Environmental, social and governance (ESG) is the new imperative for companies around the world.

The realisation that climate change is accelerating is just one of the factors that is making waves in boardrooms and organisations of all sizes in all industries.


The stark reality of climate change

A new World Economic Forum report warns that, by 2050, climate change may cause an additional 14,5-million deaths and $12,5-trillion in economic losses worldwide.

Despite these stark findings, there is still time for global stakeholders to take decisive, strategic action to counter these forecasts and mitigate the health impacts of climate change globally, the report finds.

The report, Quantifying the Impact of Climate Change on Human Health, developed in collaboration with Oliver Wyman, analyses the climate crisis through a new lens by providing a detailed picture of the indirect impact climate change will have on human health, the global economy and healthcare systems around the world, and offering actionable strategies to mitigate and prepare for this looming threat.

The report quantifies the health consequences of climate change, both in terms of the health outcomes (mortality and healthy lives lost) and the economic costs to the healthcare system, estimated to be a further $1,1-trillion in extra costs by 2050.

The analysis is based on scenarios developed by the Intergovernmental Panel on Climate Change (IPCC) on the most likely trajectory for the planet’s rising average temperature, 2,5° to 2,9° Celsius over pre-industrial levels.

The report analyses six major climate-driven event categories as key multi-pronged drivers of negative health impacts: floods, droughts, heat waves, tropical storms, wildfires and rising sea levels.

Floods were found to pose the highest acute risk of climate-induced mortality, accounting for 8,5-million deaths by 2050.

Droughts, indirectly linked to extreme heat, are the second-highest cause of mortality, with an anticipated 3,2-million deaths.

Heat waves take the highest economic toll at an estimated $7,1-trillion by 2050 due to the loss in productivity.

Excess deaths attributed to air pollution, caused by fine particulate and ozone pollution, are expected to be the largest contributor to premature death with almost 9-million deaths a year.

Climate change will also trigger a catastrophic rise across several climate-sensitive disease outcomes, including vector-borne disease, which will likely impact previously less affected regions such as Europe and the US. By 2050, an additional 500-million people may be at risk of exposure to vector-borne diseases, the report finds.

The report warns that climate change will further entrench global health inequities, with the most vulnerable populations, including women, youth, elderly, lower-income groups and hard-to-reach communities, the most affected.

Regions such as Africa and southern Asia face heightened vulnerability to climate change impacts exacerbated by existing resource limitations, adequate infrastructure and essential medical equipment, further complicating their ability to address and adapt to environmental challenges.


New EU regulations

Meanwhile, emerging markets are having to get to grips with new ESG regulations coming out of the EU. A series of regulations applies Environmental, Social, and Governance (ESG) standards to trade, aiming to curtail CO2 emissions, shield environmentally conscious European producers, and discourage unfair trade practices.

While the primary impact is anticipated within the EU, emerging markets face substantial challenges as many are ill-prepared for the impending regulatory wave, according to a Boston Consulting Group (BCG) article.

“As developed markets – such as the EU – ramp up their ESG regulations, emerging markets will feel the impact. For example, around 20% of South Africa’s exports to the EU consist of carbon-intensive products such as steel and aluminium, which will be subject to a new carbon import levy from 2026. S&P estimates this could cost South Africa over $90 billion between then and 2040. Countries and companies across Africa need to respond to these new rules and take action to maintain their carbon competitiveness,” says Tim Figures, partner and associate director at BCG.

Emerging markets, projected to constitute 62% of the global economy and 88% of the population by 2050, play a pivotal role in mitigating climate change. Despite emitting less CO2 per capita, they contribute 85% to the global total, a share expected to grow. Among the significant EU measures are the Carbon Border Adjustment Mechanism (CBAM) and the EU Deforestation Regulation (EUDR).

The CBAM is expected to impact over 5%, which could extend to 10% by 2030, of EU imports in its initial phase and will have a significantly higher impact once the scope is expanded, putting countries in Africa at risk.

CBAM will equalise the carbon costs of materials produced in developing nations with those in the EU, hitting international trade by bringing new rules to a specific scope of goods, affecting industries like steel, aluminium, and chemicals.

For instance, 20% of South Africa’s iron and steel and nearly 30% of its aluminium exports are destined for the EU and are exposed to CBAM, while nearly half of Egypt’s iron and steel and half of its fertiliser exports go to the EU.

To remain competitive, companies in emerging markets must undertake a multiphase ESG readiness journey. This includes mapping ESG regulations, identifying gaps in measurement and reporting capabilities, and developing a holistic sustainability transformation roadmap. The roadmap should address strategy alignment, governance, organisational culture, product and service sustainability, regulation-specific capabilities, and global coordination.

“Global trade, strongly linked to global GDP, is evolving into a potent tool for promoting sustainability,” says Figures.