Businesses 'underestimating' climate change risks

KPMG said that every industry sector - even those widely considered to be "safe" from the risks associated with climate change - were insufficiently prepared. It claimed its report - 'Climate Changes Your Business' - was "the most comprehensive" risk analysis of the issue to date.

It said aviation, healthcare, tourism, transport, oil and gas and the financial services sector were in the "danger zone" on climate change risks - meaning they scored highly on the risks they faced, but scored poorly in terms of how prepared they were.

They, and each of the other 18 sectors included in the report, all needed to pay more attention to the physical, regulatory and reputational risks, as well as the emerging risk of litigation, according to the report.

'Highly vulnerable'

Barend van Bergen, a director of KPMG Sustainability, commented: "We have looked at business sectors right across the global economy and we found that there are huge differences between sectors in terms of the relation between climate change risks and risk preparedness.

"Industries may be relatively safe, they may be in the danger zone, or they may be in between - but wherever they are, risks tend to be underestimated.

"Take a sector like food and beverages for example. This is supposedly a low risk sector, yet recent events have shown that this industry is highly vulnerable to climate related risks such as increases in agricultural input costs.

"The idea therefore that this sector is relatively safe from climate change effects is likely to reflect a significant under-estimation of risk."

Risk management

The report's findings are based on a review of 50 different published studies addressing the business risks and economic impacts of climate change. As well as providing each sector with a "risk score", KPMG has also rated them according to their preparedness for climate change impacts.

KPMG's Alan Buckle commented: "Companies should seek to improve their understanding of how such risks affect their business and they must also mitigate such risks. It pays to be prepared.

"Companies which understand their climate risks will be best placed to manage those risks - and they will also be able to grasp the competitive advantage that comes with fuller and earlier understanding."

The report, along with various accompanying documents, can be viewed/downloaded here.