Asian Listed Companies Face Rising Climate Risk Costs, Report Says

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Companies listed in Asia could face annual costs of about US$336 billion from physical climate risks by 2030, rising to US$477 billion by 2050, according to a new report by the Centre for Impact Investing and Practices, or CIIP.

The report, released on May 18, focuses on climate adaptation and resilience in Asia. It warns that while climate risks are becoming increasingly material for businesses, only 20 percent of the companies assessed have estimated the financial implications of physical climate risks.

CIIP, a Singapore-based non-profit centre established by Temasek Trust, prepared the report in collaboration with Temasek, Invesco and ImpactSF, with support from Dalberg. The study says Asia is warming at around twice the global average, and that 3.7 billion people in the region have been affected by climate-related disasters since 2000.

The report estimates that Asia will account for about 75 percent of the global climate adaptation and resilience financing gap by 2030. More than US$200 billion is needed annually across the region, compared with current flows of about US$19 billion.

To help close the gap, the study identifies more than 250 priority adaptation and resilience solutions across sectors including infrastructure, water, agriculture, energy and health. Of these, 65 are considered commercially viable, 93 are emerging opportunities that require catalytic capital, and 94 have low or no commercial viability but are considered foundational for resilience.

The report also found growing interest among funders. A survey of 165 Asia-based funders managing more than US$1 trillion showed that 49 percent are already investing in climate adaptation and resilience, while another 28 percent are exploring the area.

Separately, a McKinsey report cited by The Business Times said South-east Asia faces a US$25 billion shortfall in annual spending needed for climate adaptation measures to reach standards typically seen in developed economies exposed to extreme weather. The region currently spends about US$12 billion a year on 20 adaptation measures assessed in the study, while annual spending of about US$37 billion would be required to meet those standards.

The findings highlight climate adaptation as both a growing financial risk and an investment priority for Asia, where extreme heat, flooding, water stress and food security pressures are expected to place increasing strain on companies, communities and infrastructure.