Risks associated with climate change are being treated with increased urgency by business leaders around the world, according to new research.
Approximately 70% of 2,415 companies responding to a survey conducted by the Carbon Disclosure Project (CDP) and Accenture said their revenue could be ‘significantly affected’ by the changing climate.
Drought or extreme rain is already having an impact on 51% of those businesses, who include Dell, L’Oreal and Walmart and represent a combined spending power of US $1 trillion.
75% indicated disruption in production capacity or increased operational cost as impacts of heavy rain or drought (CDP)
The report also reveals that increasing concerns over weather events such as Hurricane Sandy or the US drought are more effective in generating action than national climate policies.
Of the 678 companies investing in emissions reduction initiatives, three quarters (73%) say they feel that climate change presents a physical risk to their operations; just 13% identify regulation as a sole driver.
Writing in the report, Rachel Kyte, World Bank Vice President on Sustainable Development said any business that wants to survive in the long term must prepare for further climate impacts in the coming decade.
“Major climate events are already impacting today’s business bottom lines. Insurance costs and availability are being dramatically affected in many parts of the world,” she said.
“Private companies cannot and should not wait for international climate agreements.”
The report does offer an illuminating contrast between clients and their suppliers, who are often based in China, India and South East Asia and at greater risk from weather extremes.
Suppliers demonstrate a lower level of ambition to mitigate climate change risk, with just 38% setting emission reductions targets in comparison to 92% of purchasing companies.
Similarly, at 27%, the percentage of suppliers investing in activities to reduce emissions is less than half that of CDP member companies (69%).
In a statement, CDP chief executive officer Paul Simpson said this report highlighted the need for business leaders to plan for all eventualities.
“The marked difference in the sustainable actions of companies and their suppliers highlights a missed opportunity for suppliers to reduce energy costs and risks,” he said.
“The 61% of suppliers that failed to provide information through CDP are an even greater concern since they and their clients are unable to make a full assessment of the substantial climate risks or opportunities they face.”
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