Assessing the impact of climate policies and risks on the macroeconomic situation of EU countries

Abstract

Extreme weather events and the need to trigger the necessary adaptation processes in the economy are a source of direct and indirect climate risks. The diverse nature of climate change means that geographical regions are exposed to incur financial losses to varying degrees, with implications for the country's macroeconomic situation. This variation can also lead to a geographical concentration of risk and undermine financial stability. The aim of the study is to present climate risks and their impact on changes in the socio-economic situation, including the financial situation of economies, labour markets and living conditions related to pollution and environmental change. The study undertook an overview of legal regulations, theoretical aspects, research findings, including the Yale Center for Environmental Law & Policy. Statistical data sources were drawn from Eurostat, the OECD, and the World Bank. The findings indicate that Southern and Western European countries are most exposed to the physical risks associated with climate change, including deteriorating living conditions associated with pollution. There is a growing demand for ESG experts in the labour market. The 2024 Environmental Performance Index (EPI) provides, that countries' wealth is a strong predictor of their overall environmental performance, but some countries vastly outperform their eco-nomic peers, while others lag. Among the leaders of the greenest countries are Estonia, Luxembourg, Germany, Finland and United Kingdom, and Poland (19th position).