New report sees corporate climate risk tripling by 2050
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Companies listed on the world's biggest stock exchanges have over $1 trillion at risk ahead in countries facing high climate vulnerabilities, a new analysis finds.
Why it matters: Verisk Maplecroft's study takes a newly expansive view of corporate climate jeopardy.
- The risk consultancy explores exposure to forces like political instability, declining workforce productivity, migration and much more.
State of play: It sees $1.14 trillion worth of market value at risk in 2050 in countries facing "very high" climate exposure in their index — up from just $34.8 billion today.
- That's based on their "intermediate" emissions scenario that projects global temps climbing 2.7° C above preindustrial levels this century.
- For context, that much warming would bring lots of harm — and it's quite plausible.
- UN climate analysts estimated in late 2024 that full implementation of nations' voluntary climate pledges at the time would bring 2.6°C of warming in a best-case scenario.
The big picture: "While many companies report on their physical exposure to climate hazards, lesser understood socio-economic factors do not feature as part of corporate strategies, creating a blind spot for long-term resilience planning," says Will Nichols, Verisk Maplecroft's head of climate and resilience, in a statement.
How it works: The analysis graphs each country's exposure to three major buckets of risk.
- Hazards like extreme weather events and long-term, chronic changes in temperature and precipitation levels.
- The sensitivity of their populations based on health, poverty levels, farming reliance and more.
- Adaptation capacity based on factors like institutions' strength and political stability.
What they found: A "dramatic increase in the financial exposure of companies and investors" in the world's five largest equity exchanges.
- That intermediate emissions case brings the number of countries ranked "very high" in Verisk's "Climate Hazard and Vulnerability Index" to 48 by midcentury, up from 24 today.
- There are threats to corporate assets in big emerging markets, especially India but also Nigeria, Pakistan and others.
Threat level: While the report focuses on valuations and assets, it's a reflection of global warming hitting people hard.
- It notes that fast-growing, lower-income nations "will bear the brunt of the climate crisis despite their low overall contribution to global emissions."
- Western companies headquartered in richer, more resilient countries aren't insulated, given risks to their operations abroad.
The bottom line: "Markets tend to price risk at the corporate level, yet climate vulnerabilities manifest where assets are located, not just where companies are domiciled," said Franca Wolf, the firm's principal markets analyst.
