The 215 biggest companies across the globe are threatened with $1 trillion in climate change risks.

That’s according to a new report from CDP and it echoes the warnings sounded by the Bank of England last month. Chillingly, the CDP suggests that many of these impacts are probable within the next five years.

The trillion-dollar (£790tn) threat is acknowledged by the big group of companies and 80% of them expressly forecast “major climate impacts”. These include rising temperatures, extreme weather patterns and higher pricing on greenhouse gas emissions.

Higher costs

They say that around $500 billion of costs are “likely to virtually certain”, with a significant risk of higher operating costs driven by legal and policy changes.

The companies report losses of US$250 billion potentially in “stranded assets”, including fossil fuel assets that may not offer economic returns as the market shifts in the transition to a low-carbon economy. Other businesses are significantly exposed to the physical impacts of climate change.

At the same time, CDP (formerly the Carbon Disclosure Project) suggests that there are huge opportunities – totalling $2.1 trillion – in average potential value for beneficial climate-related projects. This is almost seven times the $311 billion it would cost to achieve them.

CDP reports that companies in the financial sector forecast the most potential revenue from new sustainable products and services at $1.2 trillion, followed by manufacturing ($338 billion) services ($149 billion), fossil fuels ($141 billion) and the food, drinks and agriculture industries ($106 billion).

Gaps in awareness

CDP underlines, however, that just half of the fossil fuel companies in the Global 500 provided any financial figures for the risks and opportunities identified and “a more concerning story” may sit behind this statistic. It says that the potential gaps in awareness and disclosure elsewhere in the economy present real risks.

Nicolette Bartlett, Director of Climate Change at CDP, said:

“Regulators and investors should take note, and all companies from all industries need to step up. “The goalposts for climate action have never been clearer for companies. 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. “Following the recommendations of the UN’s IPCC report, our collective response to climate change is more urgent than ever, and it is clear that corporate action cannot be delayed. So it is hugely encouraging that companies are reporting that the potential value of climate opportunities far outweigh the costs of investing in the transition.”

Faced with growing climate risks, the majority of companies reporting to CDP say they now integrate climate risk into their business strategy (72%). Companies in the US and Brazil are falling behind the global sample (at 65% and 56% respectively). European companies lead the pack, with French, German, Norwegian and UK companies reporting the highest figures and Italian companies the least.

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