The world has reached a pivotal moment when threats related to the Earth system's "tipping points" ("tipping points") are accelerating, a new report shows: the Global Tipping Points Report, the most comprehensive assessment of "tipping points" ever conducted, says humanity is now on a disastrous trajectory. However, there are many positive tipping points that can accelerate the transition to a zero- or negative-emissions economy. The challenge lies in seizing them.
The report was produced by an international team of more than 200 researchers, coordinated by the University of Exeter, in collaboration with the Bezos Earth Fund. Francesco Lamperti, Associate Professor at the Institute of Economics of the Sant'Anna School, co-author of the report and principal investigator of the ERC project "FIND", was responsible for analyzing "tipping points" in the financial system.
The speed of the phase out of fossil fuels and the growth of zero-emission solutions will now determine the future of billions of people. The report states that current global governance appears inadequate for the scale of the challenge and makes six key recommendations for changing course quickly, including coordinated actions to trigger positive tipping points.
A tipping point occurs when a small change initiates an often rapid and irreversible transformation, and the effects can be positive or negative. Based on an assessment of 26 negative tipping points in the Earth system, the report concludes that "business as usual" is no longer possible, with rapid changes already underway in nature and societies, and more on the way.
With global warming now set to exceed 1.5°C, at least five Earth system tipping points are likely to occur, including the collapse of major ice sheets and widespread mortality of warm-water coral reefs. As the Earth system tipping points multiply, there is a risk of catastrophic loss on a global scale of the ability to grow key crops, according to the report. Without urgent action to halt the climate and ecological crisis, societies will be overwhelmed as the natural world crumbles.
Alternatively, emergency global action-accelerated by the leaders' meetings now at COP28-can harness positive tipping points and steer us toward a prosperous and sustainable future. The report outlines a strategy for doing so and states that bold, coordinated policies could trigger positive tipping points in multiple sectors, including energy, transport and food, and finance. A cascade of positive tipping points would save millions of lives, billions of people from hardship, trillions of dollars in climate-related damages and begin to restore the natural world we all depend on.
"The financial system," says Francesco Lamperti, "has often played a destabilizing role, amplifying small frictions and causing long-term cascading effects on the real economy, industry and employment. Faced with the risks posed by unchecked change and possible tipping points, the financial system is not adequately equipping itself and - indeed - with its fragility could exacerbate the chain of losses and failures induced by climate impacts. Avoiding these negative feedbacks is priority number one."
"However," Francesco Lamperti continues, "finance not only amplifies negative economic shocks, but can also assume a crucial role in facilitating technological revolutions and the rapid diffusion of infrastructure, products and services. Financial actors, particularly public investors, actively contribute to the advancement and implementation of innovative technologies, extending their involvement beyond simply providing funds. They can participate in managing the innovation process, taking on the role of financial entrepreneurs, betting on the technologies of the future even if they are risky, and coordinating the expectations of private investors and markets toward processes that - once triggered - are self-sustaining."
Finance thus has the ability to accelerate or hinder the diffusion of new products and technologies, particularly those of utmost importance for the transition to a low-carbon future. However, the report shows how this is not yet happening.
"To date," concludes Francesco Lamperti, "the financial sector is powering an economy firmly anchored a trajectory toward about 3°C by 2100. Exploiting the 'tipping points' that could be generated in the financial system and its markets will be critical to reorient the economy toward a net emissions trajectory compatible with the 1.5-2°C target of the Paris Agreement."