CDP identifies US$2.1 trillion climate change opportunity

CDP today, 4th June have reported the gains of realising climate change related business opportunities at around US$2.1 trillion and would be around 7 times more lucrative than the cost of achieving them which came in at around $311 billion.

The report identifies the potential sources of new revenue “Companies in the financial sector see the most potential revenue (USD$1.2 trillion) from potential new sustainable products & services, followed by manufacturing ($338 billion), services ($149 billion), fossil fuels ($141 billion) and the food, beverage & agriculture industries ($106 billion).”

That being said, the risk was concentrated in the financial sector too. With an estimated US$1 trillion at risk due to climate change with many businesses expecting to feel the pinch within the next 5-years.

Added costs include impact from climate change, changing weather patterns and increases in natural catastrophes, increased cost of carbon pricing and other policy-related charges. Stranded assets – assets which companies currently report on balance sheets but which they might not be in a position to develop or whose economics would no longer work – such as new oil operations are estimated at $250 billion.

Nicolette Bartlett, Director of Climate Change, CDP commented, “The goalposts for climate action have never been clearer for companies. Our analysis shows that there are a multitude of risks posed by climate change, including impaired assets, market changes and physical damages from climate impact, as well as tangible impacts to business bottom lines.

The report goes on to say, “Following the recommendations of the UN’s IPCC report, our collective response to climate change is more urgent than ever, and it is clear that corporate action cannot be delayed. So it is hugely encouraging that companies are reporting that the potential value of climate opportunities far outweigh the costs of investing in the transition.”

“However, while our research shows that financial organizations see the most opportunities and value at risk from climate change, a more concerning story may sit behind this statistic. It is likely that this growing awareness is partly caused by the increased scrutiny of regulators and stakeholders. And the potential gaps in awareness and disclosure elsewhere in the economy present real risks. Regulators and investors should take note, and all companies from all industries need to step up.”

The scope of the report includes almost 7,000 companies who report data to CDP and a 500-company sample of the largest companies by market capitalisation.

View the executive summary of the report.

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