Banks prepare for a 3°C world

The Climate, Health & Equity Brief is GMMB’s take on the latest news on the current impacts of climate change. If you haven’t subscribed yet, you can do so by clicking here.

Hot Topic: Risky business. As global financial markets continue to reel this week from Trump’s tariff whiplash, quieter news focused on separate actions of major financial institutions in the face of political pressure—and an escalating climate crisis.

According to the current signals from Wall Street, banks no longer view dangerous temperature increases as a preventable emergency, but an inevitability to prepare for. JPMorgan Chase, Morgan Stanley, and the Institute of International Finance have all signaled they are planning for a 3°C increase in global temperatures—double the Paris Agreement limit, and a scenario projected to bring widespread devastation and global economic disruption. This view is now shaping how investment portfolios and insurance risk models are being built.

Given the grim outlook, U.S. banks are now advising clients on ways to profit from the crisis by investing in sectors like air conditioning. Morgan Stanley projects that the $235 billion global cooling market could more than double its annual growth rate under a 3°C scenario, which in turn would drive up electricity use, further worsening emissions and straining power grids.

Meanwhile, a growing number of financial institutions are pulling back from climate-aligned strategies by exiting global alliances, reducing ESG disclosures, and scaling down their public commitments. And corporate America seems to be following suit, with mentions of climate change down 76% on Fortune 500 S&P earnings calls in recent years.

This week, a representative for Allianz SE, one of the world’s largest insurers, warned that entire sectors like housing, infrastructure and agriculture could become broadly uninsurable within the next two to three decades, putting the entire global financial system at risk. That concern is echoed by a new study from the University of New South Wales, which finds that 4°C of warming—on the high end of forecasts, but which the IPCC has not ruled out—could cut global GDP by 40%, with cascading impacts across supply chains, even in countries once seen as relatively insulated.

Human Health

An international team of scientists warns in a new study that climate change is unleashing ancient microbes and accelerating the spread of infectious diseases in the Arctic, which could have far-reaching consequences for global health. (Phys.org)

Dengue fever is rapidly intensifying due to climate change, and scientists say the Trump administration’s cuts to NIH climate and health research threaten to worsen its spread by dismantling the scientific infrastructure needed to track, understand, and fight the disease. (Grist)

At least 24 people are dead, and millions across the Midwest and South are enduring severe flooding after a wave of deadly spring storms brought record rainfall and tornadoes, prompting evacuations and power outages and causing widespread damage across multiple states. (NBC News)

Relentless flooding has killed at least 33 people, submerged neighborhoods, and severed vital roads in Kinshasa, Congo, where overflowing rivers and collapsed walls leave hundreds stranded and desperate for government aid. (AP News)

Planetary Health

A new study reveals that Arctic glacier retreat has exposed more than 1,500 miles of new coastline and 35 new islands since 2000—transforming the Arctic’s geography, increasing tsunami and erosion risks, and threatening ecosystems that depend on glacial habitats. (Carbon Brief)

Three NASA satellites launched between 1999 and 2004 could soon go dark with no immediate plans to replace them, prompting concern from scientists about the loss of climate and atmospheric data that includes measurements of Earth’s ozone layer and solar radiation levels. (E&E News)

Scientists warn that ground-level ozone pollution—fueled by climate change and fossil fuel emissions—is emerging as a major threat to global health, slashing crop yields, harming ecosystems, and causing up to 1.4 million deaths per year. (Mongabay)

A new report found that in 88% of 144 U.S. cities studied, hourly rainfall rates have increased an average of 15% since 1970, enhancing risks for flash flooding, landslides, and damage to crops and infrastructure. (Axios)

Equity

Seven Indigenous nations have withdrawn from conversations about a new oil and gas pipeline expected to run underneath Michigan’s Great Lakes, citing federal failures to consult Tribal governments and protect treaty rights. (Grist)

The EPA’s $1.5 billion in grant cuts have gutted climate protections in vulnerable rural and Indigenous communities, leaving them exposed to wildfire smoke, floods, and other worsening threats amid political backlash against environmental justice. (The Washington Post)

With the EPA’s rollbacks of water and air pollution rules, advocates warn that children in frontline communities are at greater risk from toxic emissions, especially in heavily industrialized areas like Louisiana’s “Cancer Alley.” (Floodlight)

Children across the U.S. are losing their classrooms, homes, and support systems in the wake of climate disasters, with Black children bearing the brunt of these impacts, facing disruption to their education, stability, and well-being. (Capital B News)

Politics & Economy

Administration Watch:

• Mr. Trump issued an executive order to block state laws that advance climate action, ESG policies, environmental justice, and emissions reductions. (Reuters)
• Mr. Trump unveiled sweeping executive orders to revive coal by slashing environmental rules, expanding mining, using emergency powers to keep plants open, and challenging state-level coal restrictions. (The New York Times)
• The Trump administration has gutted the National Climate Assessment by canceling its core contract, effectively halting the development of the government’s primary climate report. (POLITICO)
• Mr. Trump’s SEC is abandoning rules requiring companies to disclose climate risks, a move a federal court is expected to rule on later this year. (Semafor)
• The Trump administration plans to dismantle FEMA’s largest climate adaptation program, BRIC, cutting off billions in resilience funding to vulnerable communities. (Grist)
• The Administration has fired the entire staff of the $4.1 billion LIHEAP program, which helps low-income families across the U.S. pay their heating and cooling bills. (The New York Times)
• The Pentagon has abandoned decades of military climate research and resilience planning, which experts warn will weaken U.S. national security. (USA Today)

A top executive at Allianz, one of the world’s largest insurers, has warned that unchecked climate change threatens to collapse capitalism by making vast swaths of the economy uninsurable within the next two to three decades. (The Guardian)

Top U.S. banks now project that global temperature increases will reach 3°C due to stalled efforts to cut emissions and are advising clients on ways to profit from the crisis by investing in sectors like air conditioning. (POLITICO)

Experts warn that after pulling out of the Net-Zero Banking Alliance due to political pressure and the pursuit of short-term profits, U.S. banks have left themselves exposed to long-term climate risks and potential financial instability. (Bloomberg)

Mentions of climate change have plunged on S&P 500 earnings calls—down 76% compared to three years ago—as major companies retreat from public climate commitments under political pressure from the Trump administration. (Grist)

Industry leaders warn that President Trump’s sweeping tariffs are poised to disrupt the global clean energy transition by driving up costs, severing supply chains, and deterring investment in U.S. renewable energy projects. (The New York Times)

A new report warns that climate-driven coastal flooding could wipe out 82,000 homes in the New York region within 15 years, deepening an already severe housing shortage and exposing the urgent need for resilient development. (The New York Times)

A new “climate realism” initiative from the Council on Foreign Relations says the U.S. should treat climate change but focus less on costly emissions cuts and more on infrastructure resilience, innovation, and preparing for a hotter, more volatile world. (Axios)

Red states like Louisiana, Oklahoma, and Texas are emulating DOGE’s government-slashing model at the state level by creating agencies focused on cost-cutting measures that could hobble environmental regulation and oversight. (POLITICO)

Extreme weather destroyed more than $20 billion in American crops last year, yet most federal aid is set to benefit large industrial farms, leaving smaller farmers—who are often more vulnerable to climate impacts—struggling to recover. (Grist)

The EU is exploring ways to weaken its 2040 emission reduction commitment, prompting warnings that the move will further undermine global momentum to achieve climate goals. (POLITICO)

A new study found that a global rise in temperatures of 4°C would wipe out 40% of global GDP, quadrupling a previous estimate and signaling that the potential economic benefits of climate action may have been significantly undervalued. (The Independent)

A new study of Christian leaders across denominations found that 90% believe in human-induced climate change, but about half have never discussed it with their congregations. (The Hill)

Action

Since 2013, sub-Saharan Africa has invested $350 million annually in renewable energy, leading to a significant rise in capacity, powering cities and businesses, contributing to economic growth, and reducing greenhouse gas emissions despite financial challenges. (Climate Home News)

Life as We Know It

Rising temperatures in the Champagne region of France, which have already led to earlier harvests, are causing a looming identity crisis as producers must now consider growing their grapes outside of the region to preserve the quality of their product. (Bloomberg)

As climate change continues to disrupt coffee production in Colombia, the world’s third-largest coffee producer, researchers are working to develop crops more resistant to extreme weather events and harmful insects and diseases. (Mongabay)

Kicker

Curious about sea level rise and coastal flood risk near you or your loved ones? Check out Climate Central’s new interactive Coastal Risk Finder, where you can search your city, town, or legislative district for specific risks over time.

The economic value of entire regions…will begin to vanish from financial ledgers. This is what a climate-driven market failure looks like.”

– Günther Thallinger, Allianz SE

The GMMB Climate, Health & Equity Brief would not be possible without the contributions of the larger GMMB team—Catherine Ahmad, Aaron Benavides, Stefana Hendronetto, Nikki Melamed, Sharde Olabanji, Kenzie Perrow and Marci Welford. Feedback on the Brief is welcome and encouraged and should be sent to [email protected].