The article first appeared on McKinsey on May 15, 2022.
The Earth’s climate, which has remained relatively stable for over 10,000 years—encompassing the entirety of human civilization—is now undergoing significant changes. Since the late 19th century, average global temperatures have risen by approximately 1.1 degrees Celsius. This seemingly modest increase has already triggered substantial environmental and socioeconomic impacts across the globe. The rising temperatures are not just numbers on a chart; they manifest in more frequent and severe acute climate hazards, such as heatwaves, floods, and storms. Simultaneously, chronic risks, including persistent droughts and steadily rising sea levels, are intensifying.
These environmental changes are not occurring in isolation. They pose profound challenges for societies and economies, as they amplify vulnerabilities in various systems. For instance, supply chains—already strained by globalization and recent disruptions like the COVID-19 pandemic—may face new risks due to extreme weather events. Flooded transport routes, damaged infrastructure, and unpredictable agricultural yields are just a few examples of how climate-induced hazards can upend global trade and production.
Moreover, traditional risk models, which rely on historical data, may no longer be sufficient in predicting future scenarios. Policymakers and business leaders are grappling with the task of updating these models to account for the accelerating pace of climate change and its wide-reaching effects. Industries heavily reliant on natural resources, such as agriculture, energy, and manufacturing, will need to reassess their strategies to ensure resilience in the face of these evolving challenges.
The intensification of both acute and chronic hazards highlights the interconnected nature of climate risks. Rising sea levels, for example, can exacerbate the impact of coastal storms, leading to more devastating flooding in low-lying areas. Similarly, prolonged droughts can increase the risk of wildfires, threaten water supplies, and disrupt ecosystems. Addressing these complex challenges requires coordinated efforts at local, national, and global levels.
Adapting to a changing climate will demand innovative solutions, from developing climate-resilient infrastructure to adopting more sustainable business practices. Governments, businesses, and communities must work together to build systems capable of withstanding both the immediate and long-term impacts of climate change. By doing so, humanity can navigate the challenges posed by this unprecedented period of environmental transformation while striving to secure a more sustainable future.
Read more: McKinsey
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