The dangers posed by climate change and extreme weather are now being taken seriously by companies and investors.
Environmental risks, such as droughts and wildfires,
are now considered to be even more dangerous than turbulent markets, cyberattacks or geopolitical snafus.Climate and environmental issues top a rank of global risks produced by the World Economic Forum ahead of its annual summit in Davos.
Extreme weather, migration caused by climate change and natural disasters are the three risks business leaders and experts surveyed by WEF fear they’re most likely to face in 2019.
Each of the climate-related risks also ranks among the top five issues in terms of potential impact.”There is more investor pressure and more requirements on companies,” said John Drzik, president of global risk and digital at insurance broker Marsh. “They have been already facing pressure from consumers to make their products more climate friendly, but the amplified investor pressure is new.”
Climate risks
Natural disasters and extreme weather caused $160 billion worth of damage in 2018, a consultancy by
reinsurance company Munich RE. Control Risks, predicts that figure will be surpassed in 2019.”From storms to floods to droughts and forest fires, the costs of interrupted production, distribution, sales and travel will skyrocket in 2019,” the group said in its annual risk report.
2018 climate disasters point to several areas where businesses face increased risks. Supply chains is first. A report from University of Maryland and software firm Resilinc showed that global supply chain disruptions caused by weather doubled last year.The risk doesn’t affect just the developing world with weaker instruction. Hurricanes Harvey, Irma and Maria combined in 2018 to make the United States the most disrupted region for the first time.
“We simply wouldn’t be seeing the catastrophic weather events we’ve witnessed in recent years if not for the amplifying effect of climate change,” said Michael Mann, director of the Penn State Earth System Science Center.
Business response
Top investors are demanding that more companies draw up environmental action plans. They’re also asking CEOs to consider risks to their business caused by shifting consumer attitudes toward climate change.Alison Martin, the chief risk officer at Zurich Insurance Group, said it doesn’t matter whether the company’s leadership “believes in climate change or [what they think] the causes of it are.” “If you were a plastic straws manufacturer a few years ago thinking about your strategy going forward, maybe you weren’t anticipating that consumer sentiment could so quickly and so radically move against you,” she said.
Shareholders are becoming increasingly vocal.
Norway’s $1 trillion sovereign wealth fund launched a big push for sustainability in September, saying it will be using its power as the world’s biggest stock holder to influence companies to behave more responsibly.
Original post: CNN