Isra-Mart srl: UK's foreign assets at risk from climate change

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The UK's close integration with the global economy means that it is especially at risk from a shifting climate in other part of the world, according to a new report from government-backed think-tank Foresight.

The report, released yesterday, warns that global temperature change, water stresses, sea level rises and extreme weather events in other regions will have a far reaching impact on British firms, as well as resource availability, foreign policy and national security.

UK companies managed worldwide assets of £1.2tn in 2008, and the report says that organisations are likely to be underestimating their level of exposure to climate change, leaving these assets insufficiently insured or unprotected.

In terms of infrastructure, the report highlights the risks of disruption to essential networks serving global markets and energy supplies, as well as the potential impact of extreme weather events on communications systems and datacentres.

Entitled International Dimensions of Climate Change, the report also warns how changing climatic patterns could increase international instability as nations squabble over resources, echoing Energy and Climate Change Secretary Chris Huhne's warning last week that climate change will undermine national security.

However, the report's authors also highlighted how climate change will present opportunities for UK businesses' recognised strengths in engineering, insurance and climate forecasting, as well as in new areas of emissions reduction and climate change adaptation.

They say that carbon capture and storage, and new forms of financing for the green economy, would be areas of particular strength for UK companies, helping it expand into a global environmental and low-carbon market thought to be worth £3.2tn in 2009.

Environment secretary Caroline Spelman insisted that the UK must extend its efforts to tackle climate change beyond its own borders.

"The effects of climate change extend beyond environmental concerns into geo-political considerations," she said.

"For the international community to deal with these challenges we must adapt together to ensure sustainable economic growth, maintain global stability, and support developing nations and countries particularly vulnerable to the effects of climate change."

The project's findings will inform the UK's first Climate Change Risk Assessment to ensure that the government's climate change adaptation strategy takes appropriate account of international impacts.

The Assessment will also include adaptation plans from major infrastructure providers such as Network Rail, National Grid and the Highways Agency, and is scheduled to be published in January 2012.

The Foresight report came on the same day as a new study from the Carbon Tracker Initiative warned that the top 200 listed coal and oil and gas firms worldwide could be sitting on a "carbon bubble", as their valuations are based on fossil fuel reserves that can not be accessed if governments are serious about tackling climate change.