Climate change will cost companies $1 trillion. It also means huge opportunities
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Climate change is likely to cost the world's largest public companies nearly $1 trillion over the next five years. But the opportunities for new products and services to reduce environmental damage could be worth much more.
A survey published Tuesday by the charity CDP suggest that growing demand for low-emission products and shifts in consumer preferences could generate over $2 trillion for leading businesses.
CDP, which was formerly called the Carbon Disclosure Project, said that nearly 7,000 companies including Microsoft, Apple, JP Morgan Chase and Visa responded to its 2018 survey.
The results show that while 80% of the largest companies expect climate change to result in major changes including extreme weather patterns, some firms have not yet studied the issue closely.
"Our collective response to climate change is more urgent than ever, and it is clear that corporate action cannot be delayed," Nicolette Bartlett, director of climate change at CDP, said in a statement.
"It is hugely encouraging that companies are reporting that the potential value of climate opportunities far outweigh the costs," she added.
CDP encourages companies and governments to disclose information related to climate change. It's part of a coalition of advocacy groups and investors that have been pushing companies to reduce greenhouse emissions.
Some 215 of the world's largest public companies responded to the group's survey questions on financial risks, identifying $970 billion in potential costs including asset write offs.
Meanwhile, 225 large firms reported business opportunities related to climate worth $2.1 trillion. Nearly all of the opportunities for new revenues, including electric vehicles and renewable energy, were described as "highly likely" or "virtually certain."
The gap between costs and opportunities means that investors should expect "a significant shift in climate-friendly products and services from the world's largest companies," according to CDP.
Financial services companies reported the largest costs (including to their clients) and opportunities, a trend that Bartlett attributed to increased awareness caused by scrutiny from regulators and stakeholders.
"The potential gaps in awareness and disclosure elsewhere in the economy present real risks," she said. "Regulators and investors should take note, and all companies from all industries need to step up."
Pressure has been mounting on large public companies to do more on climate change following the publication last year of a landmark report by the United Nations.
The UN report warned that the world has only 12 years to avert a climate disaster and called for "rapid, far-reaching and unprecedented changes in all aspects of society."
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