The impact of climate change is accelerating faster than anticipated, with governments and businesses continuing to underestimate associated risks. These risks could lead to economic losses reaching trillions of dollars by 2050.

According to reports from climate scientists and financial experts, the world might be significantly underestimating the speed of global warming, facing the prospect of “planetary bankruptcy.” This means climate change could cause extensive damage to both the environment and economic growth.

Decision-makers often concentrate on intermediate climate impact estimates. However, with phenomena such as extreme precipitation occurring sooner than projected, preparations for worst-case scenarios are necessary, as indicated in the report.

“Urgent global cooperation on a solvency plan is essential,” says David King, former chief climate adviser to the UK government, who contributed to the report. “We’re experiencing an acceleration in temperature rise. While the future is uncertain, it’s reasonable to assume that this trend won’t reverse.”

The initial step towards such a plan could involve reevaluating the assumption that the global economy will continue to grow indefinitely. Sandy Trust, a British investment manager at Baillie Gifford, remarked that according to the Network for Greening the Financial System, the world could incur trillions in annual losses by 2050 due to climate impacts. However, the network believes that a recession is unlikely, as global economic growth might outpace these losses.

“This is akin to Titanic risk modeling, predicting a smooth journey from the deck of the Titanic in April 1912,” Trust adds. “Such assumptions overlook fundamental principles of risk management—most notably, the importance of planning for worst-case scenarios.”

Preparation for the worst is critical, according to a report from the European Union’s Copernicus climate change agency. The study highlighted that 2025 was the third warmest year on record, with average temperatures rising 1.47 degrees Celsius above pre-industrial levels. The temperatures in 2024 were even higher, leading to a three-year average exceeding 1.5 degrees Celsius for the first time.

This growth represents a step closer to the 20-30 year average needed to achieve the Paris Agreement goal of limiting temperature rises to below 1.5 degrees Celsius. Ten years since the agreement was signed, projections indicated that the 1.5 degrees Celsius threshold would be reached by 2045. However, if current trends persist, according to Copernicus’ data, we could breach this critical limit by 2030.

Scientists indicate that the rate of global warming is speeding up, largely due to declining air pollution levels, including sulfur emissions from coal-fired power plants and shipping. With clearer skies, more sunlight reaches the Earth, leading to an apparent increase of about 0.5 degrees Celsius.

However, the primary factor behind breaching the 1.5 degrees Celsius threshold sooner than predicted is the relentless rise in greenhouse gas emissions. Samantha Burgess from Copernicus emphasizes that fossil fuel emissions are expected to hit record levels in 2025.

“Emissions are not decreasing as quickly as anticipated,” Burgess comments.

With each increment of warming, extreme weather events become increasingly frequent and severe. The January 2025 wildfires in Los Angeles may potentially mark the most costly natural disaster in U.S. history, exacerbated by the climate crisis which will likely double their frequency and amplify their severity by 25 times. Hurricane Melissa, the most powerful storm to make landfall in the Atlantic, had wind speeds at least 10 miles per hour higher than would normally be expected without climate change.

“This figure represents a global average; thus, 1.5 degrees Celsius of global warming means that heatwaves can be 3 to 4 degrees, or even 10 degrees hotter than usual,” Burgess explains. “The younger generation will face even more extreme heat and climate risks than we did.”

The polar regions are warming at a pace faster than others, mainly due to feedback mechanisms, such as the loss of reflective snow and ice. In fact, last year witnessed record warmth in Antarctica, attributed to an unusual stratospheric heating event. The extent of sea ice across the Arctic and Antarctic has now reached unprecedented lows.

On a positive note, global emissions are showing a leveling-off trend, specifically in China, where emissions have stabilized.

“With CO2 emissions plateauing, we anticipate continued warming, but not at an accelerated rate,” states Timothy Osborne of the University of East Anglia, UK.

Addressing methane leaks from infrastructures like gas pipelines and aging coal mines could provide a short-term solution, King suggests. Reducing methane emissions by 30% over the next decade could mitigate global warming by at least 0.2 degrees Celsius by 2050.

“We must also tackle other slow-moving issues, which are vital elements of our path forward,” King asserts. “An overshoot beyond 1.5 degrees Celsius presents significant challenges for humanity.”