The Trillion Dollar Wake Up Call

Tackling climate change can have a significant impact on your company’s value to the total of $7 trillion, according to a new report by the London-based Carbon Trust.

The report, based on analysis by McKinsey & Co, found that companies’ futures will be highly dependent on how well prepared they are for the move to a low-carbon future. The groundbreaking research found that as much as 65% of company value was at risk in some sectors.

Well positioned and proactive, forward thinking businesses could increase company value by up to 80%. Conversely poorly positioned and laggard companies run the greatest risk of destroying value.  Car companies have the most to gain by adopting greener strategies. The car sector risks the greatest loss by failing to take onboard changes needed to meet ambitious emission targets in the coming years.

Tom Delay, chief executive of the Carbon Trust, said that investors and industry should wake up to this “trillion dollar wake up call. The financial risks of inaction are just too vast to ignore.”

Meanwhile research by the Carbon Disclosure Project which will be released in New York today, shows that although American companies judge climate change a risk to their business, they lag global companies in setting targets to cut emissions.

Paul Dickinson, chief executive of the Carbon Disclosure Project, which administers the annual survey, said “We’re seeing the U.S. play catch up here, but they’ve got a way to go,” He argued that the gap demonstrates the difference between the climate culture of companies in Europe and the United States.

Although 81 percent of U.S. companies responding to this year’s survey perceived climate change as a risk, only 33 percent of U.S. respondents had greenhouse gas reduction targets in place. “They are not listening to themselves,” Dickinson said.

So you put these two pieces of research together and what do you get. You get a clear indication that businesses that embrace the low-carbon revolution will make huge savings and those who don’t face huge losses. American companies are worried about climate change but the majority are not doing anything about it.

The financial risks of climate change may make the current financial turmoil in the markets look like small-fry compared to the shock that is coming. They have had one wake call do they need another?