. 4 June 2019 by Joshua S Hill
A recent report from CDP has revealed that a group of the world's largest companies – which together represent a market capitalization of nearly $ 17 trillion – has assessed climate risks for their companies at almost $ 1 trillion, risks that are likely to hit many companies over the next 5 years.
CDP (formerly Carbon Disclosure Project) is the organization that operates the global environmental information disclosure system. The new report is based on responses to the 2018 questionnaire from 6,937 companies and includes a subset of 500 of the world's largest global companies, of which 366 have reported CDP in 2018. The report analyzes the risks and opportunities associated with climate change in 2018, following the recommendations of the Climate Finance Task Force, set up in 2018 by the Financial Stability Board, "to develop voluntary, consistent information on climate-related financial risks that companies, banks and investors face Providing information to stakeholders can be used. "
The biggest finding from the recent CDP report is the potential climate-related risk risks of the world's largest companies. According to the CDP, 215 of the companies in this subset of 500 companies, representing a combined market capitalization of $ 16.95 trillion, estimated the "potential financial impact on some of their reported risks", which CDP considered fair below $ 1 trillion Dollars – to be exact, the $ 970 billion mark.
In addition, the report found that over half of these risks were reported as "likely / very likely / practically safe" and are expected to occur in the short to medium term – around 5 years or earlier. Part of the calculated trillions of dollars in risk is approximately $ 250 billion, which is related to impairments or write-offs ("stranded assets") due to transitional and physical risks.
The report also revealed that Over 80% of the world's largest companies expect significant business climate implications – including extreme weather conditions, rising global temperatures and rising greenhouse gas prices.
"Climate change objectives have never been clearer to business," said Nicolette Bartlett, climate change director, CDP. "Our analysis shows that climate change carries a variety of risks, including impaired assets, market changes and physical damage from climate change impacts, as well as a significant impact on business performance.
"According to the recommendations of the United Nations IPCC report, our collective response to climate change is more urgent than ever, and it is clear that entrepreneurial action can not be delayed. It is therefore extremely encouraging that companies report that the potential value of climate change opportunities far exceeds the cost of transition investment.
"However, our research shows that financial organizations see most of the opportunities and risks of climate change can be a more worrying story behind this statistic. It is likely that this growing awareness is partly due to the increased oversight of regulators and stakeholders. The potential awareness and disclosure gaps in other sectors of the economy pose real risks. Regulators and investors should take note of this and all companies from all sectors need to step up their efforts.
Although the risks are great, the report also shows that the potential opportunities are greater. CDP reports that 225 of the world's top 500 companies reported climate-related opportunities worth more than $ 2.1 trillion. Most of this is expected to be driven by the potential increase in sales due to demand for low-emission products and services.
Important The potential average of climate-related opportunities is almost seven times the cost of achieving them. In other words, the cost is about $ 311 billion, while the odds are about $ 2.1 trillion.