Climate Change Costing Companies ‘Millions’
The report, which reviews findings from CDP 2011-2013 disclosures, finds reported risks affect companies in all economic sectors and include damage to facilities, reduced product demand, lost productivity and necessitated write-offs, often with price tags reaching millions of dollars.
Forty five percent of the risks S&P 500 companies face from extreme weather and climate-changes are current, or expected to fall within the next one to five years, up from 26 percent just three years ago. The S&P 500 companies also indicate that 50 percent of these risks range from “more likely than not” to “virtually certain” up from 34 percent three years ago.
Around 60 companies describe the current and potential future risks and their associated costs in the research, which highlights excerpts from the companies’ disclosures to their investors between 2011 and 2013. Examples include:
- Gap reporting on experiencing higher material costs for cotton due to changes in precipitation and drought in China;
- Dr. Pepper Snapple Group discussing the potential of weather, climate changes and availability of water putting $2.5 billion of their cost of sales at risk;
- Sempra Energy disclosed costs exceeding its $1.1 billion of liability insurance coverage due to wildfires in San Diego;
- Union Pacific reported an 11 percent decline in corn shipments affecting its freight revenue as a result of droughts in 2012;
- HP describes a decline in revenue of 7percent following the 2011 floods in Thailand; and
- Consolidated Edison discloses costs related to Superstorm Sandy at over $431 million.
Mobilizing industry to take action to slow climate change involves translating climate risks for business, building an “architecture of participation” for climate action, and stabilizing the climate system through “resilience wedges,” says a study by Business for Social Responsibility published last month.
In its report, Business in a Climate-Constrained World: Catalyzing a Climate-Resilient Future through the Power of the Private Sector, BSR says business is increasingly exposed to risks from climate change, with some estimates putting the cumulative global cost as high as $4 trillion by 2030.
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