Global warming is the mantra dictating policy-making and financial decisions worldwide as the global community races to save the planet. However, a new report shows that policymakers and financial institutions are less prepared for bigger climate and economic risks than expected.
The report from the UK’s Institute and Faculty of Actuaries (IFoA) and University of Exeter (UofE) warns that global temperatures are accelerating faster than predicted due to a loss of the hidden sunshade effect created by air pollution, which has offset around 0.5°C of warming.
Highlighting the impact of shipping regulations in reducing Sulphur emissions, the report, titled Parasol Lost, says that as this pollution is being cleaned up, the protective effect is disappearing, thus contributing to further warming.
The International Maritime Organization’s (IMO) 2020 regulation, which capped the sulphur content in marine fuels at 0.5% (down from 3.5%), has led to a dramatic 85% reduction in global ship sulphur dioxide (SO2) emissions since its implementation, according to data from NASA and the European Environment Agency.
This policy, aimed at curbing air pollution and acid rain, inadvertently diminished the formation of reflective aerosol clouds from ship exhaust, known as “ship tracks”, which previously masked about 0.05–0.1°C of global warming by scattering sunlight back to space, as estimated in studies by climate researchers at the University of Maryland and published in Geophysical Research Letters.
The report also noted that recent studies have suggested that the planet is more sensitive to greenhouse gases than many models assume, meaning temperature could rise faster than expected.
“Without action, global warming is now likely to reach 2°C before 2050, a level associated with catastrophic impacts on societies and economies worldwide, with major disruption to water and food systems, migration, and human health,” the report says.
“An actuarial review of key climate change assumptions shows we may have seriously underestimated the rate of warming as well as the related economic impacts. Unless we rapidly change course, climate damages will start to impact growth and future prosperity,” said Sandy Trust, lead author of the report and a member of the sustainability board at the Institute and Faculty of Actuaries.
Associated climate hazards raise the risk of climate-driven inflation, financial shocks, and the withdrawal of insurance from high-risk areas sooner than many expect.
This, in turn, increases the chance of financial instability and the risk of societal and economic collapse due to the loss of nature’s critical support systems.
The report’s authors called on governments and financial institutions to shift their mindsets to recognise that humanity is not separate from nature but embedded in it, and to create an emergency action plan.
According to David King, founder and chair of the Climate Crisis Advisory Group, action is required to accelerate societal adaptation to a changing climate, supercharge the transition to green energy, and remove excess greenhouse gases already in the atmosphere.
“Economically, it will be overwhelmingly positive to do so,” he said.
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