The effects of climate change could cost businesses nearly $1 trillion in as few as five years, according to a new study.
On Tuesday, international nonprofit CDP released its Global Climate Change Analysis 2018 report, featuring financial and environmental disclosures from 6,937 companies across the world. A subset of 215 companies--some of the largest in the world, by market value--provided specific estimates of the financial toll they'll face from climate change. Added up, that amounts to $970 billion.
"Over half of these risks were reported to be likely, very likely, or virtually certain to materialize in the short- or medium-term (around five years or earlier)," reads the report from CDP, which operates a disclosure system for investors, companies, cities, states, and regions to manage their effect on the environment.
While the report focused on larger companies, climate change is liable to hamper businesses of all sizes. Extreme weather patterns and rising global temperatures could cause unexpected business interruptions and cut into supply chains across countless industries.
The risks aren't just physical. The cost of addressing government-enforced remedies and climate-focused policies may also take a toll. On Tuesday, former U.S. vice president and current Democratic presidential candidate Joe Biden introduced a plan to reinstate Obama administration climate policies, as well as proposals that would go beyond the achievements of past administrations.
Both types of risks have the ability to significantly curtail small-business growth across America: 53 percent of companies surveyed identified inherent climate-related risks. Among a subset of 500 large corporations, that number jumped to 82 percent.
There's also opportunity. Of those 500 large companies featured in the study, 225 estimate that they could potentially gain $2.1 trillion by exploiting risks associated with climate change in the near future. For instance, growing demand for products and services that produce lower emissions can lead to new revenue streams, according to the report.
Many high-profile startups and private companies are already in the vanguard of climate-change readiness. Allbirds, the three-year-old shoe brand, gained popularity for its commitment to environmental sustainability. Outdoor apparel retailer Patagonia's climate strategy has turned unapologetically political in recent years, and business has boomed as a result. TemperPack, a startup aiming to eliminate Styrofoam from shipping supply chains, was featured on Inc.'s Rising Stars list in April.