Businesses Preparing For IPO Say Climate Change Is A Risk

A growing number of companies filing for IPO say that climate change is a threat to their business. According to Quartz, up to 15% of companies have mentioned climate change in their pre-IPO filings, a 10% increase since 2009.

The share of companies mentioning climate change in their initial public offering (IPO) registration documents has risen substantially over the last decade. These documents include the S-1 and F-1 forms required by the US Securities and Exchange Commission for both domestic and foreign filers.

In 2009, the number of companies mentioning climate change in their disclosures was closer to 5%. Now, the number is approximately 15%, suggesting that more businesses are considering climate change when planning for the future of the company.

Businesses might use marketing automation to gain a revenue increase of 10%, but others might go public to raise capital in hopes of expanding.

Among these companies is denim giant Levi’s. The clothing company recently filed to go public and listed various potential risks to its business including shifting market demand, changing trade policies, and climate change on its IPO registration documents.

Levi’s relies on cotton crops to create the denim its company is built on. Rising global temperatures will have a direct impact on how and where those cotton crops grow.

Two studies published in June 2018 found that unchecked global warming could increase the risk of crop failures and lead to less of the world’s nutritionally critical vegetables.

To combat the potential dangers that climate change poses, Democrats in the U.S. Congress recently introduced a nonbinding resolution calling for a Green New Deal.

The deal would address the causes of climate change such as CO2 emissions, pollution, and waste (up to 17% of everything printed is considered waste, and global consumption of bottled water increases by 10% each year). The deal would also invest in programs to help communities fight climate change’s effects.

Climate change has already started to affect the plant and our daily lives. For instance, the southwest has seen more droughts and heatwaves, hurricanes have gotten stronger, and animal populations have shifted. Even the number of Canadian geese have increased over the last 50 years.

Now, with the disclosure-heavy process of registering for IPO, we also know that climate change and related regulatory responses are adversely impacting U.S. businesses.

“Changes in weather patterns and an increased frequency, intensity and duration of extreme weather conditions could, among other things, adversely impact the cultivation of cotton, which is a key resource in the production of our products,” said Levi’s in their IPO registration documents.

“As a result,” Levi’s said, “the effects of climate change could have a long-term adverse impact on our business and results of operations.”

Other companies going public that are listing climate change as a risk factor include BJ’s Wholesale Club, Beyond Meat, AudioEye, and Northwest Oil and Gas Trading Company.

“Climate change could affect our ability to procure needed commodities at costs and in quantities we currently experience,” BJ’s Wholesale Club reported. “Climate change may be associated with extreme weather conditions, such as more intense hurricanes, thunderstorms, tornadoes and snow or ice storms, as well as rising sea levels. We also sell a substantial amount of gasoline, the demand for which could be impacted by concerns about climate change and which could face increased regulation.”

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