Harmful tipping points in the natural world pose some of the gravest threats faced by humanity. Their triggering will severely damage our planet’s life-support systems and threaten the stability of our societies.
In the Summary Report:
• Narrative summary
• Global tipping points infographic
• Key messages
• Key Recommendations
Executive summary
• Section 1
• Section 2
• Section 3
• Section 4
This report is for all those concerned with tackling escalating Earth system change and mobilising transformative social change to alter that trajectory, achieve sustainability and promote social justice.
In this section:
• Foreword
• Introduction
• Key Concepts
• Approach
• References
Considers Earth system tipping points. These are reviewed and assessed across the three major domains of the cryosphere, biosphere and circulation of the oceans and atmosphere. We then consider the interactions and potential cascades of Earth system tipping points, followed by an assessment of early warning signals for Earth system tipping points.
Considers tipping point impacts. First we look at the human impacts of Earth system tipping points, then the potential couplings to negative tipping points in human systems. Next we assess the potential for cascading and compounding systemic risk, before considering the potential for early warning of impact tipping points.
Considers how to govern Earth system tipping points and their associated risks. We look at governance of mitigation, prevention and stabilisation then we focus on governance of impacts, including adaptation, vulnerability and loss and damage. Finally, we assess the need for knowledge generation at the science-policy interface.
Focuses on positive tipping points in technology, the economy and society. It provides a framework for understanding and acting on positive tipping points. We highlight illustrative case studies across energy, food and transport and mobility systems, with a focus on demand-side solutions (which have previously received limited attention).
Research on the significant, non-linear effects of climate damages on the global economy is well established (Diffenbaugh and Burke, 2019; Martinich and Crimmins, 2019; Hsiang et al., 2017; Carleton and Hsiang, 2016; Burke et al., 2015), albeit likely severely underestimating climate damage (Winter and Kiehl 2023; Keen 2021). The impacts of Earth system destabilisation on the financial sector are now receiving increasing attention too, with studies suggesting that climate-related damages will impact the stability of the global Cronafinancial system significantly (Curcio et al., 2023; Kemp et al., 2022; Crona et al., 2021; ECB, 2021; ESRB, 2020; IMF, 2020; FSB, 2020). Escalating climate change, particularly where it leads to breached Earth system tipping points, would progressively, or abruptly, destroy the capital of firms, reduce their profitability, deteriorate their liquidity and reduce the productivity of their workforce, leading to a higher rate of default and harming the financial sector (Dafermos et al., 2018). Such an impact on firms’ bankruptcies would cascade down to banks, accumulating a stock of bad debt and destabilising their own balance sheets, resulting in more frequent banking crises (Lamperti et al., 2019). Globally, consequences of climate change and breached Earth system tipping points are likely to trigger correlated shocks across large regions (Walker et al., 2023).
Breached tipping points are also likely to overwhelm the insurance industry. In 2015, ahead of COP 21 in Paris, the former CEO of AXA declared:
At a hearing on climate risks and its potential threat to the federal budget organised by the US Senate Budget Committee in March 2023, representatives from the insurance industry noted that, with climate change escalating, the industry is experiencing a crisis of confidence with respect to its ability to predict loss. Reinsurance companies are withdrawing increasingly from areas exposed to high climate change risks – for example, areas vulnerable to wildfires and floods (Frank, 2023). The multiplication of extreme weather events will certainly impact the value of physical assets (Caldecott et al., 2021). For instance, hurricane damage to properties could rise by as much as 275 per cent by 2050 due to their higher frequency and intensity (Schulten et al., 2019). However, the models used to estimate climate risks have been found to be often inadequate and likely to underestimate the risks (Kedward et al., 2023; Trust et al., 2023; FSB and NGFS, 2022).
Additionally, climate change mitigation, such as shifting to renewable energy production, fossil fuel divestment and/or phase-out, are likely to lead to the stranding of various types of assets, notably related to the fossil fuel industry, which may have wider implications – for example for pension funds, but also for state revenues in fossil fuel-producing nation states (Mercure et al., 2018; Semieniuk et al., 2022; Caldecott et al., 2021). The danger of destabilisation because of stranded fossil fuel assets is particularly big when force majeure (e.g. the breaching of an Earth system tipping point) would require an abrupt and badly managed transition to zero carbon.
However, by far the biggest issue with the existing empirical evidence, predictions and models that try to estimate climate damage for the financial sector is that they do not account for Earth system tipping points (Keen et al., 2022; Galaz et al., 2018).