Innovation and climate risk:
THE BIG THINK
Innovation and climate risk:
What it means for your investments
By David Crosoer, PPS Investments Chief Investments Officer
The same month the United Nations Secretary-General announced that the world is no longer on track to limit global warming to below 1.5 ° C above pre-industrial levels, the Nobel Prize in Economic Sciences was awarded to three economists whose work demonstrates how technological innovation from industrial machinery to artificial intelligence( AI) has historically driven productivity and economic growth.
This celebration of innovation sits uneasily alongside the environmental consequences of that progress. While technology has powered global growth, it has also accelerated emissions, resource depletion and pressure on ecosystems.
Humanity often draws comfort from past examples of misplaced pessimism. Lord Kelvin underestimated the sun’ s longevity and Thomas Malthus predicted food shortages that never came to pass. Yet today’ s warnings differ. The Planetary Boundaries Science Lab recently confirmed that seven of the nine systems essential to sustaining life on Earth have been breached, with ocean acidification added to the list this year. The planetary boundaries framework assesses the stability of critical ecological systems, including climate regulation, freshwater availability, biodiversity integrity, land use and the chemical balance of the oceans. When these thresholds are crossed, natural systems lose their ability to absorb shocks, increasing the likelihood of abrupt, irreversible environmental change. These findings represent practical assessments of ecological stress rather than hypothetical projections.
A SHIFTING NARRATIVE IN MARKETS AND POLICY
Despite this, public anxiety remains subdued. A“ make everything great again” narrative has gained traction and assumes that technological ingenuity, particularly AI, will ultimately outpace or neutralise global risks. Financial markets continue to rally, regulatory momentum is weakening and a growing number of corporates have quietly moved away from climate commitments in favour of shortterm profitability.
This raises a broader question: are we witnessing a return to a form of unfettered corporate capitalism in which governance principles such as those embodied in King V™ are sidelined? Considerable uncertainty persists around the future trajectory of the global economy, yet markets appear largely unfazed by climaterelated risks.
The International Monetary Fund( IMF) estimates that the cost of adapting to climate change will be substantially higher than the
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