Climate threats dominate the World Economic Forum’s (WEF) long-term risk outlook in its Global risks report 2020 for the first time in its history. They also comprise three of the five most impactful threats to the planet (see long term risk outlook).
“On the environment, we note with grave concern the consequences of continued environmental degradation, including the record pace of species decline,” WEF president Børge Brende said in the preface to the survey. The last five years are likely to be the hottest on record, with extreme weather events increasing in regularity and severity, he noted. In addition, global temperatures seem to be rising at 3°C, twice as fast as experts warn is the limit to avoid the worst impacts of such change.
“The near-term impacts of climate change add up to a planetary emergency that will include loss of life, social and geopolitical tensions and negative economic impacts,” Brende concluded.
The world’s economy has also slowed down and cyber-risk has accelerated. G20 economies hold record levels of debt at the same time as growth is low. While co-ordinated action could help reverse these trends, unilateral trade policies have made them worse, WEF says. This trend is echoed in a fragmentation of the Internet with, for example, China building its digital silk road as an alternative network to the US-dominated global model. Centres of power are shifting in unpredictable ways.
“While these changes can create openings for new partnership structures, in the immediate term, they are putting stress on systems of coordination and challenging norms around shared responsibility,” Brende said. “Unless stakeholders adapt multilateral mechanisms for this turbulent period, the risks that were once on the horizon will continue to arrive.”
Turbulence has become the new normal. As the developing economies have grown in strength, the old power structures and alliances have come under increasing threat. This trend is likely to continue. Citing a report from the consultant PWC, WEF said that six of the seven largest economies in the world could be those comprising today’s emerging economies – with China first, India second and the US third by GDP ranking.
“As these trends are unfolding, a shift in mindset is also taking place among some stakeholders—from multilateral to unilateral and from cooperative to competitive. The resulting geopolitical turbulence is one of unpredictability about who is leading, who are allies, and who will end up the winners and losers,” WEF concluded.
One of the key domains this turbulence is likely to be felt are in frontier areas. The shifting distribution of economic power is only one of these. Another is what the WEF calls the environmental frontier. For example, while the melting of Artic ice is recognised as a potential disaster, the zone had become a site of international geopolitical tension. China, Norway, Russia and the US, for instance, have been competing for rights over the exploitation of fish and gas, shipping lanes, and areas of military of dominance. There are similar tensions over the digital frontier, with only limited multilateral cooperation in areas such as artificial intelligence and Internet governance.
“As the outlines of the next geopolitical era start to emerge, there is still uncertainty about where the distribution of power will settle and from where influence will emanate, but a snap back to the old order appears unlikely,” the report’s executive summary concludes. “If stakeholders attempt to bide their time, waiting for the old system to return, they will be ill-prepared for what lies ahead and may miss the point at which key challenges—economic, societal, technological or environmental—can be addressed. Instead, longstanding institutions must adapt to the present and be upgraded or reimagined for the future.”
Read WEF’s Global risks report 2020.