The following is an edited transcript of an interview with Professor Tim Lenton OBE, Chief Scientific Advisor at Trex, on the release of the Global Tipping Points Report 2025.

Q. What are the implications for the financial sector of the recent Global Tipping Points Report?

 I think financial firms are only just starting to think about the non-linear risks of tipping points in the climate and realising that they're an issue for their asset holdings.

In our latest Global Tipping Points report, we actually identify that the world has crossed its first climate tipping point for the widespread dieback of tropical coral reefs — reefs that provide what are called ecosystem services valued at over $2 trillion per year, including supporting abundant fisheries, but [also] protecting large stretches of coastline behind them from the effects of storm surges that can really damage coastal infrastructure, which some financial firms will be invested in.

Q. The report highlights permafrost thaw and the potential slowdown or collapse of the Atlantic Meridional Overturning Circulation (AMOC) as major systemic tipping points. How are these two risks interconnected & how might they manifest in the real world?

If the AMOC were to collapse first, that might actually cool the high northern latitudes, at least in the winter. So if anything it might slow the permafrost thaw, but right now we think [the order is the other way around] with the permafrost thawing escalating first.

This AMOC tipping point — that's really special in the sense that it will change the pattern of climate, it'll even change the direction of climate change in some parts of the world. We are talking about a system of ocean circulation that transports a massive amount of heat from the South Atlantic across the equator into the North Atlantic region. If we lose that, then for the UK, suddenly our winters, we will see the sea ice descending down across the North Sea to somewhere level with Norfolk. We'll see London experiencing potentially three frozen solid months a year. In Edinburgh, nearly six frozen months a year as these arctic winds blast across the sea ice.

In simple terms, for financial sector actors, that's a lot of challenges to our infrastructure, not to mention crises in food and water security. So I think a lot of assets, including infrastructure and real estate assets, will suddenly be lower in value in northwestern Europe. And there'll be some businesses that are going to be needed and that you'd want to invest in if we're going to stay in Northwest Europe in this scenario, because we'll have to build a whole new infrastructure.

Q. How quickly might those cascades play out once triggered?

There's probably two timescales we want to concern ourselves with. How long is it till we reach the tipping point? And then how long does it take for the consequences of passing the tipping point to fully unfold?

Because those consequences might be irreversible, but that doesn't mean they arrive immediately. So if we take the example of the AMOC tipping point, how close could we be? In our latest Global Tipping Points report, the specific case study on this with some of the world's experts conclude that we can't rule out that we might have crossed it already.

Because its consequences are not felt immediately, it takes a timescale of multiple decades for the full force of the impacts to be felt. In that transition time, there will be decades where you see a fast response from the atmosphere. Say, suddenly the jet stream position in the winter might shift markedly and the winter storms might really pick up in ferocity for the UK, or in some of the models what will happen is they disrupt the monsoon in West Africa or India, and there'll be a particular decade where suddenly there's major, major change in those vast atmospheric systems.

Q. Do we need to be concerned if we're looking at short-term risk?

The whole financial system relies on things being insurable, and it relies on assets being correctly priced, and the insurability of things and the correct pricing of assets — they are related to the climate, and some of the climate tipping points that we've highlighted, even ones that might unfold slower than the short-term horizons of the financial sector, are ones that would severely reprice assets and make some things uninsurable. And so those apparently future consequences would definitely get brought into the present.

[Let's say] we've passed the tipping point for the AMOC and [that] it's now irreversible: what my pension fund colleagues tell me is that at that point they would immediately reprice assets because they would think they would be worthless eventually — even if "eventually" is many decades in the future.

Q. Current physical risk models and climate scenarios used in finance are largely linear. What are the key ways they fail to capture tipping dynamics, and how might that distort portfolio risk assessments?

When we talk about a model being linear, we mean that output is roughly proportional to input. And the whole point about tipping points — whether they're "bad" tipping points in the climate or "positive" tipping points in transforming the economy — is that output isn't proportional to input. Sometimes, a small difference in input makes a huge difference in output. So if you are still stuck with largely linear models and forecasts, you're going to miss instances in the transition where change becomes exponential, as it is now for the uptake of solar panels.

And if you'd stayed invested in fossil fuels, you might be starting to take some losses because, for example, in the mobility sector, if you had a linear projection for how electric vehicles (EVs) were going to take over, but the reality turns out to be exponential — and then follows what we call an S-curve — what you learn is that the oil firms you were invested in, their value was mispriced because they believed they'd be able to sell a whole load of oil to propel a whole bunch of cars in the future that aren't going to exist because everything's gone electric.

Q. If you were advising long-term investors, what mindset or analytical shift would you encourage to help them navigate a world where tipping dynamics increasingly drive value and risk?

I would really encourage them to think laterally and creatively about possible futures before they worry about the detail. So we've all lived through a pandemic that I don't think many people were expecting or saw coming, and even when it started, we completely misjudged what its repercussions would be.

If we're old enough, we lived through a financial crash in 2007-8. We've seen extraordinary policy reversals with the re-election of President Trump. What we need long-term investors to be doing, first and foremost, is thinking what is the panoply of possible futures that could unfold? Let's dig around a bit, let's consider what might seem a little bit crazy but can't be ruled out. And let's first of all, equip ourselves. There's some radically different futures here — that's a really good starting point so that you're not going to get blindsided.

Beyond that, I would encourage a kind of empowerment that comes from realising that also the long-term investors are very significant actors within the system. They have a lot of capital, and they can actually influence the outcome. So I'd encourage them also to think about their own agency to determine which of these possible futures will unfold.

Q. How should firms talk about tipping points — internally and with clients — so it fosters understanding and drives action rather than overwhelm, especially given the scale of the challenge and the lack of immediate urgency in finance?

I've anchored on the concept of tipping points not because it's scary or disempowering, but because it is a useful way of understanding some crucial aspects of what's undoubtedly a complex climate system and a complex economic system.

I think everybody can intuitively grasp the idea of a tipping point. If I encourage you to lean back on a chair to the balance point — as we've all done — you have a sense that sometimes a small change makes a big difference to your fate. That matters clearly for the climate tipping point risks, but also in a good way for the positive tipping point opportunities.

[Tipping points] are actually a tool to stop people suffering [from] what I call "paralysis by complexity". Everybody needs some cut-through on that, and that's what what I'm encouraging others to do — to see that tipping points encapsulates both the really important bad risks we need to know about and the key opportunities we need to know about.

One can also communicate on the positive tipping points the agency that we all have. Major investors, particularly in clean technologies, [can] shape that future and trigger positive tipping points. So whilst engaging with clients might be partly sobering for them as they're told about tipping point risks in the climate that they hadn't thought about, at the same time you can give your audience agency by explaining to them the disproportionate influence they can have in triggering positive tipping points.