Transition to climate-resilient economy could create $45T investment opportunity, report says
The transition to a climate-resilient and zero-carbon economy could amount to nearly a 25% cumulative gain in gross domestic product (GDP) for the global economy over the next two decades, said a new Moody’s report on Monday, coinciding with a major UN climate conference in Glasgow, Scotland.
“This is equivalent to adding the current Italian or Canadian economy to the global economy each year over this period,” Moody’s President and CEO Rob Fauber said in the report Ready or not? Sector Performance in a Zero-Carbon World.
It would also create a $45 trillion investment opportunity for those able to take advantage of it, he added.
“Looking at the data, it is clear that carbon transition will be a key factor in corporate competitiveness. What emerges is a picture of mixed momentum and preparedness within and between sectors in the race to zero,” Fauber said.
The report stressed that carbon-intensive sectors such as utilities, automotive, airlines, cement, shipping, and oil and natural gas account for nearly 85% of global emissions.
It said the auto and utilities sectors show that improvement in companies’ positioning for a rapid transition is possible in some of the most carbon-intensive sectors.
However, many carbon-intensive sectors and firms are lagging in a rapid transition, leaving the world off the track for limiting global warming to 1.5C, or 2.7F,by 2100, it added.
“Taken together, we estimate that today’s stated emissions reduction plans from companies across all economic sectors are aligned with a global temperature increase of at least 2.6 degrees Celsius by 2100,” the report said.
“Sectors that are least prepared overall for rapid transition also have the widest range of potential default risk outcomes for individual companies,” it added.
Moody’s emphasized that the financial system has a significant role to play in climate change by supporting sustainable and resilient investments in sectors that align with a lower-carbon future.