A new report suggests that companies and investors are failing to take into account the strategic implications of incremental climate change, and missing potential investment opportunities. The report reveals that most companies are paying due attention to the affects of extreme weather on their business assets, for example where major flood risk results, but the effects of climate change on operational costs have to date been largely overlooked.
The report, produced by Henderson Global Investors, Insight Investment and the Universities Superannuation Scheme (USS), with specialist input from the consultant Acclimatise, builds on data from four sector reports, covering electric utilities, water utilities, real estate, oil and gas and calls on investors to ensure that companies have clear strategies for responding to climate change
Hilary Benn, Secretary of State for Environment, Food and Rural Affairs, added in a foreword to the report, "In outlining the risks that inevitable climate change poses for companies, this report encourages investors to examine adaptation-related risks in their portfolios and use their influence to encourage companies to manage these risks more effectively." Also commenting on the report, David Russell, Co Head of Responsible Investment at USS, observed that, "most companies see climate change primarily in terms of downside risk management. However, from an investment perspective, climate change may also present opportunities.”
The report, “Managing the Unavoidable: investment implications of a changing climate”, summarises findings from a project launched in January 2008 to identify how companies and their investors are likely to be affected by the physical impacts of climate change. At present companies are still adopting a wait-and-see attitude in the hope of a definitive public policy response now looking unlikely to result at the Copenhagen summit. The report therefore urges investors to play a much more proactive role in public policy debates on adaptation to the effects of climate change.