Climate change could be considered a fundamental factor in whether firms thrive, merely survive, or die, suggests a new report from Lehman Brothers.

“Global warming, we judge, is likely to prove one of those tectonic forces that – like globalization or the ageing of populations – gradually but powerfully changes the economic landscape in which our clients operate, and one that causes periodic sharp movements in asset prices,” it concludes.

“Firms that recognize the challenge early, and respond imaginatively and constructively, will create opportunities for themselves and thereby prosper. Others, slower to realise what is going on or electing to ignore it, will likely do markedly less well,” it predicts.

The report notes that the past year has seen a significant shift in the debate on climate change. “No longer the preserve of scientists and political activists, it has started to occupy the mainstream of everyday discussion,” it says. “In the world of business and finance, climate change has developed from being a fringe concern, focusing on the company’s brand and its Corporate and Social Responsibility, to an increasingly central topic for strategic deliberation and decision-making by executives and investors around the globe.”

Driving all this is an emerging consensus on three broad points, Lehman says: that Earth is warming; that this is the result in large part of mankind’s emission of greenhouse gases; and that there will be significant consequences for Earth’s environment.

“While climate change may well be a slow-moving force, asset prices will on occasion move sharply, when new evidence reaches the market, or policies are changed,” it predicts.” Businesses are likely to be affected both by climate change itself and by policies to address it through: regulatory exposure; physical exposure; competitive exposure; and reputational (including litigational) exposure.”

Sectors particularly likely to be affected include: utilities; integrated oil and gas; mining and metals; insurance; pharmaceuticals; building and construction; and real estate. “Within each sector, many firms will find ways of turning change to their advantage, while others will fail to adapt,” it says.

“The firms that will prosper in a climate-changed world will tend to be those that are: early to recognize its importance and its inexorability; foresee at least some of the implications for their industry; and take appropriate steps well in advance,” it says. “This is likely to involve, within an overall framework of good management practice: inculcating in management a constructive culture of adaptation to a changing economic landscape; encouraging employees to embrace change, and equipping them to do so; undertaking the requisite research and development, which is often highly industry- or even firm-specific; and, translating this research and development into appropriate investment in physical and human capital.”

“The pace of a firm’s adaptation to climate change and related policy is thus likely to prove to be another of the forces that will influence whether, over the next several years, any given firm survives and prospers; or withers and, quite possibly, dies.”