Assets of the world’s largest companies with growing risk of climate impact: S&P


More than 90% of the world’s largest companies will have at least one asset highly exposed to the physical effects of climate change by the 2050s, data and analysis from index and rating provider S&P Global showed Thursday.

From heatwaves to flooding, extreme weather is increasingly causing turmoil around the world, prompting companies and investors to better understand and measure the risks to their assets.

If the world continues as it does today and fails to contain climate-damaging emissions, 98% of the largest companies — classified as those in the S&P Global 1200 index — could be highly exposed by the 2090s, it added.

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However, if the Paris Climate Agreement target of limiting global warming to less than 2 degrees Celsius is achieved, the proportion of large companies with assets with a high physical risk could be reduced to 39% during that period.

“Investors and companies are looking for advanced analytics to address the financial impacts of climate change. Essential here is the ability to quantify the financial impact of climate change at the asset level to enable meaningful mitigation and adaptation planning,” said James McMahon, chief executive officer of The Climate Service, part of S&P Global, in a statement.

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Using climate models that simulate the physics, chemistry and biology of the atmosphere, land and oceans, S&P said it was able to evaluate risk for more than 20,000 companies and more than 870,000 asset locations, each on a scale of zero to 100.

By the 2050s, every company would have at least one asset with a rating of more than 75, which is considered to be at significantly high risk from extreme heat, extreme cold, wildfires, water stress, drought, coastal flooding, river flooding and tropical cyclone.

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After scoring an asset for physical risk exposure, S&P can then calculate the financial impact, allowing companies to adjust their exposure, it said.

“In simple terms, this dataset enables companies and investors to understand their climate risks — and, vitally, what they could cost,” McMahon said.

(Reporting by Juliette Portala; editing by Simon Jessop and Mark Potter)

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