When it comes to climate change, companies and investors alike tend to focus on reducing greenhouse gas emissions. But businesses increasingly face physical risks from global warming as well.
“It’s not just companies with oil rigs and smoke stacks,” says Rebecca Henson, senior sustainability analyst with Calvert Investments. “It’s any business with operations.” The risks range from floods damaging facilities to droughts threatening the availability of raw materials, although experts shy away from attributing specific weather events to global warming.
For food and beverage manufacturers, perhaps the biggest issue relates to the unpredictability of the water supply. A severe drought could deplete the available supply. In other instances, the quality of water might be affected.
There are a myriad of risks to power companies, ranging from a stepped up need for electricity during heat waves to damage to generation, transmission and distribution facilities as a result of storm surges and flooding. For that reason, “we’re taking a robust look at all of our assets,” says Walter Fromm, a manager at U.K.-based National Grid, which operates in the Northeastern U.S. and the U.K. Fromm is based in Waltham, Mass.
Insurers and reinsurers pay for the losses experienced by the businesses and organizations they cover. Perhaps the enterprises with the most at stake are reinsurers and, not surprisingly, they’re the players that have been most active in addressing risks, according to Ceres.