A recent report by the Center for Climate and Energy Solutions (C2ES), Weathering the Storm: Building Business Resilience to Climate Change, evaluates how companies view risks posed by climate change. C2ES, formerly the Pew Center on Global Climate Change, found that 90 percent of companies in Standard and Poor's (S&P's) Global 100 Index identified extreme weather and climate change as current or future risks in public disclosures. Of those companies, 60 percent have experienced climate-related impacts or expect to within 10 years.
The purpose of the report is to take an in-depth look at whether and how companies are responding to the increased risks and pressures presented by climate changes and extreme weather risks. It examines how companies perceive and manage these risks as well as potential business opportunities, describes common business practices for evaluating and building resilience to physical impacts, and presents a framework for emerging best practices used by leading companies to manage the risks of extreme weather and climate-related impacts. Specifically, it examines:
- the extent to which companies acknowledge risks from the physical impacts of extreme weather and climate change
- drivers motivating companies' actions to build resilience to climate change impacts
- steps taken by companies to assess potential vulnerabilities
- actions undertaken to more effectively manage the risks and maximize any opportunities
- tools and methods used by companies to assess risks and opportunities
- barriers preventing companies from taking more focused and forward-looking action
While generally all industry sectors acknowledged climate risks, uncertainty about climate changes presents difficulties when decisions need to be made today that have long term impacts on business. Nearly one quarter of the S&P Global 100 companies report as a challenge the uncertainty associated with the nature, timing, location or severity of climate change impacts for deciding how and when to invest in resilience beyond what is considered business as usual.
The report highlights the top five current or expected impacts from changing climate:
- Reduction/disruption in production capacity (e.g., power outage or shortage of key input)
- Increased operational cost (e.g., higher costs for key supplies or backup power)
- Inability to do business (e.g., damage to facilities, communications or transport systems)
- Increased capital cost (e.g., plant or equipment upgrades, higher insurance prices)
- Reduced demand for goods/services (e.g., shifting market preferences or ability to pay)
The report provides case studies of various companies and significant insights into climate views on business decisions. The report also offers a four-step framework for managing risk.
The report, Weathering the Storm: Building Business Resilience to Climate Change, is available at http://www.c2es.org/docUploads/business-resilience-report-07-2013-final.pdf.