82% Of Execs Say Climate Change Will Alter Their Business Models

May 7, 2008

Eighty-two percent of senior finance and risk managers believe global climate change will require changes to their business models in the years ahead. Yet, when it comes to taking proactive steps to manage their weather risk, 51 percent concede that their companies are not well prepared to cope with the current day-to-day economic risks posed by the weather.

Email this story Print this post Add your comments

The study, commissioned by CME Group and Storm Exchange, also found that just 42 percent of those surveyed said their companies have attempted to quantify their exposure to the weather, and only 10 percent had used weather hedging strategies (e.g., derivatives, options, futures, etc.) to limit that exposure. However, of those respondents who said their companies have used weather hedging tools, 86 percent said they found them useful.

A report will be made available this month. Some of the key findings include:

Extreme Exposure: 59 percent of senior finance and risk management executives said their companies’ exposure to risks stemming from weather volatility meant that the impact on their financial performance could be “significant” (38%) or even “severe” (21%), and that they need protection from it.
Increased Weather Volatility: 34 percent of all companies surveyed said the weather has become more volatile in recent years; that number jumps to 43 percent in the energy and agriculture sectors.
Forced Change: 82 percent of those surveyed said they may have to make changes to their business models over the long term to cope with climate change and weather volatility.
Day-to-Day Weather Risk is High: 51 percent of respondents said their companies are not well prepared to cope with the day-to-day economic risks of the weather.
Energy Companies Pioneer Weather Hedging: 74 percent of energy company executives said they have attempted to quantify the impact of weather volatility on their businesses, making energy the lone industry where companies have made a systematic attempt to quantify the impact of weather volatility on their business. By contrast, only about one-fourth of agriculture and retailing businesses have made the effort.
Hedging Works: Of those respondents who said their companies have used weather hedging tools, 86 percent said they found them useful.

The Storm Exchange/CME weather risk survey was conducted via telephone by Andrews Research Associates in February and March 2008 and included 205 senior-level finance professionals, including CFOs, CEOs, corporate treasurers and risk managers at predominantly middle market and Fortune 1,000 firms in weather-sensitive industries in the U.S. and Canada. The industry sectors covered by the survey include energy, agriculture, retail, construction, and outdoor entertainment. The results of this survey are statistically accurate to within ±7 percentage points.

Email this story Print this post Add your comments

Advertisers

Make sustainability part of your strategy.

Get equipped at the SAP Sustainability Resource Center. >>

Unclear about the EPA's new GHG Rule?

Learn how it could affect your business. >>

EPA mandatory emissions reporting starts Jan 1st

CSA Standards can help your organization get ready for compliance. Find out how. >>

Best Practices: Product Environmental Compliance

How to achieve compliance at a significantly lower cost. Download the full report. >>

Join the Discussion

Reader Comments

John A. Warden III, a U.S. strategy expert recently posted this about Global Climate Change: Thinking Strategically About Global Climate Change. It would be interesting to hear how your readers view his positions and the need to establish the future state of the global climate before embarking on a lots of tactical solutions to a percieved problem.

Sun Tzu | May 7th, 2008

Recent Daily News [ see all ]

11/24/2009
11/23/2009
11/20/2009

Charts [ see all ]

Government Intervention Required to Drive “Green” Technology

62% of Firms Assign Environmental Team for Green Goals

European Paper Industry Cuts CO2 Emissions by 42% since 1990

S. America Takes Most Urgent View of Copenhagen Talks

Jobs

View All Jobs >> Post a Job >>

Comments and Discussions

Jetset1 on Energy-Savings Claims Don’t Add Up for Microsoft’s Windows 7
"This article is wrong. If your PC is less than a few years old,..."

Iain on McD’s in Germany Trades Red for Green In Logo
"Now if only their food was healthy and nutritious."

Phil on Climate Scientists Alleged to Have Manipulated Data
"After reading all the comments it seems obvious, to me, that the individuals populating..."

Marc Hudson on McD’s in Germany Trades Red for Green In Logo
"where will the stone be mined from- under what labor rights conditions? Will the..."

Clyde on Climate Scientists Alleged to Have Manipulated Data
"This just shows all the Global Warming freaks out there are a bunch of criminals cut from..."

Car Rental Singapore on News Corp. Taps Hara for Energy Efficiency, Environmental Management
"Energy reduction is a good thing. We need to save the..."

Meme Mine on WWF, WRI Make Last-Minute Pitches on Climate Change
"To the voting public, what the scientists say is irrelevant anymore for if you read..."

Environmental Leader