses the near-term impacts of climate policies and climate change on financial stability and economic resilience, primarily developed as an input for climate stress-testing and risk to financial institutions’ investment portfolios.

The scenarios range from immediate and swift action to policy stagnation, showing that immediate action to curtail climate change has the lowest impact on financial systems.

The GEM-E3 model (part also of the PRISMA modelling suite – extended to better represent the financial sector)  was central to the development of the report. The GEM-E3 model was used to assess how climate risk (transition and physical)  impacts the economy and energy systems, including GDP, sectoral production, interest rates, employment and trade.

• Main takeaways here

This news is part of a project that has received funding from the European Union’s Horizon Europe programme under grant agreement No 101081604 – PRISMA. Views and opinions expressed are however those of the speaker(s) only and do not necessarily reflect those of the European Union or the European Climate, Infrastructure and Environment Executive Agency (CINEA). Neither the European Union nor the granting authority can be held responsible for them.

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