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World's Biggest Companies Forecast $1 Trillion Risk From Climate Change

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Over 200 biggest global companies in the world have predicted that they face nearly $1 trillion risk from climate change, most of which is likely to be incurred over the next five years, a report said Tuesday.

The report from the international non-profit CDP, formerly known as the Carbon Disclosure Project, is based on data from 366 biggest companies, representing a market cap of $28.7 trillion as of February 13.

CDP is an influential charity that campaigns for reduction in greenhouse gas emissions, safer water resources and protection of forests.

More than 80 percent of these companies expect major climate events such as extreme weather patterns, rising global temperatures and higher pricing for greenhouse gas emissions, the CDP report said.

Companies reckoned that $500 billion of costs are virtually certain and a significant risk would be the higher operating costs linked to legal and policy changes.

They expect to see $250 billion in losses due to write-off of stranded assets that can include fossil fuel assets, which may loose market amid a transition to low-carbon economy. Assets can also become redundant due to significant exposure to the physical impacts of climate change.

Meanwhile, companies assessed that the potential value of climate-related opportunities is nearly 7 times the cost of achieving them. They valued opportunities at $2.1 trillion and costs at $311 billion.

Financial sector firms were the most hopeful of revenue from the climate-related business and they expect to generate $1.2 trillion from new sustainable products and services.

However, the same industry would see the large part of risks - about 80 percent of all financial risk value, the CDP report said.

Fossil fuel companies, which are one of the main ones to be hit by the climate change, expect to generate $141 billion from climate-related business.

The CDP pointed out that fossil fuels companies see more opportunities than risks from the low-carbon transition, and this raises questions about the quality of the data they provided.

"While our research shows that financial organizations see the most opportunities and value at risk from climate change, a more concerning story may sit behind this statistic," Nicolette Bartlett, Director of Climate Change at CDP, said.

"It is likely that this growing awareness is partly caused by the increased scrutiny of regulators and stakeholders.

She stressed that the potential gaps in awareness and disclosure elsewhere in the economy present real risks.

Bartlett urged regulators and investors to step up action to cope with climate change.

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