Deloitte "Immediate Response to Climate Crisis Could Generate 2,300 Trillion KRW in Added Value by 2070"

[Asia Economy Reporter Ji-hwan Park] An analysis has revealed that if South Korea does not respond to the climate crisis, the cumulative economic loss over the next half-century could reach 935 trillion won. Conversely, immediate action is expected to generate an added value of 2,300 trillion won.

On the 23rd, the Korea Deloitte Group, including Deloitte Anjin Accounting Firm, released the climate change economic report by the Deloitte Economics Institute titled "Turning Point for the Korean Economy? Climate Action Drives Our Economic Future," which directly shows the correlation between climate action and economic growth.

According to Deloitte’s analysis of future economic scenarios, if South Korea either fails to respond or responds inadequately to the climate crisis, the cumulative economic loss over the next 50 years is estimated at approximately 935 trillion won in present value terms. This corresponds to about 2.5% of the projected GDP in 2070.

The report anticipates significant economic damage from climate change to advanced manufacturing and service industries, which are the main pillars of the Korean economy, posing a major threat.

Deloitte analyzed that in the manufacturing sector, climate change will cause annual average losses of about 8 trillion won over the next 50 years to infrastructure related to ports and coastal areas. The service industry, closely linked to the overall economy, is expected to suffer massive annual average losses of 18 trillion won.

Additionally, damages from extreme weather events caused by global temperature rise and decreased labor productivity are predicted to result in annual average losses exceeding 10 trillion won across retail, tourism, construction, and energy sectors.

On the other hand, Deloitte forecasts that if South Korea takes bold climate action aligned with the goal of limiting global temperature rise to 1.5°C by 2050, it could expect approximately 2,300 trillion won in additional economic benefits by 2070.

This equates to an increase in GDP of about 295 trillion won in 2070 alone, comparable to adding one of the highest-value multinational corporations to the Korean economy. Baek In-gyu, Chairman of the Korea Deloitte Group Board and ESG Center Head, emphasized, "The next decade is a crucial turning point that could change the course of climate change, perhaps one that will never come again," and added, "A shift in perspective is needed to recognize proactive climate action not as a cost but as an investment opportunity to secure our country's future economic growth."

The Deloitte report outlined a four-stage decarbonization pathway for the Korean economy. The first stage, from now until 2025, is described as a preparatory phase for bold climate response, during which rapid decision-making by key market participants such as the government, companies, and consumers will send changed price signals to the market, laying the groundwork for decarbonization.

The second stage, from 2025 to 2040, involves achieving change through more aggressive investment expansion, policy development, and systematic transformation of the economic and social structure. Although structural transformation entails costs, accelerating the energy sector transition will simultaneously allow benefits from alternative renewable fuel resources.

By the third stage, from 2040 to 2050, it is expected that the high-emission economic structure will be largely dismantled. Economic net gains from technological innovation and progress will expand more broadly across key industries such as trade, construction, and services, marking an important turning point for both climate and economy. The final stage, post-2050, envisions establishing a low-carbon future structure through carbon neutrality and eco-friendly economic growth.

Lee Ok-su, Korea Deloitte Group Climate Action and Sustainability Leader, stated, "South Korea can serve as an innovative technology hub providing technology and innovation for global transformation," adding, "By leading decarbonization technologies, which have emerged as new economic drivers, our country can drive long-term economic growth."

This content was produced with the assistance of AI translation services.