Allowing global warming to reach 3C by 2100 could reduce cumulative economic output by 15 per cent to 34 per cent, but investing 1 per cent to 2 per cent in mitigation and adaptation would limit warming to 2C, reducing economic damages to 2 per cent to 4 per cent.

In perspective: the cost of inaction is equivalent to three times global health care spending, or eight times the amount needed to lift the world above the global poverty line by 2100.

So, the logic is clear, according to the Boston Consulting Group (BCG), Cambridge Judge Business School, and the University of Cambridge’s climaTraces Lab report, Too Hot to Think Straight, Too Cold to Panic: Landing the Economic Case for Climate Action with Decision Makers.

Furthermore, mitigation is the most cost-effective means of reducing the economic damages of climate change; it can return as much as 5 to 14 times the original investment. At the same time, adaptation is critical to minimising damages, particularly in the next couple of decades. To limit global warming to 2C by 2100, mitigation investments must increase ninefold and adaptation thirteenfold by 2050. The challenge lies in the timing of climate investments with 60 per cent needing to be committed before 2050, while 95 per cent of the economic damage from inaction would occur after that point.

“The economic case for climate action is clear, yet not broadly known and understood,” said Annika Zawadzki, BCG MD and partner, and a co-author of the report. “Investment in both mitigation and adaptation could bring a return of around tenfold by 2100.”

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