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Tuesday, November 6, 2012

The intolerably risky business of climate disruption

Multinational consulting giant PricewaterhouseCoopers (PwC) has issued two reports that find that climate disruption will have increasingly destructive impacts on business.  Global supply chains, assets and infrastructure of fully 85 percent of companies are at risk. 

The first PwC report, 10 Minutes – Risk ready: New approaches to environmental and social change, says that the ability of companies to plan for potential weather disasters is “vital.”  Many companies now view preparation for climate disruption as a matter of resilience, but also as a competitive advantage. 

PwC’s warnings are playing out in real time.  PwC says that only 33 percent of $380 billion lost in 2011 to natural disasters was covered by insurance, and Hurricane Sandy’s total impact on the US economy could total $45 billion in damage and lost production, with the losses from closed businesses and drops in consumption possibly outweighing the cost of physical damage.

The second PwC report - Low Carbon Economy Index 2012 - says the world is heading for an unimaginable six-degree Celsius – 11 degrees Fahrenheit - rise in temperature by the end of the century.   PwC says that companies need to address a more pessimistic outlook when making investments in long-term assets and infrastructure, particularly in coastal and low-lying areas.

PwC says that drought, poor water quality, flooding and other water-related challenges negatively affected 53 percent of the world’s largest companies in the past five years, up from 38 percent last year.  In September, the Carbon Disclosure Project’s 2012 Global 500 Climate Change report found that 81 percent of reporting companies identified physical risks from climate disruption, compared to 71 percent in 2011.  Further, 37 percent of companies perceived these risks as a “real and present danger,” up from 30 percent in 2011 and 10 percent in 2010.  

Those numbers will mercilessly rise with atmospheric carbon concentrations and the global  thermometer.  

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