The Cost of Inaction 2024

Images: Getty Images, Pexels Disclaimer This document is published by the World Economic Forum as a contribution to a project, insight area or interaction. The findings, interpretations and conclusions expressed herein are a result of a collaborative process facilitated and endorsed by the World Economic Forum but whose results do not necessarily represent the views of the World Economic Forum, nor the entirety of its Members, Partners or other stakeholders. © 2024 World Economic Forum. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, including photocopying and recording, or by any information storage and retrieval system.Note: This report has been updated in January 2026, as a result of the retraction of the following report: Kotz, M. et al. (2024). The economic commitment of climate change. Nature, no. 628, 2024, pp. 551-557.Contents Foreword 3 Executive summary 4 1 Climate inaction could severely harm the world economy 5 1.1 Impacts of climate change are increasing and will accelerate with further warming 9 1.2 Climate-related economic costs have more than doubled over the past 20 years 11 1.3 Further warming could put an increasing strain on the world economy 12 2 Corporate cost of global inaction: physical risks on the rise in the next two decades 14 2.1 Climate change poses substantial physical risks to private sector 15 2.2 Physical risks will translate into material costs within the next two decades 16 2.3 Companies recognize physical risks but likely underestimate their impact 18 2.4 Corporate adaptation investments have an increasingly positive business case 20 3 Corporate cost of own inaction: transition risks are increasing 22 3.1 Companies that do not decarbonize may face increasing transition risks 23 3.2 If transition risks materialize, they could translate into material financial losses 26 3.3 Companies seem to underestimate these financial losses and overestimate 29 the cost of action 4 Unlocking new growth by advancing the climate transition 32 4.1 Climate leadership still pays off 33 4.2 In heavy industry, climate leaders play a long-term game 34 4.3 The warming climate is creating a market for adaptation solutions 35 5 The CEO Climate Leaders Guidebook 36 Step 1 Conduct a comprehensive climate risk assessment 38 Step 2 Manage risks in the current business portfolio 41 Step 3 Pivot your business to unlock opportunities 44 Step 4 Monitor risks and report on progress 45 Enabler 1 Upgrade climate risk governance 46 Enabler 2 Integrate climate risk into business-as-usual 47 Enabler 3 Develop effective climate risk systems 47 6 How corporates and governments can rise to the challenge 48 Appendix 51 Contributors 53 Endnotes 55 The Cost of Inaction: A CEO Guide to Navigating Climate Risk 2