TOPLINE Leading companies like Nestle, Delta Air Lines and Clorox are among dozens of global firms “highly exposed” to climate hazards, a leading group of investors warned Thursday, as they urged businesses to do more to address the risks of climate change.
KEY FACTS
Fifty at-risk companies around the world are more likely to be threatened by natural disasters like floods, wildfires, extreme heat and hurricanes, according to the Institutional Investors Group On Climate Change (IIGC).
More than 50 IIGCC members—who represent some $10 trillion in assets and include Lombard Odier and Impax Asset Management—urged the at-risk businesses to do more to identify and respond to the threats in a letter Thursday, Reuters reported, and the IIGCC issued guidelines for what it expects all companies to be doing to tackle the issue.
The investors’ recommendations include developing strategies to cope with physical climate risks, building resilience to these risks, including the risks in climate governance frameworks and reporting them over time to better measure progress.
The physical risks of climate change also present some opportunities to business, the IIGCC report said, like providing businesses with the opportunity to develop and adopt new technology, offer new products and services and improve their processes and infrastructure.
IIGCC chief executive Stephanie Pfeifer said it is “more important than ever” for investors to understand and account for the risks of climate change, adding that “companies cannot afford to ignore the impact” it might have on business.
CRUCIAL QUOTE
While investor pressure has been building for businesses to reduce carbon emissions, the more tangible physical threats can be overlooked. Marion Maloney, Head of Responsible Investment & Governance at Britain’s Environment Agency Pension Fund, told Reuters there are “two parts to the climate change debate” and physical risks are often sidelined.
KEY BACKGROUND
While critics often deride the costs of moving towards a greener economy, climate change is far more expensive, according to the European Central Bank. In the U.S. alone, there have been a number of climate-related disasters this year, including severe heat waves, cold snaps, droughts, wildfires, storms and hurricanes. Around the world, the number of weather-related disasters have increased fivefold in the past 50 years and have become more costly but less lethal, according to a new report by the World Meteorological Organization. Seven of the costliest ten disasters—including the top six spots—were driven by storms and hurricanes in the U.S., the WMO found, and U.S. losses from extreme-weather events account for 38% of all global economic losses ($1.4 trillion). Estimates suggest Hurricane Ida, which made landfall in late August, could join this list. Experts overwhelmingly attribute this increase in severe weather to human-driven climate change.
FURTHER READING
Exclusive: Centrica, Nestle, Swatch among companies exposed to physical climate risks – investors (Reuters)
By Robert Hart, FORBES STAFF