By: Sara Kendall, Weyerhaeuser
Publsihed in The Environmental Forum, January 2014
Companies have long engaged in risk assessment and mitigation as a core business practice.
The Intergovernmental Panel on Climate Change in its 2012 report “Managing the Risks of Extreme Events and Disasters to Advance Climate Change Adaptation” observes that heavy precipitation, heat waves, and droughts have increased over the last half century. Businesses may not have a position on climate change, but they understand how a flood can shut down transportation, a hurricane can topple buildings and powerlines, or extreme temperatures can disrupt markets and threaten operations and supply chains.
As noted in a recent report by The Center for Climate and Energy Solutions, “Weathering the Storm: Building Business Resilience to Climate Change,” there are significant costs associated with these weather events. In 2012, over 800 major weather-related disasters worldwide led to $130 billion in losses. The most expensive events cost more than $1 billion each. Further, 90 percent of the S&P Global 100 Index identified extreme weather and climate change as a current or future risk. Of those, more than one third stated they’ve already experienced adverse effects. It isn’t about whether a company believes in climate change. This is about staying in business.
The C2ES report highlights companies’ efforts to build business resilience. Not surprisingly, the insurance industry is among the first sectors to pay attention. Utility companies are building redundancy and looking at innovative approaches to handling storm surges. Natural resource companies have the added risk that their “factories” are directly exposed to weather conditions.
To get more insight on these issues, I asked Eileen Claussen, president of C2ES, to respond to a few questions raised by the report.
What does business resilience really mean?
"Companies have always navigated a changing business environment. But now they face a changing physical environment, as climate change leads to more frequent and intense heat waves, higher sea levels, and more severe droughts, wildfires, and downpours. Business resilience means assessing and managing these impacts on a company’s facilities, operations, supply and distribution chains, and costs."
Is building business resilience risk management or new business development?
"Both. Extreme weather is certainly a risk. It can close facilities, delay production, disrupt supply and distribution chains, raise operation and capital costs, and reduce demand. Extreme weather can also keep employees from getting to work, disrupt communication systems, and threaten the availability of power and water supplies. But there also are business opportunities in becoming more resilient. Some companies are already working on drought-resistant crops, storm-resistant building materials, and weather-related insurance products. Forms of distributed generation, which provided resilient electricity in the aftermath of Hurricane Sandy, are promising growth areas as well."
Are you encouraged by what you see being undertaken by businesses to prepare for and respond to extreme-weather events?
"What’s encouraging is that in our discussions with CEOs and members of corporate boards, we’re not being asked, “Is this a problem?” We’re being asked “What should my company do?” Most of the largest global companies are using existing business continuity and emergency management plans to assess and manage their climate risks. But only a few companies say they’ve used climate-specific forecasting tools to assess how these risks are evolving and the potential business impacts. These companies are generally dependent on a key commodity or operate in high-risk locations. So while the vast majority of firms acknowledge risks from extreme weather and climate change, their actions so far to address the risks aren’t going much beyond business as usual."
Where do you think more should be done, and what do you see as the biggest barriers for companies?
"Companies tell us they need user-friendly, localized projections of climate change, and models that can link these projections to specific business impacts. Those in regulated sectors such as water, electricity, and insurance need regulators to be open to the case for increased spending on resilience and policies that encourage customer decisions about sufficient levels of risk mitigation."
Is building business resilience private or public sector work?
"Both. Companies need to manage risks to their facilities and supply and distribution chains, but they also need governments to invest in strengthening resilience of public infrastructure. That’s one reason why we recommend voluntary public-private partnerships to bring together government and business expertise to develop and improve resilience planning.
My view: The bottom line is that extreme weather events are likely to continue and companies should think about building business resilience in a changing climate. We all will be better off if we’re better prepared."
Sara Kendall is vice president, corporate affairs and sustainability, Weyerhaeuser Company. She can be reached at sara.kendall@ weyerhaeuser.com.
Copyright© 2014 Environmental Law Institute®, Washington, DC. Reprinted with permission from ELI®.
A Primer on Federal Surface Transportation Reauthorization and the Highway Trust Fund
by Nick Nigro and Cindy Burbank
Happy New Year! It’s time to think about your resolutions for 2014. Consider making one that will result in a cleaner environment, a more stable climate … and a happier you. Here are a few ideas:
- Pledge to save energy. Take these actions to save money and energy, and leave the environment healthier for everyone in the New Year.
- Keep your gatherings food-waste free. Americans throw away 34 million tons of food every year. To reduce your waste, take what you know you’ll eat and make leftovers with any remaining food. Learn more in this blog.
- Compost it. Composting can be done in a pile in the yard, an outdoor bin, or even in a vermicompost (worm) bin indoors. You can build your own or purchase one online. Composting can help reduce the 1.3 billion tons of food that goes to waste globally and help reduce methane, a highly potent greenhouse gas.
The mining industry is especially susceptible to heavy rainfall, changing weather conditions and rising sea levels. Such events can stall transportation, halt electricity generation and threaten the safety of employees and facilities. Sue Lacey, Rio Tinto's Principle of Climate and Energy, will discuss strategies and opportunities for building a more resilient business.
Title: Building Business Resilience to Climate Change: Rio Tinto
Date: Wednesday, December 4, 2013
Time: 2:00 PM - 3:00 PM EST
Federal agencies trying to meet tougher sustainability mandates can make significant progress toward their goals by taking advantage of more efficient data storage and other information and communication technologies.
At the NextGov Prime 2013 conference, Scott Renda of the White House Office of Management and Budget and I outlined some of the ways these technologies can lead toward a greener government that saves energy – and money.
Extreme weather poses some unique challenges and opportunities for the water industry. The variation and intensity of rainfall, flooding and drought can affect the ability to draw, treat, and provide water to customers. Extreme weather also plays a role in the location of plants and water treatment technologies. Dr. Mark LeChevallier of American Water will describe efforts by of the world's leading companies to confront these factors.
Title: Building Business Resilience to Climate Change: American Water
Date: Wednesday, November 13, 2013
Time: 2:00 PM - 3:00 PM EST
Weathering the Storm: Building Business Resilience to Climate Change
Date: Monday, November 18, 18:00-19:00
Location: US Center, National Stadium
Building off the C2ES report, “Weathering the Storm: Building Business Resilience to Climate Change,” corporate leaders will discuss the risks of extreme weather and some ways to begin assessing and managing those risks. Among the steps that could help are: creating a clearinghouse for up-to-date data and analytical tools; investing in public infrastructure; considering resilience needs in regulation; and developing voluntary, public-private partnerships.
- Nancy Sutley, Chair, White House Council on Environmental Quality
- Giles Dickson, Vice President, Environmental Policies & Global Advocacy, Alstom
- Jennifer Layke, Executive Director, Institute for Building Efficiency, Johnson Controls
- Timothy Juliani, Director of Corporate Engagement, C2ES
Reception: “Increasing Stakeholder Engagement”
The Edison Electric Institute (EEI), Center for Climate and Energy Solutions (C2ES), and International Emissions Trading Association (IETA) invite you to a reception recognizing the importance of increasing the involvement of stakeholder groups in the UNFCCC process – one of the key themes of COP-19.
Date: Monday, November 18, 19:30
Location: US Center, National Stadium
U.S. Climate Policy: An Update on Federal and State Action
Date: Tuesday, November 19, 18:00-20:00
Location: EU Side-events (1st floor), Room Brussels, National Stadium
Senior U.S. and California officials and business and environmental stakeholders will examine progress and challenges in advancing domestic policies to reduce U.S. greenhouse gas emissions.
- Matt Rodriquez, Secretary, California Environmental Protection Agency
- Jonathan Pershing, Deputy Assistant Secretary for Climate Change Technology and Policy, U.S. Department of Energy
- Marnie Funk, Senior Advisor, CO2 Advocacy, Oil Sands & Renewables, Shell Oil
- Jake Schmidt, International Climate Policy Director, Natural Resources Defense Council
- Elliot Diringer, Executive Vice President, Center for Climate and Energy Solutions
C2ES launched the Alternative Fuel Vehicle (AFV) Finance Initiative in early 2013 to identify new types of financing to speed the deployment of AFVs and fueling infrastructure. C2ES and its partners are working in states with public and private stakeholders to learn more about markets, identify financial barriers, and develop new approaches to deploying AFVs and fueling infrastructure by taking maximum advantage of small pubic investments or making new business arrangements. C2ES assembled the AFV Finance Advisory Group to help guide its work.
The initiative currently consists of two projects. For more information, see About AFV Finance or the C2ES resources linked below.
Businesses face growing threats from extreme weather and climate change: damage to facilities, loss of water or power supplies, higher costs, and disruption of supply and distribution chains.
In a major report, Weathering the Storm: Building Business Resilience to Climate Change, C2ES provides a detailed snapshot of the state of resilience planning among a cross-section of global companies and outlines steps companies can take to better assess and manage their growing climate risks.
Click above to see our infographic, with key takeaways
The report includes a comprehensive review of resilience practices among S&P Global 100 Index companies and detailed case studies of six companies in diverse sectors: American Water, Bayer, The Hartford Group, National Grid, Rio Tinto and Weyerhaeuser. It also draws on input from a technical workshop with representatives of a wide range of industries.
- Ninety percent of S&P Global 100 Index companies identify extreme weather and climate change as current or future business risks.
- Almost two-thirds (62 percent) say they are experiencing climate change impacts now, or expect to in the coming decade.
- Companies are most concerned about the direct impacts of extreme weather on property, production and supplies, and indirect impacts on operational costs, such as higher prices for commodities or insurance.
- Most companies are managing these risks through existing business continuity and emergency management plans. Only a few have used climate-specific tools to comprehensively assess risks.
- Most companies (75 percent) also see new opportunities from a changing climate, including drought-resistant crops, storm-resistant building materials, and weather-related insurance products.
- Create a clearinghouse for reliable, up-to-date data and analytical tools. Companies need user-friendly, localized projections of climate changes and models that link projections to impacts that matter most.
- Invest in public infrastructure resilience. Roads, bridges, ports, and other public resources used to transport goods and services to market must withstand extreme weather and climate impacts.
- Consider resilience needs in regulation. Companies in regulated sectors, such as water, electricity, and insurance need regulators to be forward-looking and open to companies making the case for more spending
- Set up voluntary, public-private partnerships. Bring together government and business expertise to improve resilience planning.
- Executive Summary of the report.
- C2ES Blog Post: Weathering the Storm: How to build business resilience to climate change
- Press Release on “Weathering the Storm: Building Business Resilience to Climate Change”
- Our 2008 study, “Adapting to Climate Change: A Business Approach," which outlined an initial screening framework for assessing risks.
- The C2ES Business Environmental Leadership Council (BELC).
C2ES would like to acknowledge Bank of America for its collaboration and generous financial support.