Building resilience to the physical effects of climate change poses an unprecedented technological, economic, and environmental challenge for business and society. The recent increase in extreme weather events clearly demonstrates that even today’s weather can impact a company’s bottom line. Persistent rainfall, melting snowpack, and historic flooding along the Mississippi River in 2011 caused an estimated $2 to 4 billion in economic losses, while drought and heat waves in the Southern Plains and Southwest caused over $12 billion in losses. Some economists predict that losses from Hurricane Sandy could be three to four times higher than the $13 billion in damage created by Hurricane Irene in 2011. Companies incur property losses, supply chain disruptions, and electricity interruptions from events such as floods, storms, and droughts—all of which are forecast to become more frequent or severe with climate change.
These impacts and trends place an imperative on businesses to develop risk management approaches that help anticipate and address vulnerabilities to the physical effects of climate change. While not every company will be directly affected, a strong business case can be made for many companies to begin to assess current and future risks, and to identify steps to reduce those risks and maximize opportunities. But there has been little exploration and analysis of the most successful and cost-effective steps to address the risks that corporations across the economy are already beginning to face.
This research project is exploring the extent to which companies consider their vulnerabilities to a changing climate, and how those considerations may be incorporated into business planning and decision-making. The project includes a look at both business risks and opportunities, and will profile early actions that companies can take to build resilience to climate impacts. The outcome of the research will frame the key drivers for action; provide a framework that companies can use to begin to assess risks, opportunities, and prioritize actions; and describe the business decisions needed to undertake adaptation planning.
This research builds on our 2008 study, “Adapting to Climate Change: A Business Approach, [1]" which outlined an initial screening framework for assessing risks. As with past Center projects, we are drawing information directly from leading companies, including our Business Environmental Leadership Council [2] (BELC), and aim to develop a risk assessment and management framework that affected businesses and sectors could use in their own planning efforts. The research is being conducted through an assessment of climate adaptation efforts across key business sectors; in-depth business case studies; a by-invitation technical workshop [3]; and additional information sharing with the Center’s wide network of experts. The research findings will be published as an on-line report in early Spring 2013. The results should be of interest to corporate decision-makers who are developing or considering adaptation strategies, including risk managers, sustainability executives, financial analysts, and others.
To provide feedback or for more information about the initiative, please contact Meg Crawford, Markets & Business Strategy Fellow, crawfordm@c2es.org [4].
This initiative is made possible with a generous grant from Bank of America
Links:
[1] http://www.c2es.org/publications/business-approach-adaptation
[2] http://www.c2es.org/business/belc
[3] http://www.c2es.org/initiatives/business-adaptation-workshop
[4] mailto:crawfordm@c2es.org