Extreme weather events and changing weather patterns, current or impending regulations imposing a cost on carbon and a carbon tax, and an altered competitive landscape will have an inescapable impact on businesses. Climate change is a strategic issue, and action must be taken now to mitigate the risks and take advantage of the opportunities arising from climate change as a way to ensure a position for themselves in the emerging low-carbon global economy. The risks that specific companies face vary but every company will face some pressure from climate change.

The risks that specific companies face vary but every company will face some pressure from climate change.

• Regulatory Risk: Companies with significant greenhouse gas (GHG) emissions or energy-intensive operations face risks from new state, national and international regulations limiting carbon emissions and imposing a cost on carbon. All companies will be impacted by fast spreading regulations that are already in place in Japan and Europe.

• Reputation and Competitive Risk. Tightly linked to regulatory risk in the global       and domestic marketplaces, climate risk preparedness will be a key driver in a company’s ability to compete.

• Physical Risk. Businesses are at risk from the physical impacts of climate change, including the increased intensity and frequency of severe weather events such as prolonged droughts, floods, storms and sea level rise.

• Litigation Risk. Companies in carbon-intensive industries such as oil and gas, electric utilities, and automobile manufacturing are already starting to face litigation concerning corporate contributions to global climate change. Examples already exist of lawsuits against large utilities for substantial contributions to climate change.

Climate change poses risks to industry, but it also presents opportunities: new products, markets, and competitive advantages are  becoming inherent in the low-carbon economy.