European Investors Urge Companies to Assess Climate Risks

Large companies should analyze the impacts of climate change on their operations in a range of possible future scenarios to reach performance and financial targets, according to investors and asset managers.

Companies today tend to look primarily at their carbon footprints, which is the total amount of greenhouse gases—primarily carbon dioxide—that a particular human activity releases into the atmosphere.

Scenario analyses, however, could help investors understand the physical risks to companies of climate change—for example, if their facilities are likely to be vulnerable to increased flooding.

It would also help them understand the risks related to a transition away from ...