Physical climate risk: looking local, thinking systemic
Climate risks get physical: mounting economic costs.
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A global temperature shock can leave a durable economic scar
–12%
World GDP per capita six years after a +1°C global temperature shock.
Source: Adrien Bilal and Diego R. Känzig, The Macroeconomic Impact of Climate Change: Global vs. Local Temperature, NBER Working Paper 32450, November 2024.
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Severe warming raises the cost of delay
40%
Estimated GDP loss by 2100 at 4°C warming.
Source: Neal, T., Newell, B. R., & Pitman, A. (2025). Reconsidering the macroeconomic damage of severe warming. Environmental Research Letters, 20(4), 044029.
Identifying geographical exposure is only a first step: it does not, by itself, establish financial materiality.