By Lise Alves, Contributing Reporter
MIAMI BEACH, FLORIDA – Some of the world’s largest companies, representing nearly US$17 trillion in the global market have valued the climate risks to their businesses at almost $1 trillion, says a report published by the CDP, a non-governmental organization which operates a global disclosure system for environmental information.
“Our analysis shows that there are a multitude of risks posed by climate change, including impaired assets, market changes and physical damages from climate impact, as well as tangible impacts to business bottom lines,” noted Nicolette Bartlett, Director of Climate Change at CDP.
According to the study, these companies see almost half of their loss estimates ($500 billion) as almost certain.
According to CDP, over eighty percent of the companies in the study expect major climate impacts in the years to come, ‘including extreme weather patterns, rising global temperatures and increased pricing of greenhouse gas emissions’.
Bartlett says that the increased awareness of economic losses due to climate change is probably brought about by a new mind-set from investors who want to know that their investments are being applied to sustainable projects and products.
The study, however, suggests that many companies still underestimate the dangers related to the phenomenon, and the director worries that smaller companies will not follow this new trend.
“It is likely that this growing awareness is partly caused by the increased scrutiny of regulators and stakeholders. And the potential gaps in awareness and disclosure elsewhere in the economy present real risks. Regulators and investors should take note, and all companies from all industries need to step up,” says Bartlett.
While the study showed the possibility of losses due to climate change, it also showed cumulative gains of nearly $2.1 trillion from business opportunities related to climate change.
According to the entity, these opportunities include increased revenue through demand for low emissions products and services (such as electric vehicles), shifting consumer preferences and increased capital availability as financial institutions increasingly favor low-emissions producers.
On average the potential value of climate-related opportunities is almost seven times the cost of achieving them. Given this, investors and stakeholders could expect to see a significant shift in climate-friendly products and services from the world’s largest companies, reports the CDP.
“It is hugely encouraging that companies are reporting that the potential value of climate opportunities far outweigh the costs of investing in the transition,” says Bartlett.
Companies in the financial sector expect the most potential revenue (US$1.2 trillion) from new sustainable products and services, but also reported eighty percent of all financial risk value.
In addition to the financial sector, other segments of the global economy also expect revenues from sustainable products and services: manufacturing ($338 billion), services ($149 billion), and the food, beverage & agriculture industries ($106 billion).
On the other hand, only half of the fossil fuel companies in the Global 500 provided any financial figures for the substantive risks and opportunities identified
The report covers almost ,7000 companies who reported data to CDP in 2018, including 366 of the 500 biggest global companies by market cap, including Apple, Microsoft, Nestlé, Unilever, China Mobile, Infosys, UBS, Sony and BHP.
The CDP, formerly known as Carbon Disclosure Project helps investors, companies, cities, states and regions manage their environmental impacts.