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The Network for Greening the Financial System report highlights the increasing threat of acute physical impacts from climate change, emphasising their far reaching economic implications.
Severe weather events, like floods and hurricanes, have intensified in frequency and severity, with damages exceeding $275 billion globally in 2022.
These events disrupt supply chains, reduce productivity, and impair financial systems, impacting GDP and inflation.
The report outlines the cascading effects through supply, demand, and financial channels, illustrating how damaged infrastructure, disrupted labor markets, and diminished confidence amplify economic shocks.
It stresses the need for effective mitigation, adaptation, and resilience measures to reduce future risks, enhance fiscal stability, and guide monetary policy in addressing these challenges.
Central banks are urged to integrate climate related risks into their frameworks to ensure economic resilience.
This report is part of a broader effort to equip policymakers with tools to address climate driven economic disruptions.
