Six sectors in climate change risk "danger zone"

Aviation, healthcare, oil and gas, tourism, transport, and the financial services sectors have been accused of putting their head in the sand over climate change risks by a major new report from consultancy KPMG.

The Climate Changes Your Business report is based on analysis of 50 separate climate change risk assessment studies and concludes that while almost all industries underestimate the threat posed by global warming, a number of sectors are particularly guilty of failing to prepare for climate change.

The report divided climate change risks into physical, regulatory, reputational and legal risks and then measured companies risk exposure and ability to adapt to climate change using data complied by the Carbon Disclosure Project.

Each of the sectors classified as being in the danger zone scored highly in terms of the risk they face but poorly in their preparedness to put in place adaptation measures.

The oil and gas sector was deemed to face the greatest risk with recent attempts by energy firms to diversify into the renewable energy sector offset by the sheer scale of upheaval the industry faces as countries shift towards a low carbon economy.

Financial institutions were also found to be particularly exposed to climate risks as a result of their investment portfolios and increasing environmental awareness amongst their customer bases. The tourism sector was deemed to be underestimating the physical effects climate change will have on many of the sectors most popular resorts.

Timothy Flynn, chairman of KPMG International, advised that companies should be assessing the direct implications on their business such as extreme weather conditions as a matter of best practice, but should not ignore indirect effects such as the way environmental regulations could impact their operations. They should also seek to benefit from climate change opportunities, he said, for example through the development of more energy efficient products.

Even the three sectors that fell into KPMG's safe haven risk group – telecommunications, chemicals and food and beverages – could still face significant disruption as a result of climate change, according to Alan Buckle, chief executive of KPMG's advisory division in Europe.

He said that even the supposedly lower-risk food and beverage sector had already shown that it is highly vulnerable to climate change related risks such as increasing commodity prices. "The idea that this sector is relatively safe from climate change effects is likely to reflect a significant under-estimation of risk," he argued, adding that all companies should invest in preparing to adapt to climate change now.

"Companies which understand their climate risks will be best placed to manage those risks and will be able to grasp the competitive advantage that comes with fuller and earlier understanding," he said.