Consider three developments:
In the Arctic, the Northwest Passage is growing in size every year, creating new competition for faster shipping and resource exploration, and new engineering and safety challenges.
In California, the number of seniors dying from heat-related issues is set to rise sharply in coming decades, creating new challenges for health-care companies and insurance-providers alike.
Across the globe, the increase in temperature spikes and storm surges is making it harder for electric utility providers to offer uninterrupted power as profitably as they have in the past.
Although it’s difficult to attribute a single storm or season to climate change, it is fair to say that we’ll see more of these events as climate change sets in. For business managers who are focused on reducing greenhouse gas emissions as a key element of addressing climate change, these examples show that business must adapt to volatile and uncertain future weather to achieve sustainability.
To better understand what the private sector is and should be doing, BSR examined more than 500 company responses to the Carbon Disclosure Project, which represents more than 80 percent of Global 500 companies. We considered three things in our research: company disclosures on the risks and opportunities of climate change, what companies are doing about it, and opportunities for innovation based on current gaps. Our research yielded briefs on several different industries, available at www.bsr.org/adaptation.
We identified four steps companies should consider as they develop climate change adaptation strategies:
- Create value by understanding and addressing new customer needs. All companies need to evaluate how a changing and uncertain climate will affect customers, and consider how to better serve current and new markets. Hydration, energy management, micro-insurance, advanced weather prediction, better science and technology for agriculture, and real estate and building solutions are just a few areas in which companies can provide new products and services to address growing needs.
- Protect value by securing assets, operations, and supplies. Most companies will also be well served by taking action now to mitigate their operating risks. Companies that have operations or depend on suppliers near coasts, at flood plains, and in deserts will find that more extreme and frequent weather events can compromise infrastructure and disrupt suppliers. A number of sustainability approaches—such as local procurement, green building, and dialogue with communities—can help address these risks by diversifying assets and establishing redundant systems.
- Strengthen long-term geographic strategies. In addition to present-day weather events, climate change produces longer-term changes to physical geographies. Companies in the mining, transportation, travel, exploration, and buildings sectors should prepare for completely different physical landscapes and related business models. For those in farming, tourism, and health care, temperature changes will lead to migrations of people, plants, animals, and ecosystems services, changing the locations of the ingredients necessary for effective operations. Adjusting to this will take time, which means action is required now.
- Invest in vulnerable communities. All of these challenges will disproportionately affect poor and disenfranchised people by exacerbating issues such as water scarcity, high food prices, and the loss of insurance coverage. Companies should look for ways to help these vulnerable populations by offering the infrastructure, products, and services that increase their resilience. While doing so, they should also consider whether their operations might exacerbate challenges people are already facing due to changing weather patterns.
If your company is new to the concept of climate change adaptation, the first step is to assemble personnel with strategic and executive responsibilities and identify the most important issues. In doing so, consider potential “hot spots” in your company’s markets, operations, and plans (see sidebar for a selected list), and evaluate how more volatile and uncertain weather is likely to affect your company. Then identify the top questions that need to be answered, and establish responsibility for understanding the situation better, ensuring an ongoing review, and investing sufficiently in solutions.
For more on adapting to climate change, contact Ryan Schuchard at email@example.com.