With a foreseeable pattern of climatic and natural disaster crises in 2022, we anticipate that public opinion will increasingly be at odds with government action. Policy proposals that follow COP26 are likely to be held up in debate and discussion, meaning that global action will be slow. Although major polluters such as China and the US have committed to net-zero emissions by 2050, they have made no discernible progress yet on backing that up with policy. 

With no major power truly leading on climate policy, COP26 and other attempts to form wide-ranging international agreements on reducing emissions in 2022 are unlikely to lead to rapid or radical action at scale. This will also sustain uncertainty for businesses about longer-term regulatory frameworks.

The European Union is one potential exception to this. It unveiled draft policies in mid-2021 that position the bloc as a global leader on the ambitious implementation of climate policy. These policies involve tax rises on polluting items, and tariffs on imports of products that come with a high carbon emissions cost. We forecast that the bloc’s member states will approve a slightly watered-down version of the draft policies in late 2022 or early 2023. 

While this would be a significant step, it is likely to cause rifts with some trading partners. In particular there is some potential for China, India and Russia to impose retaliatory measures such as trade barriers. In any case, it is very likely that there will be strong opposition from affected sectors in Europe. We have already seen indications from some trade unions that they intend to hold lengthy strikes in opposition to the proposals. Disruption to supply chains is probable, with haulage workers particularly likely to join walk outs.

Amid these tangible, material and near term impacts of climate change, public pressure on governments and businesses to address climate change is almost certain to intensify. It is highly likely that an ever-more-acute sense of urgency will widen the gap between what even the most committed governments are doing and what people and businesses expect. This will mostly drive protests and activism in countries with accountable elected governments. But is equally likely to represent real political, reputational and, in some cases, security risks for businesses.

A divergence between publics and their representatives carries serious implications for public trust in institutions, and the regulations that they implement. Polling conducted by the EU in 2021 shows that 93% of the bloc’s population now believe climate change to be a ‘serious problem’. While similar research by the UNDP suggests generational changes will further strengthen public support for strong action over the coming years. It shows that younger age groups globally are much more likely to view climate change as an ‘emergency’. 

It seems unlikely that public pressure alone will drive governments to take more radical actions on climate change in 2022 beyond what they already pledged at COP26. And even then, it is quite probable that many will fall short on their pledges and fail to deliver clear and achievable time frames for actions to ameliorate growing frustrations and concerns. The economic cost of the Covid-19 pandemic is likely to deter many governments from implementing policies that may be immediately costly, amid concern of undermining economic recovery from the pandemic. 

This is particularly the case in the EU and the US, which alongside China, account for the vast majority of global emissions. The Climate Action Tracker – an independent scientific analysis that tracks government climate action and measures it against the Paris Agreement aim of ‘holding warming well below 2°C – scores the EU’s current policies and action as ‘almost sufficient’, and that of China and the US as ‘insufficient’. Already some governments have signalled a lack of conviction and commitment to agreements made at COP26. Indonesia’s criticism of a zero-deforestation deal is one such example.

Beyond the immense human and financial cost of extreme weather events, the impacts of both slow-onset and sudden-onset climatic crises are likely to cascade into other areas compounding wider instability and economic pressure in 2022. Instability in countries due to adverse weather events threatens to sustain ongoing disruption to global supply chains as well as inflationary pressure. We anticipate natural disasters in 2022 having an even bigger impact on these critical areas, impeding the global recovery from the pandemic.

The financial impact of climate change events also increases the debt burden of already vulnerable countries, and adapting to them will demand ever higher amounts of international public finance. This will put more pressure on fiscal budgets already squeezed by the pandemic, and raises the prospect that urgent support for poorer nations will fall short of what is required. The UNEP Adaptation Gap Report 2016, estimates that by 2030 the increasing impacts of climate change will result in global adaptation costs of $140-300 billion annually.

Research and modelling by the World Health Organisation also points to increases in transmission patterns of serious diseases such as malaria as a result of climate change, further adding to the destabilising human impacts and costs of climate change now and in the coming years. Credible estimates of annual deaths that already result from these patterns vary hugely from the hundreds of thousands to the millions. The indirect impacts of loss of life and disease from slow and sudden-onset climatic crises is much harder to measure. But it is in South Asia, Sub-Saharan Africa and the Sahel that we see the closest observable correlation between climatic and security risks, particularly civil conflict and intercommunal violence. 

Competition over ever-more-scarce resources due to climate change has contributed to sharp increases in intercommunal violence across much of the Sahel and Sub-Saharan Africa since at least 2018. We forecast that as the adverse impacts of climate change persist, if not worsen, it will compound the unstable political and economic situations in those countries. In 2022 major economies in the region such as Cote d’Ivoire, Kenya, and Nigeria will probably be among the worst affected, alongside already unstable countries like Burkina Faso, Chad and Ethiopia. 

Insecurity and a lack of opportunity in these regions, and in South Asia, is already a driver of migration towards Europe, which as we note in this Strategic Outlook presents a chronic strategic challenge to the EU particularly. The EU border agency recorded a rise in the number of people travelling on the western and central Mediterranean routes to Spain and Italy respectively in 2021. A long-term rise in migration numbers is probable over the coming year given the converging pressures of conflict, instability and climate change. 

Ongoing pandemic restrictions may temporarily contribute to somewhat reduced numbers as was the case in 2020 and 2021. But the cost of brain drain in poorer countries and the political fallout in developed nations seem all too predictable; the trends are clear. The Migration Data Portal reported there were around 7m displaced people at the end of 2020 due to disasters. The Institute for Economics and Peace projects said that 1.2bn people could be displaced by climate-related events by 2050. 

With government policies falling far short of what climate science prescribes and what concerned citizens expect, a widening and intensification of climate change activism is almost certain. And with governments unwilling or unable to take the necessary measures with sufficient haste, businesses are ever more likely to be targets of pressure to adopt climate-friendly practices and in turn apply pressure on other businesses to follow suit. 

While many businesses, particularly in high-emissions and finance sectors, have become used to dealing with environmental activist groups calling for boycotts and holding protests, the situation is becoming more complex. If businesses fail to adapt, such activist pressure is likely to increasingly come from investors, shareholders, customers and employees. 

Activist shareholders had some success against oil and gas firms in 2021, including by forcing changes in board membership. In two specific examples climate activists managed to replace board members of ExxonMobil who then voted for a greener strategy. At Chevron a majority of the shareholders rebelled against the board by voting for an activist proposal.

This has shown the effectiveness of such an approach in how small groups of shareholders have been able to swing key votes in their favour, and suggests more will follow in 2022. The growing public support for radical action on climate change will also make it easier for activist shareholders to gain broader backing. In 2021, businesses faced the most investor resolutions in AGMs tied to climate change in years, with 79 in the US alone, and eight in UK FTSE 100 companies. In 2021, 457 investors released a statement ahead of COP26 urging governments to set ambitious targets and implement climate policies or lose out on trillions of dollars in investment. 

Employees are another source of activist or legislative pressure on businesses in relation to climate, although one we do not anticipate becoming particularly widespread in 2022. Extinction Rebellion launched a campaign in the UK in early 2021 that encouraged whistleblowing by people frustrated by their employer’s environmental practices. There have been few, if any, instances of this as far as we have seen. But given shifts in public opinion towards the climate crisis, we anticipate that major climate-related scandals involving companies would prompt both activist and legislative backlash.

Climate change-related direct action activism has until 2021 mainly been an issue in western countries. And it has more often than not been directed at major emitters and those that finance or insure them or otherwise enable them. This is likely to spread slowly to other less well developed countries in 2022. But such activism will probably remain most intense in Europe, the US and Australia. There were some 200 protests coordinated worldwide during COP26, although outside of the UK as the host of COP26, these were mostly small gatherings by comparison. For example, we tracked protests in Uganda, Zambia, South Africa, Sierra Leone, Tanzania, DRC, Brazil, Argentina and South Korea. 

This large number of protests around the world was perhaps unsurprising given the stakes at play during COP26. But there seems to be little momentum behind local activist movements outside of western countries to mobilise larger numbers of people to take more robust forms of protest action. This is probably a reflection of what protests can really achieve in less wealthy countries where there are higher levels of intolerance towards civic activism. Western countries are responsible for the majority of global emissions and their open democratic systems enable activism to flourish. 

This is the inverse of China, which despite being one of the single biggest emitters, has a suppressive stance towards activism, meaning we expect to see little pressure within China on the government or on Chinese businesses. The broader global trends of rising authoritarianism that we forecast in this Strategic Outlook suggest direct action on climate change is very likely to remain a western phenomenon in 2022. And more broadly, it seems that it will be western businesses that will probably lead the way in driving material change, not just because of activist pressure or legal or regulatory requirements, but because of business imperatives and the risks of inaction to their future competitiveness. 

Nevertheless, the operational and strategic challenges facing organisations are only likely to grow in the coming months and years. The COP26 summit showed that there is still little common vision among major polluters about how to address climate change. Beyond contrasting political views on climate change, the financial impact of the Covid-19 pandemic will probably continue to act as a drag on any significant policy action on climate. As at COP26, ensuring a sustainable financial environment alongside a green transition will most likely remain counter-arguments to those pushing for faster action.◼