SYDNEY, March 23, 2022 /PRNewswire/ -- The new U.S. Security and Exchange Commission (SEC) proposal to require companies to disclose their climate risk, including the physical impacts of storms, drought and heat waves, marks a major step towards more transparent reporting, according to climate risk expert Rohan Hamden.
Under the SEC proposals, adopted on a 3-1 SEC vote, public companies would have to report on the risks to revenue impairment from severe weather, climate change and fossil fuel transition.
"This proposed SEC requirement sends a strong signal to all companies that they need to take climate risk seriously," XDI Systems CEO Rohan Hamden said today.
"XDI System's recent analysis of 1,300 companies across eight indices, including the S&P 500 shows that many companies underestimate and under-report both the current and projected financial impacts of climate change."
"U.S. companies' operational facilities are increasingly at risk from extreme weather events and, coupled with business continuity impacts, revenue impacts are set to increase by 90% by 2050 under the current emissions trajectory," Hamden said.
"Measuring your climate risk, in particular risk to physical assets like commercial properties, productivity loss and the proportion of high-risk properties, is not only good governance but makes a positive point of difference for investors."
"The reality is that many companies are already experiencing losses as a result of extreme weather events caused by climate change," Hamden said.
"The proposed SEC rules are a step towards making climate risk reporting mandatory. We believe this will mean companies will be more inclined to properly understand their climate risk and invest in resilience to reduce costs and avoid disruption to core operational assets."
The XDI 1000, released this week, ranks more than 1,300 public companies by level of risk across the ASX 200, CAC 40, DAX, FTSE 350, HSI, NI 225, S&P 500 and STI, by quantifying the projected impacts on owned or leased operational assets of each company and its subsidiaries. The data has been published by physical risk experts, XDI, using a like-for-like methodology across 2.1 million commercial properties globally.
The new data suggests climate change has already increased annual average damage by 36% in Europe and 45% in Asia since 1990, and that under current emissions trajectory those impacts will increase up to threefold by 2050. Companies listed on the Nikkei are most exposed, followed by companies listed in Hong Kong, Singapore, France and the UK.
Assets highly exposed to disruptive events like floods, forest-fires and coastal inundation have been identified in the analysis, and are projected to double over the course of the century.
Analysis of productivity losses across eight indices reveals companies listed on the ASX and the Hang Seng are currently most at risk but will be overtaken in the decades to come from the impact of sea level rises for companies listed on the Nikkei and FTSE.
XDI CEO Rohan Hamden said the XDI 1000's sobering insights demonstrates the importance of independent and comparable analysis, alongside Climate-related Financial Disclosures (TCFD) reporting.
"We published the XDI 1000 to show that an objective and globally consistent approach to physical climate risk reporting is not only possible but that it provides a desperately needed like-for-like comparison for regulators, shareholders and companies," XDI CEO Rohan Hamden said.
"We should prepare for these impacts to worsen in all markets but some companies and indices will be harder hit than others. The S&P 500 is not immune to these risks."
XDI 1000: https://xdi.systems/xdi-1000-benchmark/
XDI Insights: https://xdi.systems/xdi-1000-insights/
XDI 1000 media release (including image): https://www.prnewswire.com/news-releases/new-data-quantifies-significant-risk-to-global-indices-from-physical-climate-risk-301504144.html
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