| | Six major industry
sectors are in
particular danger from
climate change risks,
claims professional
services organisation
KPMG.
Aviation, healthcare,
tourism, transport, oil
and gas and the
financial services
sector all feature in
the "danger zone" in a
report on climate change
risks from KPMG
Sustainability B.V., a
member of KPMG
International. The
report, entitled
Climate Changes Your
Business, suggests that
the sectors score highly
on the risks which face
them yet score poorly in
terms of their
preparedness to face
these risks. Financial
institutions are
particularly exposed to
climate risks through
their investment
portfolios and through
the risk to reputation
as consumer awareness
grows.
In addition, KPMG
claims that the 18
sectors included in the
report – even the three
deemed to be in the | |
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| | they may be in the
danger zone, or they may
be in between – but
wherever they are, risks
tend to be
underestimated."
The report is the
most comprehensive
analysis of its kind to
date. Its findings are
based on a review of 50
authoritative published
studies addressing the
business risks and
economic impacts of
climate change at sector
level. The published
reports have been
analysed and a "risk
score" for each sector
has been assessed. At
the same time, the
business sectors have
been rated according to
their preparedness for
climate change impacts.
Preparedness was
measured using data
compiled in the latest
completed round of the
independent Carbon
Disclosure Project.
The report grouped
sectors into three
areas, dependent on the
risks they face and
their preparedness (see
below). Due to the way
the figures were
compiled, these rankings | |
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| | effectively represent
what financial
institutions and
businesses themselves
think about climate
change risks.
While the oil and gas
sector is far better
prepared than any of the
other sectors in the
"danger zone", the
climate change issues it
faces make it the
riskiest of all the 18
sectors. By contrast,
transport is a far less
risky sector but its
level of preparedness is
the worst of all the 18.
However, further
analysis of the results
by KPMG suggests that
even the sectors in the
"safe haven" may not be
as safe as they would
like to think. Buckle
continued: "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
underestimation of risk.
"When considering how
businesses report on
these risks, it is
striking that businesses
consistently appear to
gloss over certain
climate risks even where
they have
well-established
management techniques
for dealing with other
forms of risk.
"Some risks are now
materialising regardless
of the actual rate of
climate change, gaining
a dynamic and pace of
their own. 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."
| |
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| | "safe area" – are not
sufficiently prepared to
deal with the new risks
associated with climate
change.
The climate change
risks that companies
should be paying more
attention to are
physical, regulatory and
reputational risks as
well as the emerging
risk of litigation; yet
the scope and potential
impact of these risks
appears to be
underestimated across
all sectors.
Commenting on the
findings of the report,
Alan Buckle, chief
executive of Advisory
KPMG Europe, said: "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, | |
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