Some of the largest corporations in key US states view climate change as a growing risk to their bottom line and reputation among consumers and investors, according to new analysis from CDP.
The new report from environmental non-profit and investment research provider CDP covers the past four years and looks at US corporate relations to the impacts of climate change on business in four US regions: Texas and Florida, Arizona and Colorado, California, Ohio and Illinois.
Among the report’s major findings: an overwhelming 88 per cent of US real estate companies cited operational risks related to hurricanes, flooding, storm surges and sea level rising, which could translate into higher costs to businesses.
These concerns are well founded given that the 2017 Atlantic hurricane season was one of the costliest disaster years for the insurance industry: a record $215 billion. Insurance companies such as Allstate and American International Group told CDP that they are managing risk by adjusting pricing and terminating coverage in areas prone to natural disasters — potentially leaving people, particularly in coastal regions, alone to face the costs of hurricanes and other climate-driven natural disasters.
Companies in California reported in 2017 more opportunities from environmental regulation than companies headquartered in any other state: 81 per cent disclosed inherent benefits to their businesses from climate-related regulation. That same year, over half of companies in the Golden State indicated that corporate reputation and changing consumer behaviour were drivers of business opportunities. For instance, Alphabet, Google’s parent company, recognized reputational benefits in the form of potential brand equity gains amounting to at least $133 million from addressing climate change risks.
Last year, companies in the Southwest operating within the Colorado River Basin reported more than 70 serious water risks to their operations, such as higher operating costs and plant disruptions.
Climate risks are essentially pronounced in the ice cream industry, which contributes more than $39 billion to the US company. Unilever’s dairy facility in the Western seaboard, which produces brands such as Breyers and Ben & Jerry’s, predicted disruptions in production if water levels continue to drop in Lake Mead, the largest reservoir in the US in terms of water capacity.
Due to the increasing concern about climate risks, CDP found that US companies are stepping up investments in wind and solar: investments in the US renewably energy industry exceeded $40 billion in 2017 and cumulative private investments in renewable energy could reach $1 trillion in the near future.
Image credit: J. Daniel Escareño via Flickr