Biggest banks and companies brace for trillion pound losses triggered by climate breakdown


Analysis of 215 of 500 largest corporations shows how business leaders expect global warming to hit every corner of the world’s economy. Brad Plumer explains in an article on The Independent website.

Many of the world’s biggest companies, from Silicon Valley tech firms to large European banks, are bracing for the prospect that climate change could substantially affect their bottom lines within the next five years, according to a new analysis of corporate disclosures.

Under pressure from shareholders and regulators, companies are increasingly disclosing the specific financial effects they could face as the planet warms, such as extreme weather that could disrupt their supply chains or stricter climate regulations that could hurt the value of coal, oil and gas investments.

Early estimates suggest that trillions of pounds may ultimately be at stake.

Many firms are bracing for direct impacts.

Hitachi Ltd, a Japanese manufacturer, said that increased rainfall and flooding in South East Asia had the potential to knock out suppliers and that it was taking defensive measures as a result.

Banco Santander Brasil, a large Brazilian bank, said increasingly severe droughts in the region might hurt the ability of borrowers to repay loans.

Google’s parent company, Alphabet, Inc, noted that rising temperatures could increase the cost of cooling its energy-hungry data centres.

Others are keeping a close eye on the potential public reaction to climate change.

Total, a French energy company, is grappling with the possibility that ambitious efforts by nations to limit global warming and restrict fossil fuel use could render some oil and gas reserves “unburnable”.

BASF, a German chemical company, said it has a “significant corporate carbon footprint” that could scare off environmentally conscious shareholders unless it takes steps to act on climate change.

The CDP report found that companies headquartered in the European Union are much more likely to detail the potential financial effects of global warming, in part because local regulations often require them to do so.

By contrast, companies in the United States, China, Brazil and Mexico were far less likely to report significant financial risks.

The key findings from this analysis are:

  • Companies are identifying significant risks but need to expand their analysis
  • The biggest companies report major financial implications
  • The opportunities are bigger than the risks
  • Differences are striking across countries and regions
  • The finance sector is seeing more implications than the real economy
  • The wins far outweigh the costs of management
  • Companies and investors need to learn lessons from the power sector


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