Mayor Boris Johnson urged to act as over half of the largest 100 companies listed on London Stock Exchange are found to have no plans to deal with climate risks

London’s economy is increasingly vulnerable to climate change because of the city’s status as a global financial centre and the international connections of its businesses, a report by the London assembly has found.

It urges more action to prepare the city for climate risks from mayor Boris Johnson.

Just over half of the 100 largest businesses listed on the London Stock Exchange have no adaptation strategy in place to prepare for the risks posed by climate change, which include floods, droughts and heatwaves. The effect of such extreme weather conditions is likely to fall most heavily on small and medium-sized businesses, outside the FTSE 100, which are least equipped to bear the brunt. Nearly two-thirds of such businesses have no plan in place to deal with climate change.

London’s status as a financial centre means it is vulnerable in other ways to climate-related shocks around the world too. The capital’s financial sector is exposed to risks internationally, the report found, including through its investment in fossil fuels. If controls on carbon dioxide emissions are brought in by governments around the world then reserves held by coal, oil and gas companies risk being rendered worthless. The Bank of England is currently preparing a report on these overvalued assets - the so-called carbon bubble.

Other businesses, which are seemingly far from the effects of climate change, must also take account of it, according to the report’s authors. They cited the floods that afflicted Thailand in 2011, which affected the makers of many computer components, and the damage done resulted in higher prices throughout the IT hardware supply chain, which affected London companies.

Food prices are also likely to be affected by climate change, the report found, with knock-on effects throughout the UK.

The report from the London assembly, called “Weathering the Storm: The Impact of Climate Change on London’s Economy”, called for more emphasis on climate change policies from the mayor Boris Johnson. His economic development strategy for the capital does not currently feature climate change with any prominence, the report’s authors argued.

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The group also found that the London Pension Fund Authority, which controls pensions for the assembly, should look at the potential for diversifying its investments, including possibly taking money out of coal. Campaigners have called for the the £4.8bn pension fund to be divested entirely from fossil fuels.

The report found that London’s “adaptation sector” was worth about £431m in turnover in 2011 to 2012, employing about 4,000 people, in industries such as construction.

Jenny Jones, Green party assembly member and co-author of the report, said: “Too little is being done to understand and prepare for the potential costs of climate change. London faces a great unknown when it comes to how our supply chains and economy will be hit by extreme weather events.”

She added: “Detailed work is essential to secure London’s future economic prosperity. We need to diversify London’s economy and further invest in our green economy. That way, our city will be stronger and more resilient whatever the level of future global warming.”

Jenny Bates, campaigner at Friends of the Earth, said: “Climate change is not only a massive threat to Londoners through increased droughts, heat waves and flooding - it could devastate our economy too. Tackling climate change should be a top priority for the mayor. London must prepare for the consequences of global warming and do far more to play its part in cutting emissions through, for example, the development of clean energy and transport infrastructure.”

She also called for measures to cut greenhouse gas emissions, such as stopping the expansion of airports and road-building, which she said would also help to cut air pollution, and called for financial institutions in the City of London to support low-carbon projects around the world.