By Stephen Leahy
BROOKLIN, Canada, Sep 24 2007 (IPS)

Stockholders, investors and financial analysts are now demanding to know how climate change will affect companies’ bottom line, and a new report reveals large corporations’ risks and opportunities.

At the behest of institutional investors managing over 41 trillion dollars, several hundred large corporations voluntarily revealed how they are responding to this new reality in a report released Monday at a major event on New York’s Wall Street, where former U.S. President Bill Clinton will also speak.

“Climate change will change the way we do everything,” said Paul Dickinson, CEO of the Carbon Disclosure Project, an independent not-for-profit organisation.

“Nothing will go back to the way things were,” Dickinson told IPS.

The Carbon Disclosure Project (CDP) conducted a survey of 1,300 of world’s largest corporations on behalf of institutional investors and found “a worldwide economic and industrial restructuring” driven by regulatory, policy and business responses to climate change.

The results show that many companies already understand the world is changing and they are looking to find ways to reduce their financial risk and exposure. In general, there is a tremendous shift in government and public spending away from products that have a negative impact on the climate, said Dickinson.

Climate change is completely changing how business is being done, and there will be big winners and big losers, Dickinson said.

“Investors are looking for the next Microsoft with the reality of climate change,” he added.

Despite the steadfast opposition of the George W. Bush administration to mandatory action on greenhouse gas emissions, U.S. companies are anticipating an eventual carbon tax, increased requirements for energy efficiency and more pressure to produce products sustainability, he said.

The report reveals that many companies are already redefining competitive advantage and financial performance. Banks and brokerage firms such as JP Morgan have invested 650 million dollars in 26 wind farms in 13 U.S. states. HSBC invested 55 billion dollars in clean technologies, in addition to purchasing 40 percent of its electricity from renewable energy in 2006. Barclays, which provides long-term financing for over 2,600 megawatts of renewable energy projects, purchases 50 percent of its energy in Britain from renewables.

The report also found that Anheuser-Busch is active in seed research design to develop crops that are resistant to extreme weather events, and its Water Council manages water-related issues related to its supply chain, products, and local communities. Unilever has partnered with several stakeholder groups to develop sustainable agriculture programmes that focus on ways to improve farming efficiency and minimise water use.

The CDP survey is voluntary, but 86 percent of European firms responded, while 74 percent of North American firms did so. None of the seven Chinese firms asked responded. The responses are not audited, although Dickinson is confident that corporations wouldn’t provide misleading information, he told IPS.

“We are looking forward to the big accounting firms joining in,” he said.

There is a rising clamour for the Securities and Exchange Commission (SEC), the U.S. stock regulator, to require corporations to reveal their risks under climate change. Allstate Corporation, which insures 1 in 8 homes in the U.S. and reported over 4 billion dollars in losses from Hurricanes Katrina and Rita, did not mention climate change at all in its latest annual filing. And energy giant Exxon Mobil barely mentioned it.

Investors, pension fund managers and environmental organisations officially petitioned the SEC on Sep. 18 to force all public companies to come up with something more useful.

The petition said in part: “Climate change can affect corporate performance in ways ranging from physical damage to facilities and increased costs of regulatory compliance, to opportunities in global markets for climate-friendly products or services that emit little or no global warming pollution.”

It also noted that a January 2007 study published by Ceres and the Calvert Group, an asset management firm, found that more than half of the companies in the S&P 500 Index are doing a poor job disclosing climate change risks to their investors.

“The SEC needs to do more to protect investors from the risks companies face from climate change, whether from direct physical impacts or new regulations,” said Mindy S. Lubber, president of Ceres, a coalition of investors and NGOs and director of the Investor Network on Climate Risk.

“Shareholders deserve to know if their portfolio companies are well-positioned to manage climate risks or whether they face potential exposure,” Lubber said in a statement.

There is going to be an enormous global response to climate change, predicted Dickenson. All of the information collected by the CDP is available on their website because the organisation wants to “help investors vote with their money”.

“Climate change is like the Internet – it is never going away,” he said.

Excerpt: