Short-term negative outlook for the world – and only going to get worse

If anyone is in any doubt about the importance of ESG, and in particular, sustainability, then the World Economic Forum’s Global Risks Report 2024 is surely required reading. On first glance, it is hard to find a more depressing and worrying document, given that it is the views of over 1,400 global risks experts, policymakers and industry leaders. Its focus is much broader than sustainability, but unsurprisingly, climate and catastrophes are a key element. The report highlights a predominantly negative outlook for the world in the short term that is expected to worsen over the long term. While 30% of global experts expect an elevated chance of global catastrophes in the next two years, nearly two-thirds expect this in the next ten years. More depressingly, “progress in human development is being chipped away slowly, leaving states and individuals vulnerable to new and resurgent risks. Against a backdrop of systemic shifts in global power dynamics, climate, technology and demographics, global risks are stretching the world’s adaptative capacity to its limit,” the report finds. “An unstable global order characterised by polarising narratives and insecurity, the worsening impacts of extreme weather and economic uncertainty are causing accelerating risks – including misinformation and disinformation – to propagate,” said Saadia Zahidi, managing director, World Economic Forum. “World leaders must come together to address short-term crises as well as lay the groundwork for a more resilient, sustainable, inclusive future.” Not surprisingly, environmental risks continue to dominate the risks landscape over all timeframes. Two-thirds of global experts are worried about extreme weather events in 2024. Extreme weather, critical change to Earth systems, biodiversity loss and ecosystem collapse, natural resource shortages and pollution represent five of the top ten most severe risks perceived to be faced over the next decade. Interestingly, expert respondents disagreed on the urgency of risks posed – private sector respondents believe that most environmental risks will materialise over a longer timeframe than civil society or government, pointing to the growing risk of getting past a point of no return. Fortunately, it is not all doom and gloom. There are some positive messages in terms of how the world responds to the risks. The report recommends focusing on global and cross-border cooperation, but also on shoring up individual and state resilience, for example through fostering greater research and development on climate modelling and technologies with the potential to speed up the energy transition, with both public and private sectors playing a role. John Scott, head of sustainability risk, Zurich Insurance Group, speaking at the launch of the report, said: “The world is undergoing significant structural transformations with AI, climate change, geopolitical shifts and demographic transitions. Ninety-one per cent of risk experts surveyed express pessimism over the ten-year horizon. Known risks are intensifying and new risks are emerging – but they also provide opportunities. Collective and coordinated cross-border actions play their part, but localised strategies are critical for reducing the impact of global risks. The individual actions of citizens, countries and companies can move the needle on global risk reduction, contributing to a brighter, safer world.” The report finds that environmental risks continue to dominate the risks landscape over all three time frames (this year, the next two years, and the next ten years). Two-thirds of respondents rank extreme weather as the top risk most likely to present a material crisis on a global scale in 2024, with the warming phase of the El Niño-Southern Oscillation cycle projected to intensify and persist until May this year. It is also seen as the second-most severe risk over the two-year time frame and, similar to last year’s rankings, nearly all environmental risks feature among the top ten over the longer term. Drilling down into the research, there is some disagreement about the urgency of environmental risks, in particular biodiversity loss and ecosystem collapse and critical change to earth systems. Younger respondents tend to rank these risks far more highly over the two-year period compared to older age groups, with both risks featuring in their top ten rankings in the short term. And the private sector highlights these risks as top concerns over the longer term, in contrast to respondents from civil society or government, who prioritise these risks over shorter time frames. The report states: “This dissonance in perceptions of urgency among key decision-makers implies sub-optimal alignment and decision-making, heightening the risk of missing key moments of intervention, which would result in long-term changes to planetary systems.” The report concludes on a slightly more positive note, with suggestions for how to respond to the risks: “Localised strategies, breakthrough endeavours, collective actions and cross-border coordination all play a part in addressing these risks. Localised strategies, leveraging investment and regulation, are critical for reducing the impact of global risks, and both the public and private sector can play a key role in extending benefits to all.” It adds: “Through prioritising the future and focusing on breakthrough research and development, the efforts of single entities can make the world a safer place. The actions of individual citizens, companies and countries – while perhaps insignificant on their own – can move the needle on global risk reduction if they reach a critical mass. Finally, cross-border coordination remains the only viable pathway for the most critical risks to human security and prosperity.” And Airmic CDEO Julia Graham struck a more positive note in response: “There are solutions to risks associated with misinformation and disinformation, and climate change. “However, what we lack is political will, and this is why collaboration to develop and use these solutions is vital between governments, business and society.” The more seriously sustainability is taken, and the more individuals and organisations highlight the issues, the better the chance that the political will be there to make fundamental and lasting changes. Reports such as the Global Risks Report 2024, despite its gloomy outlook, will help that process.

Short-term negative outlook for the world – and only going to get worse

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