New data released by CDP indicates that European companies are pricing in the financial implications from climate change.

The data comes from companies listed on the FTSE 350 and STOXX Europe 600 stock market indices which responded to CDP’s 2021 climate change questionnaire, with disclosing companies including Shell, Vodafone, Adidas, Deutsche Bank, and ArcelorMittal.

CDP’s analysis looked at how they are aligned with key recommendations from the Taskforce on Climate-related Financial Disclosures (TCFD). These recommendations include topics such as: setting emissions targets, identifying risks and opportunities, financial planning, and levels of governance.

Over 500 companies (84 per cent) on the STOXX Europe 600 responded to CDP, covering $11tr in market capitalisation and 225 (64 per cent) of the FTSE 350 provided data, covering $2.5tr.

The cost to companies from frequent extreme weather events and long-term shifts in climate patterns had a financial impact, from both acute and chronic physical risks, of $575bn across both indices. The financial sector accounted for 80 per cent of this total, which suggests the real economy may be underestimating the impact of climate change.

The results also show European companies are making progress on climate awareness: over 90 per cent of all reporting companies on both indices provided data on at least 80 per cent of the TCFD-aligned questions.

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