Updated from 1:29 p.m. Monday with light editing throughout.
NEW YORK (TheStreet) -- The threat to profits from climate change is real, growing and affects all sectors of the economy, according to a report of findings by a nonprofit group representing large investors.
The Carbon Disclosure Project claims to represent over 750 investors managing a combined $92 trillion. Each year, CDP requests climate-change-related disclosures from public companies on behalf of those investors. Its latest report notes that, judging from survey responses of S&P 500 companies over the last three years, the awareness of a potential impact from various aspects of climate change has grown dramatically. According to the CDP:
- 45% of risks were described by companies as current or predicted to fall within the next 1-5 years in 2013, up from 26% in 2011
- 50% of the risks disclosed were described as more likely than not to virtually certain in 2013, up from 34% in 2011
- 68% of the disclosed physical risks were direct to operations in 2013, up from 51% in 2011
In the following pages, we look at the exposure of Chevron (CVX), Wal-Mart (WMT), Google (GOOG), Alcoa (AA) and Xcel (XEL) -- five leading companies in five different sectors -- as noted by the companies themselves in responses quoted by CDP.
Some of the threats outlined by the companies are simply a response to weather and environmental changes that may or may not be conclusively attributed to global warming. The following responses were chosen for this article in part because risks from climate change specifically, rather than merely bad weather, are cited by the companies themselves in response to the CDP surveys.
The stocks in this article would, in another context, represent a well-balanced portfolio and indeed, investors holding all five over the last five years should be more than pleased with the return. But because one storm or drought can affect several sectors, a single major event could put such a portfolio at risk. By extension, this large-scale aspect also means that the greatest risk from climate change is to national economies.
The following companies, speaking in their own words, serve as eloquent examples of what can very quickly go horribly wrong in the changing environment.