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How CFOs can help companies weather climate change

CFO Insights 

In this issue of CFO Insights, we’ll explore the multitude of forces pressuring companies to act now on climate change and examine some of the ways CFOs can fortify their companies against the expected economic damage it could generate.

As the environmental impact of climate change becomes more and more visible, finance leaders around the world are on the front lines of calculating the risks and bolstering their companies’ financial resilience in the midst of such ongoing threats.

Both the North American CFO Signals™ survey for the fourth quarter of 20191 and the Autumn 2019 European CFO Survey2 asked finance executives what their companies are doing to address climate change risks, to what extent different stakeholders are pressuring them to act, and what specific steps their companies have taken. Among North American CFOs, more than 70 percent said their company is under at least moderate pressure to act from at least one stakeholder group. Sixty-one percent of European CFOs (representing 19 countries) reported that they feel pressure to act from three or more stakeholders.

The increasing frequency and severity of climate-related disasters has raised the specter of unforeseen losses. By the US government’s count, the country endured 14 separate billion-dollar (or more) weather and climate disaster events in 2019, at a total cost of $45 billion. For CFOs, such events indicate the high potential impact that climate change may have on future operations and financial returns—whether in the form of physical risks (rising temperatures, lower crop yields, etc.), as a result of the transition to a low-carbon environment (for example, investments in updated equipment), or of having to accommodate a shift in consumer preference.

In this issue of CFO Insights, we’ll explore the multitude of forces pressuring companies to act now on climate change and examine some of the ways CFOs can fortify their companies against the expected economic damage it could generate.

How CFOs can help companies weather climate change

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