Mayor Boris Johnson urged to
act as over half of the largest 100 companies listed on London Stock Exchange
are found to have no plans to deal with climate risks.
London’s
economy is increasingly vulnerable to climate change because of the city’s
status as a global financial centre and the international connections of its
businesses, a report by the London assembly has found.
It urges more action to prepare the city for climate risks from mayor Boris
Johnson.
Just over half of the 100 largest businesses listed on the London Stock
Exchange have no adaptation strategy in place to prepare for the risks posed by
climate change, which include floods, droughts and heatwaves. The effect of
such extreme weather conditions is likely to fall most heavily on small and
medium-sized businesses, outside the FTSE 100, which are least equipped to bear
the brunt. Nearly two-thirds of such businesses have no plan in place to deal
with climate change.
London’s status as a financial centre means it is vulnerable in other ways
to climate-related shocks around the world too. The capital’s financial sector
is exposed to risks internationally, the report found, including through its
investment in fossil fuels. If controls on carbon dioxide emissions are brought
in by governments around the world then reserves held by coal, oil and gas
companies risk being rendered worthless. The Bank of England is currently preparing
a report on these overvalued assets - the so-called carbon bubble.
Other businesses, which are seemingly far from the effects of climate
change, must also take account of it, according to the report’s authors. They
cited the floods that afflicted Thailand in 2011, which affected the makers of
many computer components, and the damage done resulted in higher prices
throughout the IT hardware supply chain, which affected London companies.
Food prices are also likely to be affected by climate change, the report
found, with knock-on effects throughout the UK.
The report from the London assembly, called "Weathering the Storm: The
Impact of Climate Change on London’s Economy”, called for more emphasis on
climate change policies from the mayor Boris Johnson. His economic development
strategy for the capital does not currently feature climate change with any
prominence, the report’s authors argued.
The group also found that the London Pension Fund Authority, which controls
pensions for the assembly, should look at the potential for diversifying its
investments, including possibly taking money out of coal. Campaigners have called
for the the £4.8bn pension fund to be divested entirely from fossil fuels.
The report found that London’s "adaptation sector” was worth about £431m in
turnover in 2011 to 2012, employing about 4,000 people, in industries such as
construction.
Jenny Jones, Green party assembly member and co-author of the report, said:
"Too little is being done to understand and prepare for the potential costs of
climate change. London faces a great unknown when it comes to how our supply
chains and economy will be hit by extreme weather events.”
She added: "Detailed work is essential to secure London’s future economic
prosperity. We need to diversify London’s economy and further invest in our
green economy. That way, our city will be stronger and more resilient whatever
the level of future global warming.”
Jenny Bates, campaigner at Friends of the Earth, said: "Climate change is
not only a massive threat to Londoners through increased droughts, heat waves
and flooding - it could devastate our economy too. Tackling climate change
should be a top priority for the mayor. London must prepare for the
consequences of global warming and do far more to play its part in cutting
emissions through, for example, the development of clean energy and transport
infrastructure.”
She also called for measures to cut greenhouse gas emissions, such as
stopping the expansion of airports and road-building, which she said would also
help to cut air pollution, and called for financial institutions in the City of
London to support low-carbon projects around the world.
(The
Guardian)