The Cost of Inaction 2024

1.2 Climate-related economic costs have more than doubled over the past 20 years Climate change is already causing significant economic costs According to EM-DAT’s international disaster database, climate-related disasters have caused more than $3.6 trillion in economic damage since 2000, more than half of which is attributed to storms.15 This figure very likely underestimates actual costs, as it primarily reflects direct damage such as infrastructure destruction, insured losses and immediate economic impacts, while excluding indirect effects such as longer-term health consequences, loss of productivity and natural resource depletion. The economic strain of climate change is already massive, with a significant portion, especially the unaccounted indirect effects, currently borne by society at large. Since the turn of the century, average damage costs have more than doubled The costs of climate-related damage increased from around $450 billion between 2000 and 2004 to more than $1 trillion between 2020 and 2024 (see Figure 7). Early estimates for Hurricane Helene, which wreaked havoc in Southeastern US states in September 2024, indicate that this event alone might be responsible for over $100 billion worth of damage,16 making it one of the costliest hurricanes in US history. An increasing frequency and intensity of such events would mean that costs are likely to escalate further. The impact of future disasters can already be felt Insurance premiums for climate resilience and protection from “natural catastrophes” are estimated to increase by around 50% until 2030, reaching a total of $200 billion to $250 billion.17 As companies pull back coverage in vulnerable areas, properties in certain parts of the world are essentially becoming uninsurable.18 Economic cost of climate-related disasters has more than doubled since 2000 FIGURE 7 Economic cost of climate-related disasters1 ($ billion) five-year sum of reported cost of disasters from 2000-20242 35 2012 2005-2009482115664 1066 2010-2014343317746 6652 2015-2019599192914 39 2020-20242247 6211,023 Floods: 1.7x Over two decades Storms: 2.6x Droughts: 4.1x Wildfires: 2.6x Others:3 0.4x1526 2000-2004244150458 23106 5 9 10 1. EM-DAT’s database categorizes and shares economic data across: floods; storms; extreme temperature events; droughts; “mass movement (dry and wet)” – i.e. landslides & mudslides; wildfires; volcanic activity; and earthquakes. Disasters related to volcanic activity and earthquakes are excluded here as they are not directly linked to climate or climate change. 2. Data is extrapolated for 2024’s disasters, based on 2020-2023 averages, to show the trend for five years from 2020-2024. 3. “Others” include extreme temperatures and mass movement (dry and wet); data for these fluctuates due to reporting. Notes: Graph uses 2023 adjusted dollar figures across the analysis for parity; pre-2000 figures have reporting biases, hence excluded from analysis. These costs are only a subset of total damage from physical risks and hence underestimate likely total impacts and costs. Sources: EM-DAT’s international disaster database, hosted by the Centre for Research on the Epidemiology of Diseases (CRED), UCLouvain; BCG analysis. Climate-related disasters have caused more than $3.6 trillion in economic damage since 2000, more than half of which is attributed to storms – this figure very likely underestimates actual costs. The Cost of Inaction: A CEO Guide to Navigating Climate Risk 11