More than half of S&P 500 companies hold assets at high risk from climate change, according to an S&P Global presentation Wednesday at the 2020 Annual Meeting of the World Economic Forum in Davos.
The biggest physical risks for those companies come from heat waves, wildfires, water stress and hurricanes linked to rising average global temperatures. Another key factor is the location of assets, which outweighs the industry or sector, S&P Global found.
Companies in the S&P 500 index own physical assets in 68 countries, and 60% of them hold assets that are at high risk of at least one type of climate-related physical event. Some, like real estate investment trusts with portfolios concentrated in the U.S., U.K., and Canada, face heightened risk from sea level rise.
The presentation incorporated data from the Climate Change Physical Risk Analytics dataset from Trucost, part of S&P Global, and from S&P Global Platts. The research looked at the effects of climate change that pose important transition and physical risks for companies and investors through regulation, changing market dynamics, technology and other factors.
According to an analysis by S&P Global Platts, the most likely scenario of expected policy actions and technological innovation would see emissions stabilizing after about 2025, which is still far above needed targets.
