As environmental and extreme weather-related risks escalate globally, BCG Global Chair Rich Lesser joins Catalysts to discuss the crucial importance of the energy transition in light of increasing energy use and technological advancements.

Lesser emphasizes that both the number of individuals affected by and the financial costs of extreme weather-related disasters are set to rise. He notes, "the scary part" is that current disasters are occurring at a 1.2-degree rise in global temperature, while the world is on track for a potential 2.5-degree or higher increase.

Lesser explains the impact of these extreme conditions on personal finances is significant. "People are going to start to realize more than they realize right now is it's not just the impact in the moment. It's things like insurance, the amount of savings that goes to covering these issues. I mean, we're watching insurance costs go up, we're watching lack of availability of insurance, we're watching insurance coverage—what is actually covered in a storm— go down, so people are more exposed personally even if they technically have insurance," he told Yahoo Finance.

Lesser outlines two critical steps to combat these risks: a clean energy transition and increased access to affordable technology to slow the rate of global warming and a focus on adaptation and resilience: "It has a very high payback to protect things more, and we're going to have to do more of that."

Regarding the artificial intelligence boom, Lesser predicts that power requirements for this technology will double and grow. However, he notes that despite being "power hungry," Big Tech companies like Meta, Apple, and Google have committed to managing energy use responsibly. "I think we will see a lot of creativity, but it's a heavy lift because the amount of power that's going to be required is just enormous."

Lesser concludes by emphasizing the need for government action: "This is going to require governments to work at a different pace. To do their environmental reviews, to do the things that they want to do to protect society, which we all respect. But we all know how much bureaucracy can creep into those sorts of processes," he told Yahoo Finance.

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This post was written by Angel Smith