The recent World Economic Forum’s (WEF) Global Risks Report 2023 makes it clear that by 2033 the converging risks of rising inequality and unmitigated climate change have the potential to drive devastating global environmental and societal outcomes if left unchecked.

The report presents a bleak scenario eerily similar to the beginning of a dystopian novel. The short-term risks of inflation, an unsustainable cost of living, trade wars, capital flight from emerging markets, widespread social unrest, and geopolitical conflict are combined and amplified by skyrocketing debt levels, low growth, and an escalating climate crisis. Together, these factors create a perfect storm, one set to cause a decline in human development as the transition window to a 1.5-degree Celsius world is quickly closing.

Considering the report — prepared for the WEF annual meeting in Davos, Switzerland — drew from analysis of over 1,200 experts across academia, business, and government, it’s safe to say the world should be sure to pay attention to these identified risks and understand what’s at stake.


The immediate threat: cost of living crises and rising inequality 

The aftershocks of the Covid-19 pandemic along with the Russia-Ukraine war “ushered in skyrocketing inflation, a rapid normalization of monetary policies and started a low-growth, low-investment era,” the report stated. It should come as no surprise that as basic necessities like food and energy grow more expensive and critical resources like water start to run out, political instability and social unrest will ensue. The WEF stated that increases in fuel prices alone led to protests in an estimated 92 countries in 2022.

Together, these factors create a perfect storm, one set to cause a decline in human development as the transition window to a 1.5-degree Celsius world is quickly closing.

However, inflation and the rising cost of staples impact people unevenly, with poorer countries being disproportionally affected and people of color, people with disabilities, and women often bearing the brunt of stalled growth. Data shows weakening economies are slowing progress on gender equality. In the past five years, only one in three companies have made progress in executive-team diversity according to the WEF, while shrinking job opportunities continue to disproportionately affect minorities and women. The COVID-19 pandemic increased identity-based hostility and took a far greater negative toll on LGBTQIA+ employees, people of color, and women. Still, there’s hope.

Accompanying the rising inequality has been an uptick in attention to diversity, equity and inclusion (DEI). Companies are set to spend an estimated $15.4 billion on DEI-related efforts by 2026, according to a report by the World Economic Forum’s Global Parity Alliance. That’s almost double the $7.5 billion spent in 2020. 

The benefits of incorporating DEI initiatives within businesses help address inequality gaps while making the company more attractive to investors and top talent. The Parity Alliance report states ethnically diverse companies and gender-diverse companies are 36% and 25% more likely, respectively, to financially outperform peers with average diversity. Strong corporate DEI initiatives support practices that provide a safe, fair, and inclusive work environment and can help build a more equitable society.

Governments are also acknowledging how policymaking and program development contribute to structural inequities and disadvantages based on age, gender, sexual orientation and identity, disability, and socioeconomic position as DEI issues gain attention.

Ultimately, the WEF warned that further action must be taken to avert a “polycrisis” of continuous cost-of-living increases, strained supply chains, and interstate conflict. As global leaders clamor to solve these inequality issues, climate change presents a secondary hazard that threatens to widen the inequality gap even further and risks stranding people, assets, jobs, and economic opportunities if left unaddressed. 


The risk of the decade: failure to mitigate climate change

Today’s leaders are faced with one of the greatest collective problems of our time — to address climate change and the potential collapse of our natural ecosystems. The latest Intergovernmental Panel on Climate Change (IPCC) report states that the world is set to reach 1.5 degrees Celsius within the next two decades— a threshold beyond which catastrophic damage is almost a certainty.

The top four severe global long-term risks over the next decade identified by the report all focus on climate — failure to mitigate climate change, failure of climate-change adaptation, natural disasters and extreme weather events, and biodiversity loss and ecosystem collapse. 

The WEF report explained, “Without significant policy change or investment, the interplay between climate change impacts, biodiversity loss, food security, and natural resource consumption will accelerate ecosystem collapse, threaten food supplies and livelihoods in climate-vulnerable economies, amplify the impacts of natural disasters, and limit further progress on climate mitigation.”

Translation: immediate reductions in carbon emissions are critical to avoiding an environmental, social, and political catastrophe. But, why the focus on carbon? 

The safe CO2 level was set at 350 parts per million, which humans exceeded in 1988. CO2 levels in 2020 were estimated to be 417 parts per million.

The temperature of the Earth depends on a balance between incoming energy from the Sun and the energy that bounces back into space. Increasing carbon dioxide (CO2) — Earth’s most important greenhouse gas — in the atmosphere drives up the planet’s temperatures as it absorbs heat that would otherwise be lost to space and reemits it back to Earth. A warming planet is responsible for increased wildfires, more severe and frequent storms, sea level rise, drought, and intense heat waves. Additionally, around 30% of the CO2 released into the atmosphere is absorbed by the ocean. As the quantity of carbon dioxide absorbed by the ocean rises it triggers a chain of chemical reactions that raises the acidity of the world’s oceans and poses a serious threat to marine biodiversity.

So, how much CO2 can the Earth handle? The safe CO2 level was set at 350 parts per million, which humans exceeded in 1988. CO2 levels in 2020 were estimated to be 417 parts per million.

Despite 30 years of global climate advocacy and international diplomacy, the WEF report stated “the international system has struggled to make the required progress on climate change.” The current trajectory of global emissions indicates that the world is unlikely to limit planetary warming to the targeted 1.5 degrees Celsius. 

 The WEF noted that over half of the world’s economic output is “estimated to be moderately or highly dependent on nature” and the collapse of sensitive ecosystems could have “far-reaching economic and societal consequences.” An S&P Global study of 135 countries estimates four percent of global annual economic output lost by 2050 due to climate change which hit many poorer parts of the world disproportionately hard.

This widening inequality gap will lead to further civil unrest and cause mass climate migrations, increasing stress on already tight water supplies, multiplying the loss of livelihoods, and further burdening health care systems with an increase in zoonotic diseases.

To mitigate these risks, immediate and deep emissions carbon reductions are required across all public and private sectors worldwide — particularly within the energy sector — the United Nations stated in a 2022 press release.


Risk convergence and the need to act

The report makes clear, “Without significant policy change or investment, the interplay between climate change impacts, biodiversity loss, food security, and natural resource consumption will accelerate ecosystem collapse, threaten food supplies and livelihoods in climate-vulnerable economies, amplify the impacts of natural disasters, and limit further progress on climate mitigation.”

Ultimately, this is a call to action for corporate and governmental leaders around the world to understand these risks and to put policies into action that support more equal systems of care and drive toward carbon neutrality.

Read the full WEF Global Risks Report 2023