Warming to the challenge

Climate-related disruption is the dominant threat to global economy, in the view of 750 experts from business and academia who take part in the World Economic Forum’s annual analysis of global risks. Failure to take action on climate change amplifies many other risks – from food crises and water security, to migration and social instability.
Business has an “important” or “very important” role in tackling climate change according to 86 percent of respondents surveyed by GlobeScan/SustainAbility. Respondents included professionals in the public and private sector, as well as those working in NGOs and academia.
Climate change risk has arrived as an investment issue, according to Ewen Cameron Watt, chief investment strategist at BlackRock: “Even if you are skeptical of global warming and its causes, no one should ignore that significant regulatory, economic and technological factors make this a major investment issue.”
Financial returns are stronger for companies taking a lead on climate issues, according to a 2014 study of the S&P 500 by CDP. Businesses ranked by CDP as climate leaders generated 18 percent higher ROE than lower-scoring companies, and 67 percent higher ROE than companies that did not disclose any information at all. And the returns leading businesses enjoyed were more stable – their earnings were 50 percent less volatile over the previous decade than those of their low-scoring peers. 

APPLE issued $1.5 billion in green bonds in 2016 to finance renewable projects.
GOOGLE invested $2.5 billion to help take new green technology to scale.
WAL-MART vowed 100 percent renewable energy by 2020, and 20 percent less energy per square foot.
GOLDMAN SACHS pledged $150 billion to clean energy finance, plus advocacy efforts.
IKEA says by 2020, through wind, solar and biomass, it will produce as much energy as it consumes.
GE, with the world’s largest clean energy portfolio, pledged to invest $10 billion in green technology.
CITI is lending, investing and facilitating $100 billion over 10 years to environmental solutions.

Phil Drew, a Director, is part of Brunswick’s Business & Society Practice. Jordan Bickerton is an Associate. Both are based in the firm’s London office.

According to CDP, a nonprofit that runs a system for companies, cities and states to disclose their environmental impact, 827 investors, with a combined $100 trillion in assets, requested information on climate change, water or forests. Cities are joining in the effort, too: CDP reports that 533 cities disclosed their impact in 2016.

Sixteen of the world’s 20 largest banks, representing $1.7 trillion by market capitalization, are taking action in their core business, according to data from Nazca, a platform created by the UN that tracks climate action. The same data set recorded that companies from 145 countries are taking some form of action.

Charts: Peter Hoey