By Sarah George

Copyright edie

This is according to a new analysis from S&P Global Commodity Insights.

Climate scientists have warned that global warming exceeding 2 °C could leave vast parts of Earth, currently home to around one-third of the population, ‘unliveable’ for humans.

S&P’s research reveals that global average temperatures will almost certainly (90% likelihood) be 1.5°C warmer in 2040 than pre-industrial levels. The likelihood stands at 50% for a 2.3°C pathway.

In a pathway exceeding 2.3 °C, the researchers concluded that cumulative economic costs could be as high as 33%.

The researchers are imploring action to unlock additional finance for climate adaptation activities, which make key infrastructure, communities and public health more resilient to physical climate risks such as heatwaves and droughts.

Such risks are not abstract, but already present. Swiss Re previously estimated that economic losses related to climate change reached a record $328bn in 2024 – equivalent to 0.3% of global GDP.

Adaptation finance gap

Around $28bn of international public finance was provided for climate adaptation in 2022, up from $22bn the year prior, according to the UN.

But at least $187bn per year more will need to be spent through to 2030 to meaningfully address climate-related risks, the UN states. This would only be 5% lower if global decarbonisation accelerated significantly

It has called upon national governments to not only spend more, particularly on “transformative” large-scale projects, but to innovate to unlock additional private and philanthropic finance. They must also make the financial and policy environment more enabling for adaptation financing.

S&P’s experts argue that part of the reason for under-investment in adaptation is “uncertainty about the timing, extent, impacts and costs of climate change”. But probabilistic analysis is beginning to mature.

There is also a lack of data on likely investment returns, making the building of a traditional ‘business case’ more challenging.

S&P has emphasised: “Current efforts to mitigate greenhouse gas emissions have close to no impacts on physical climate risks in the near future, or on adaptation and resilience needs.

“[As such,] adaptation and resilience investment returns carry more certainty in the short term.”

Productivity decline on the horizon

S&P further estimates that global heating could (50% likelihood) exceed 2.8°C by 2100. The UN previously warned that the world is aligned with a 3.1°C trajectory.

The World Economic Forum has stated that such levels of warming would be devastating for public health and economic productivity.

It estimates that, through to 2025, climate-driven health impacts could result in the loss of more than $1.5trn in lost economic output. This is a conservative estimate.

The food and agriculture, built environment and insurance industries are classed as those most at risk of climate-related health impacts. Banking, media, automotive and chemicals are less exposed.

“We are entering an era in which protecting worker health is proving essential to business continuity and long-term resilience,” said the Forum’s head of climate resilience, Eric White.

“Every year we delay embedding resilience into business decisions, the risks to human health and productivity climb and the costs of adaptation rise.”

The Forum’s analysis indicates that companies investing early in climate health adaptation can benefit beyond risk mitigation, unlocking new opportunities for innovation and growth while meeting emerging market needs.

The report has been published on the eve of the UN General Assembly in New York, which will run concurrently to Climate Action Week NYC (22-26 September 2025). The aim is to better inform businesses, investors and policymakers of adaptation-related risks and opportunities.

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