LONDON & SAN FRANCISCO--(BUSINESS WIRE)--Eighty-three percent of decision-makers at large businesses in the US and UK believe climate volatility poses a tangible risk to their corporate bottom line. Additionally, almost half place a greater emphasis on managing climate risk than on imperatives like revenue growth, digital transformation, and profitability. However, there is a wide gap between organizations’ awareness of climate-related risk and their readiness to mitigate its impact, even as extreme weather activity threatens more and more of their assets.
These are key findings from the Cervest 2021 Climate Intelligence Outlook, published today. Based on input from more than 800 senior executives responsible for climate-related strategies in the US and UK, the survey further highlights that despite the bottom line implications of climate risk, and a whopping 87% of respondents believing their organization understands the financial risks that climate change poses, nearly half (47%) of organizations have yet to integrate climate into their financial risk management. A similar proportion of respondents state their organizations are not actively assessing and managing relevant physical climate risks. In addition, over a third (36%) believe their company has not allocated enough resources — including budget and people — to effectively manage the risks and opportunities of climate change.
The Outlook highlights the two key climate-related challenges enterprises must address at once: decarbonization and physical risk. The vast majority of executives (80%) admit they are heavily focused on achieving net zero carbon emissions over adapting to physical climate risks. By contrast, just over a third (37%) agreed their organization plans to adapt to climate change by modifying physical assets or processes for future climate scenarios.
“Decarbonization is critical, but it’s not enough to protect organizations and investors against the risks of climate change,” said Iggy Bassi, Founder and CEO of Cervest. “Decades of greenhouse gas emissions have locked us into decades of accelerating climate volatility which translates into trillions of dollars of assets at risk. Even if we were to reach net zero tomorrow, it would not reverse the persistence and intensification of today’s extreme weather events. Organizations need to understand how to adapt with climate change and build resilience into their strategy.”
Conducted in September, following Hurricane Ida, the California Wildfires, and the flooding and droughts across the UK and Europe, the Cervest Climate Intelligence Outlook finds the impact of climate-related risks on corporate physical assets may be more significant and broader in scope than previously forecasted.
Last year, S&P Global reported that 60% of companies in the S&P 500 Index owned physical assets at high risk of climate-related events. But the Cervest survey finds 88% of companies have already had a corporate physical asset, such as an office, warehouse, or other building, affected by extreme weather. Flooding (61%) topped the list of climate hazards that executives say pose the most significant risk to assets, followed by extreme precipitation (59%), heat stress (46%), wind stress (40%), and drought (33%).
“Businesses are becoming increasingly aware of the complex transitional and physical risks posed by climate volatility,” added Bassi. “Our survey results clearly bear that out. However, despite their best intentions, decision-makers across organizations are struggling to factor climate change into their decision-making. All internal and external stakeholders need to see the projected impact of climate change on the same physical assets. When this happens, we will create a network of climate intelligent organizations driving transformative change at a global level.”
In an effort to take that next step, 56% of respondents believe software leading to actionable insights would enable their organization to quantify and manage climate risk more accurately. In addition, nearly half (48%) of businesses reported using in-house data and analytics to develop insights, and 38% stated they receive bespoke data and analytics from consultancies.
For more information on the Cervest 2021 Climate Intelligence Outlook, including downloadable highlights, please visit www.cervest.earth.
Cervest delivers cloud-based Climate Intelligence (CI) on any asset, anywhere, through its AI-powered CI product suite — giving enterprises, governments and NGOs the most comprehensive view possible of climate risk, and opportunity, at an asset-level. Cervest Climate Intelligence is built on three core principles: irrefutable and evolving science, quantification for every asset, and open access for all. By democratizing access to Climate Intelligence through its CI Product Suite, Cervest incentivizes everyone to share and integrate Climate Intelligence into everyday decisions – protecting the world’s critical assets — including our greatest asset, the planet. Cervest is a Certified B Corporation. For more information, visit www.cervest.earth. Follow Cervest on Twitter and LinkedIn.