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Bank Group Climate Risk Management and Adaptation Strategy


Climate change poses serious threats to sustained economic growth and poverty reduction, the quality of life, and political stability in the world. Two reports: the 2007 Fourth Assessment Report (AR4) of the Intergovernmental Panel on Climate Change (IPCC)1 and the Stern Review2 have shed light on the phenomenon and the risks and challenges that it presents. IPCC presented empirical evidence linking human socio-economic activities to the emission of greenhouse gases (GHGs), and linking the latter to climate change. The Stern Review presented a comprehensive cost-benefit analysis of concerted response to climate change. The Review estimated that, under the ‘do-nothing’ option, climate change could cause a world-wide economic welfare loss equivalent to a permanent loss of 5% of average per-capita consumption. This rises as high as 20% when a wider range of environmental and social impacts are included. The Review reckons that effective measures to reduce GHG emissions at an annualised cost of about 1% of global GDP would mitigate future climate change and avert welfare losses.

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