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Exclusive-Centrica, Nestle, Swatch among companies exposed to physical climate risks-investors By Reuters

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© Reuters. FILE PHOTO – The Losentze River is shown after the flash flood that occurred in Chamoson (Switzerland), August 12, 2019. REUTERS/Denis Balibouse

By Carolyn Cohn and Nina Chestney

LONDON (Reuters) – European energy firms Centrica (OTC:) and Galp, food group Nestle and watchmaker Swatch are among 50 companies worldwide that are highly exposed to physical climate risks, investors with $10 trillion in assets said on Thursday.

Institutional Investors Group On Climate Change said that companies involved in energy, mining, food or technology manufacturing, transport, and utilities are more susceptible to flooding issues than any other company in the same sector or region.

The investors sent a request to more than 50 IIGCC member companies to ask them to properly identify and deal with events like flooding, droughts, and extreme heat.

IIGCC issued a list of requirements for companies to build resilience to the physical effects of climate change. This included reporting on a range of risk metrics and scenario testing.

Shell (LON.) is planning to appeal the landmark decision on this issue. Investors and activists are pushing companies to lower their carbon emissions.

But physical risks to a business can be overlooked, said Marion Maloney, Head of Responsible Investment & Governance at Britain’s Environment Agency Pension Fund.

We believe there are only two aspects to the climate debate. Often the less-known physical risks component is what gets the least attention.

These expectations should be reflected in every company that I have in my portfolio.

Lombard Odier, Impax Asset Management, and AustralianSuper were also among the other investors who signed the letter.

British Gas is owned by Centrica, one of Britain’s largest energy providers. It stated that it was currently “assessing both transitional and physical risks” and “increasing disclosures about the results of its analysis to comply with best practices.”

Switzerland’s Nestle said it was “already undertaking scenario analysis to assess physical impacts on our value chain over a longer time horizon”, adding this would “provide direction for our mitigation and adaptation actions across our raw material sourcing and operational footprints”.

Galp Energia, Portugal said that its commitment is to transparency and quality in information provided to investors and others.

“This year, we also concluded an evaluation of climate risks and opportunities, including physical and transition, that may impact Galp’s expected portfolio by 2025, 2030 and 2050,” Galp added.

Swatch, Switzerland, declined to comment.

It comes before the November round of world climate talks in Scotland. Governments are being encouraged to speed up their efforts towards net zero emissions by 2050.

The investor initiative comes after a United Nations landmark climate report was released in August, warning of the dangers of global warming spiraling out of control.

These companies were identified by Four Twenty Seven and the IIGCC, which conducted research on climate risks data.

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