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Climate change risk seen as growing issue

Posted On: May. 27, 2007 12:00 AM CST

Climate change risk seen as growing issue

BRUSSELS, Belgium—Climate change is a growing concern for European risk managers, according to the Federation of European Risk Management Assns.

In its response to a United Nations-sponsored report that highlighted the role of risk management in the mitigation of climate change effects, Brussels, Belgium-based FERMA said that climate change will become a more pressing issue for risk managers as companies attempt to improve energy efficiency and reduce greenhouse gas emissions.

The Intergovernmental Panel on Climate Change, a body of experts established by the World Meteorological Organization and the United Nations Environmental Program, published its fourth assessment report in Bangkok, Thailand, earlier this month.

The report highlighted the importance of mitigation in managing the effects of climate change, and stated that changes in lifestyle and behavior patterns can contribute to climate change mitigation across all sectors.

"Decision making about the appropriate level of global mitigation over time involves an iterative risk management process that includes mitigation and adaptation, taking into account actual and avoided climate change damages, co-benefits, sustainability, equity and changes to risk," according to the report.

Marie-Gemma Dequae, president of FERMA and risk manager for N.V. Bekaert S.A., said she believed that as companies seek to address climate change, risk managers inevitably will become more involved in those decisions.

Risk management is critical to the success of efforts to improve energy efficiency, she said.

An informal survey of its membership undertaken by FERMA earlier this year revealed that—as yet—climate change does not rank highly in risk managers' lists of concerns.

But, according to FERMA, many respondents said they believed that there would be increasing pressure upon their companies to improve energy efficiency and reduce greenhouse gas emissions.

"Part of the role of the risk manager is to take a longer-term view of the exposures to the company and the problems to be solved, so that we consider whether the way we do things now is going to be sustainable long term," said Franck Baron, director of global insurance and risk management for Geneva, Switzerland-based Firmenich S.A.

"One of those issues is the way we use energy," he said.

In addition, the U.K. Minister for Environment and Climate Change Ian Pearson, told a group of U.S business leaders at the Commission of Sustainable Development in New York earlier this month, that companies' vulnerability to climate change threats is of increasing concern to investors and shareholders.

"Climate change already poses risks to businesses—and these will only increase in future," he said.

"In the future, I expect a company's carbon statement to be as prominent as its financial statement. That's because investors are increasingly demanding reliable information about a company's global carbon footprint as well as what it is doing to reduce its (carbon dioxide) emissions," he said.