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LONDON: Research by the Institutional Investors Group on Climate Change (IIGCC) says First Group, Delta Air Lines and Nippon Express number among 50 companies “highly exposed” to climate risk.

Together with Swatch, Valaris, Centrica, Kerry Group, Nestlé, Logitech International, Clorox, Campbell Soup, Nan Ya Plastics and Nissin Foods Holdings, they have been asked by the investor group to explain how they will respond to increasing threats of flooding, droughts and heat stress on their businesses.

To help them the IIGCC, which has over 330 members in 22 countries and €39 trillion in assets under management, has publishing a set of expectations for immediate company action:

• establish a climate governance framework which considers physical risks and opportunities alongside transition risk, underpinned by clear responsibility and a commitment to greater disclosure;
• undertake physical climate risk and opportunity assessments based on two or more climate scenarios, disclosing outputs from analysis and details of how this is integrated into strategic business decisions;
• develop and implementing a strategy for building climate resilience, which includes management of material risks and financial implications for the company, and identifying opportunities to provide adaptation solutions; and
• identify and report against risk, opportunity and impact metrics to demonstrate progress over time.

Investor group members, including AustralianSuper, the Environment Agency Pension Fund, Impax Asset Management and Lombard Odier, say they want these companies to adopt the recommendations to mitigate risk and then explain how they’re doing it.

“Companies cannot afford to ignore the impact that climate change could have on their businesses,” noted IIGCC CEO Stephanie Pfeifer. “It is more important than ever that investors are able to understand the risks and associated financial impacts that companies are facing when it comes to the physical effects of global warming.

“This means that they can effectively identify sectors and individual businesses that are resilient or well-placed to adapt, and increase engagement with those that don’t have an effective risk management strategy in place,” she said.

One company not on the IIGCC risk list is GEODIS that has put managing a customer’s environmental impact at the heart of its logistics services by identifying and improving all stages of a supply chain life cycle.

For one client it was able to permanently reduce CO2 emissions 51 percent over five years by combining the use of photovoltaic panels and LED lamps, recycling, optimising space and equipment, and the use of a BREEAM-certified building.

““With the development of e-commerce, more and more customers are calling on us to find solutions to decarbonise and reduce waste in the supply chain,” explained Laurent Parat, GEODIS Contract Logistics EVP and the company’s head of services for Western Europe, the Middle East and Africa. “ISO 14001-certified for many years, we wanted to take our environmental approach even further and move towards a responsible supply chain.

“Our approach is based on more transparent communication. It provides a guarantee to our customers that behind an offer and a price, environmental aspects have been taken into account and are part of the quality of service that we are committed to delivering,” he continued.

Last year the company employed 41,000 people to produce €8.4 billion in sales from a network spanning nearly 170 countries.

“In a world where temperature rises are becoming unavoidable, investors are faced with the reality that we cannot insulate our investments from the effects of climate change,” added Marion Maloney, IICCC member and head of Responsible Investment & Governance, UK Environment Agency Pension Fund.

“Instead, we need to be able to understand the material risks that companies are facing so that we can engage with them appropriately and build resilient portfolios, in line with investors’ fiduciary duty,” she added.
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