New dataset reveals climate change risks to S&P companies

The fallout from climate change will be felt across industries, eroding asset values and forcing investors to make new risk assessments, according to a fresh data analysis tool launched by a unit of S&P Global.

Over 90% of the world’s largest companies will have at least one asset financially-exposed to climate risks such as wildfires or floods by the 2050s, data provided by S&P Global Sustainable1 show. And more than a third of those companies will see at least one asset lose 20% or more of its value as the planet heats up.

“More than ever, investors and companies are seeking advanced analytics to respond to the financial impact of climate change,” said James McMahon, chief executive of The Climate Service, which was acquired by S&P earlier this year.

The new S&P dataset offers clients a way to predict the “future financial costs of changing hazard exposure for 20,000 companies, down to the rooftop level,” he said.

It’s the latest in a string of product launches designed to help businesses and investors measure the financial risks they face due to global warming. JPMorgan Chase & Co., Fitch Ratings and Morningstar Inc. all unveiled similar products this month in response to growing client demand.

The S&P Global Sustainable1 product looks at over 870,000 corporate assets such as warehouses and data centres. Close to 10% of the S&P 500’s total assets would be financially impacted by climate hazards by the 2050s under a business-as-usual scenario, with water stress and extreme heat having the highest impact.

Global data and risk assessment providers are under huge pressure from clients to provide increasingly-granular environmental, social and governance insights. That’s as extreme weather transforms the planet and gradually renders large swaths of it unlivable.

The Earth is already 1.1 degrees Celsius hotter than before the industrial age. Scientists estimate that several critical planetary systems are at risk of breaking beyond repair even if nations restrain warming to 1.5 degrees Celsius, the lower threshold stipulated by the Paris Agreement.