Changing Profile of Corporate Climate Change Risk

Understanding Climate Risk for Business Executives

This book will help business executives to rethink their perceptions of climate risk, evaluate whether their company is effectively positioned, and make informed and prudent business decisions about climate change risk in an environment rife with policy uncertainty.

Business Risks Associated with Climate Change

Business climate risks include: Operational and Supply Chain (Physical) Risk, Brand Risk, Market-driven Structural Risk, Liability Risk.

Policy and Physical Climate Risks

As national and global policy to materially reduce climate change is delayed, it is business-prudent to assume that the level of climate risk is increasing. Even if policy risk might seem lower today than a few years ago, political will can change quickly. Should physical impacts of climate change manifest in dramatic ways, for example, draconian climate policy is likely to follow quickly. These conditions create a complex and shifting business risk environment, and most companies either overlook or substantially underestimate key climate risks.

Company Preparedness and Timing

How many companies, for example, are positioned for material climate change outcomes, whether physical or regulatory? Companies with little climate change exposure may not face much downside risk from taking a wait-and-see approach. For those with greater exposure, being "too late" to respond will mean costs and competitive impacts that could have been avoided. Being "too early," however, can mean being penalized later for actions that reduce a company’s emissions today, or competitive disadvantage from getting too far out in front of competitors.