Corporations Assess Risks / Opportunities in the Age of Climate Change
Bank of America worries flooded homeowners will default on their mortgages. Disney is concerned its theme parks will get too hot for vacationers. AT&T fears hurricanes and wildfires may knock out its cell towers. Coca-Cola wonders if there will still be enough water to make Coke.
Read the entire article at Bloomberg.
As the Trump administration rolls back rules meant to curb global warming, the country’s largest companies are already bracing for its effects. Documents reveal how widely climate change is expected to cascade through the economy – disrupting supply chains, disabling operations and driving away customers… but also offering new ways to make money.
The disclosures were collected by CDP, a U.K.-based nonprofit that asks companies to report their environmental impact, including the risks and opportunities they believe climate change presents for their businesses. More than 7,000 companies worldwide filed reports for 2018, including more than 1,800 from the U.S.
The information companies provide to CDP about their climate risk is far more specific than what they include in their filings to the Securities and Exchange Commission. While the SEC requires companies to disclose material risks, it doesn’t ask them to address the specific threats associated with climate change.
Most of the largest U.S. companies submitted information to CDP, and the vast majority say the threat is real and serious: Of the 25 companies whose submissions were reviewed by Bloomberg, 21 said they had identified “inherent climate-related risks with the potential to have a substantial financial or strategic impact” on their business.
Visa Inc. warns that global warming could increase global pandemics and armed conflict – problems that would in turn cause fewer people to travel. “Any such decline in cross-border activity could impact the number of cross-border transactions we process and our foreign currency exchange activities, and in turn reduce our revenues,’’ Visa wrote.
Climate change isn’t all downside for the largest U.S. companies. Many of those that filed reports with CDP said they believe climate change can bolster demand for their products.
For one thing, more people will get sick. “As the climate changes, there will be expanded markets for products for tropical and weather related diseases including waterborne illness,” wrote Merck & Co. More disasters will make iPhones even more vital to people’s lives, Apple predicted.
Living with climate change is also going to cost money, which some banks see as an opening. “Preparation for and response to climate-change induced natural disasters result in greater construction, conservation and other business activities,” Wells Fargo and Co wrote, adding that it “has the opportunity to provide financing to support these efforts.”
More disasters will mean increased sales for Home Depot, the company wrote. And as temperatures get higher, Home Depot predicted that its ceiling fans and other appliances will see “higher demand as temperatures increase over time.”