Investor Network on Climate Risk
The Investor Network on Climate Risk (INCR) is a network of investors and financial institutions that promotes better understanding of the financial risks and investment opportunities posed by climate change. INCR is coordinated by Ceres, a coalition of investors and environmental groups working to advance sustainable prosperity. History. The Investor Network on Climate Risk (INCR) was launched at the first Institutional Investor Summit on Climate Risk at the United Nations in November 2003. INCR's membership consists of more than 200 investors managing nearly $38 trillion in assets. Members include asset managers, state and  city treasurers and comptrollers, public and labor pension funds, foundations, and other institutional investors. INCR leverages the collective power of these investors to promote improved investment practices, policies, disclosure and corporate governance practices on the business risks and opportunities posed by climate change. Making the Business Case. Given the global nature of climate change, climate risk has become embedded, to a greater or lesser extent, in every business and investment portfolio. Severe weather events and changing weather patterns, current or impending regulations imposing a cost on carbon, and an altered competitive environment will have an inescapable impact on businesses. Climate  change is increasingly being seen as a strategic issue, and leading companies are taking action now to mitigate the risks and take advantage of the opportunities arising from climate change as a way to prepare for the emerging low-carbon global economy. Economic Risk. The risk that climate poses to any individual business varies, but nearly every company will face some type of pressure from the changing climate including: Companies with significant greenhouse gas (GHG) emissions or energy-intensive operations face risks from new state, national and international regulations limiting carbon emissions and imposing a cost on carbon. While momentum  for mandatory federal climate legislation is growing, California and 10 Northeastern states have already taken regulatory action to require emission reductions. Japan, China and other leading trading partners have instituted GHG emission reduction targets, fuel emission standards and renewable energy mandates. Meanwhile, all of Europe is reducing GHG emissions under a cap-and-trade carbon emissions trading program already valued at over 64 billion a year. All U.S. companies – including oil producers, banks and automakers – will be impacted by these fast-spreading regulations. Businesses are at risk from the physical impacts of climate change, including the increased intensity and frequency  of severe weather events such as prolonged droughts, floods, storms and sea level rise. Among the more recent examples is the $10 billion of insured losses, including the destruction of 116 oil platforms, that offshore oil producers suffered from the 2004-2005 Gulf Coast hurricanes. Tightly linked to regulatory risk in the global and domestic marketplaces, climate risk preparedness will be a key driver in a company's ability to compete. General Electric, for example, sees huge growth opportunities from its many new climate-friendly product lines, such as wind turbines, high efficiency gas turbines, IGCC power plants and  hybrid diesel-electric locomotives. Ford and General Motors are currently engaged in a high-stakes struggle to remain competitive as customers turn away from gas-guzzling SUVs in favor of hybrids and other lower-emitting vehicles from Japanese competitors. In China, auto sales are surging well beyond growth rates that the U.S. market has seen in recent decades. Yet, less than a quarter of current U.S. passenger cars and light-duty trucks can meet China's 2008 emission standards. Companies in carbon-intensive industries such as oil and gas, electric utilities, and automobile manufacturing are already starting to face litigation  concerning corporate contributions to global climate change. For example, eight state attorneys general, the City of New York and three land trusts brought suit in 2005 against the five largest electric utilities in the U.S., on the grounds that they were substantial contributors to the "public nuisance" of global warming. These and other similar cases pose a significant risk to businesses. Should the courts find against companies in such cases, the potential liability is immense. Even if some of the suits are unsuccessful, the costs of litigation and the reputation damage incurred by companies involved could be damaging in their  own right. Opportunity. The challenges and risks that climate change presents are enormous, but where there is challenge, there is the potential for growth. Companies are already finding space for new products and services within an increasingly "green" economy, and the momentum of this trend will only increase as the US and other countries embrace a low-carbon future. With the financial and competitive risks that climate change brings, forward-looking companies are finding the potential for enormous business opportunities as well. Clean technology, renewable energy sources, carbon emissions trading markets and energy efficiency efforts are the most vivid examples  of these opportunities: the growth of global markets for renewable energy, for example, hit $50 billion in 2005, and the market is projected to eclipse $150 billion by 2015. Companies are seizing on opportunities for creating new low-carbon energy-efficient products — GE's "ecomagination" program, for example, is expected to have sales of $20 billion by 2010. But companies in other sectors are reaping the benefits, too—banks, insurers, and others in the financial industry are also finding innovative ways of proving that for business, "green is green." Climate change, like any momentous challenge, provides opportunities  for growth for companies willing to be leaders. Hand in hand with the financial and competitive risks of climate change come opportunities to increase shareholder value, increase brand value and enhance competitiveness and profitability. Leading U.S. Companies. Since 2004, corporate leaders in many industries and leading investors have begun to meet the climate challenge. Consider the following examples: And companies have begun to reap the benefits: