According to investors with $10 trillion in assets, the fifty companies globally that are that are highly exposed to physical climate hazards include names like energy companies of Europe such as Centrica and Galp, European energy corporations, as well as those like Nestle, and watchmaker Swatch.
According to the Institutional Investors Group On Climate Change (IIGCC), firms dealing in energy and mining, food, pharmaceuticals or technology manufacturing, or transportation and utilities are more vulnerable to concerns over extreme weather events such as floods than other companies in their industry and area.
More than 50 IIGCC members wrote to European, Asian, and American corporations, urging them to appropriately recognise and respond to catastrophes like as flooding and droughts.
The IIGCC also issued a set of expectations for all businesses on how to create resilience to physical climate change risks, including scenario testing and reporting against a set of risk metrics.
Companies are under pressure from activists and investors to reduce their carbon footprints, and Shell plans to challenge a landmark judgement on the subject. more info
However, physical hazards to a firm might be underestimated, according to Marion Maloney, Head of Responsible Investment & Governance at the Environment Agency Pension Fund in the United Kingdom.
“We think that are there two parts to the climate change debate – often the physical risks element is the poor cousin that doesn’t get enough attention,” she said.
“I want every company in my portfolio to be looking at these expectations.”
AustralianSuper, Impax Asset Management, and Lombard Odier were among the other investors that signed the letter.
Centrica, which owns British Gas, one of the biggest energy suppliers in Britain, said it was “assessing both physical and transitional risks and opportunities we may face across a number of climate scenarios” and was “increasing our disclosures on the outputs from the analysis in line with best practice”.
Switzerland’s Nestle said it was “already undertaking scenario analysis to assess physical impacts on our value chain over a longer time horizon”, adding this would “provide direction for our mitigation and adaptation actions across our raw material sourcing and operational footprints”.
Galp Energia, based in Portugal, stated that it is dedicated to becoming a leader in the quality, accuracy, and openness of the information it delivers to investors and other stakeholders.
“This year, we also concluded an evaluation of climate risks and opportunities, including physical and transition, that may impact Galp’s expected portfolio by 2025, 2030 and 2050,” Galp added.
There were no comments on the issue available from Switzerland’s Swatch.
The investor initiative comes ahead of the next session of global climate negotiations in November in Scotland, where countries are being encouraged to speed efforts to achieve net zero emissions by 2050.
It comes after the release of a major United Nations climate study in August, which warned that global warming was perilously close to becoming uncontrollable. more info
The firms were discovered through research conducted by the IIGCC and climate risk data firm Four Twenty Seven.
(Adapted from Reuters.com)