As the aftermath of extreme weather events around the globe has made clear, climate and the economy are intimately linked. For example, in 2017, the U.S. experienced Hurricanes Irma, Harvey, and Maria—three of the top five costliest hurricanes in U.S. history.
Furthermore, an economy characterized by layers of exclusion and structural discrimination amplifies climate risk by exacerbating the social, economic, cultural, and political vulnerability of marginalized individuals and communities. In other words, the poorest are most likely to be hit the hardest by the impacts of climate change, and this will be particularly pronounced both within less inclusive societies and in less affluent communities around the globe.
Conversely, an inclusive economy with improved employment practices, job quality, and job access; increased affordability and access to critical products and services; and enhanced community and government engagement can boost our capacity to anticipate, absorb, accommodate, or recover from the effects of climate change. In essence, when a company learns to work at the “nexus,” or intersection, between climate and inclusion, it becomes more climate-resilient and ready to respond to climate impacts. That is one reason why today we are excited to publish Climate and Inclusive Economy: The Business Case for Action—the latest in our climate nexus report series that explores the intersection between climate resilience and key sustainability issues.
As we begin to experience the reality of our already-changing climate, there remains a critical need for business to support society in adapting to climate risk and to do so in a way that addresses inequality and structural inclusion.
The business case for undertaking this effort now is clear: While business has been working to address climate change for years now, much of the work done thus far has consisted of steps to mitigate greenhouse gas emissions. However, as we begin to experience the reality of our already-changing climate, there remains a critical need for business to support society in adapting to climate risk and to do so in a way that addresses inequality and structural inclusion.
What exactly does this look like? We applied our “Act, Enable, Influence Framework” to consider how companies are working across their value chains, collaboratively with partners, and to influence governments and policies to advance more inclusive economies that build climate resilience.
- Act: Businesses should improve enterprise risk management systems by investing in human, social, natural, physical, political, and financial assets, which provides a more holistic approach to climate risk, looking further than infrastructure and operations to consider how climate affects people. For example, businesses can build resilience by enhancing employment practices.
- Noting a decrease in crop yield and quality from farm suppliers, Woolworths developed an initiative aimed at providing additional assistance to farmers challenged by increasingly difficult growing conditions. The initiative provides guidance to producers on agricultural best practices, with a heightened focus on water conservation for South African producers. It also helps organize farm partners toward collective action and engagement with the broader ecosystems of partners needed to preserve the function of their community water resources.
- Enable: Businesses can enable greater resilience in part by increasing the affordability of and access to products and services.
- Sompo Holdings took a significant leadership role in the insurance industry by launching its Weather Index Insurance product that helps farmers cover the revenue losses caused by extreme weather events.
- Influence: Businesses can seek to create an enabling environment for inclusion and resilience through stronger community and government engagements.
- Allianz Re became a founding partner of a multi-stakeholder partnership aiming to provide governments and NGOs with improved agronomic data on rice production. This partnership intends to support new climate and food security policies in Southeast Asia, as well as support enhanced crop insurance programs.
It’s clear that companies can play a critical role in building corporate and community resilience through inclusivity. Considering inclusivity in everyday business practices and new programs, products, and services can both benefit climate resilience and create a more inclusive economy.
Addressing the underlying vulnerabilities that marginalized communities and populations face will help to build a more resilient society—one in which businesses can thrive. To learn about the “nexus” between climate and inclusive economy, read our new report, Climate and Inclusive Economy: The Business Case for Action.
BSR’s climate and inclusive economy nexus report is the third in our series, which also includes reports on the intersection between climate and both supply chains and health. Stay tuned for more on the connections between climate resilience and women’s empowerment, human rights, and a just transition to the low-carbon economy in the months to come.