April 16, 2008
Contact: Tom Steinfeldt, (703) 516-4146
PEW CENTER REPORT OUTLINES ADAPTATION STRATEGIES FOR BUSINESS COMMUNITY
Climate Change Poses Significant Risks; Need for Private Sector Action
WASHINGTON, DC -- The Pew Center on Global Climate Change today released a new report that outlines a business approach to adapting to the physical effects of climate change. Adapting to Climate Change: A Business Approach examines a range of risks businesses face from the physical impacts of climate change and presents a framework for assessing vulnerability to these risks across a company’s operations, value chain, and broader commercial environment.
Authored by ICF International senior economist, Frances G. Sussman, and senior vice president, Randall Freed, the study focuses on a critical first step in assessing climate impacts: understanding the potential risks to business from the physical effects of climate change and the importance of taking action to reduce those risks. It examines case studies of three companies in the Pew Center’s Business Environmental Leadership Council (BELC) that have taken initial steps to address these risks.
“We know climate change is occurring and the real world ramifications of that change are already being felt,” said Eileen Claussen, President of the Pew Center on Global Climate Change. “In addition to policies that reduce greenhouse gas emissions, we also need strategies to adapt to those climate change impacts that are unavoidable. The private sector faces a range of risks and it is important that they begin now to assess their options and strategies for adapting.”
The study adds to the Pew Center’s expanding body of work on adaptation, an issue that has grown in importance as governments and businesses around the world recognize that a certain amount of climate change is unavoidable and that impacts are already being observed.
The report finds that susceptibility to the physical effects of climate change varies considerably across sectors of the economy. For example, higher demand for air conditioning during prolonged heat waves could stress and possibly overwhelm the electricity grid. Longer and more intense rains could restrict access to construction sites and slow productivity in the buildings sector. And the agriculture industry is at risk of extreme drought that could render previously arable land unusable. While some sectors are more at risk than others, all businesses face the possibility of property damage, business interruption, and changes or delays in services provided by electric and water utilities and transport infrastructure.
Despite these known threats, relatively few companies have developed climate change adaptation strategies. A few have begun taking steps to evaluate and act on the physical risks of climate change, and their experiences offer important insights to other companies. The report’s case studies highlight actions three BELC companies have taken on adaptation:
- Entergy, the New Orleans-based utility, which suffered $2 billion in losses from Hurricanes Katrina and Rita, has begun relocating important business operations to areas less vulnerable to severe weather events.
- Mining giant Rio Tinto is using high-resolution climate modeling to conduct detailed site assessments and gauge risks to high-priority assets.
- Travelers, a major insurance company, is exploring new pricing strategies to encourage adaptive actions from its commercial and personal customers.
This and other Pew Center reports are available at www.c2es.org.
The Pew Center was established in May 1998 by The Pew Charitable Trusts, one of the United States’ largest philanthropies and an influential voice in efforts to improve the quality of the environment. The Pew Center is an independent, nonprofit, and non-partisan organization dedicated to providing credible information, straight answers, and innovative solutions in the effort to address global climate change. The Pew Center is led by Eileen Claussen, the former U.S. Assistant Secretary of State for Oceans and International Environmental and Scientific Affairs.
The BELC was established by the Pew Center in 1998. It is comprised of mainly Fortune 500 companies representing a diverse group of industries including energy, automobiles, manufacturing, chemicals, pharmaceuticals, metals, mining, paper and forest products, consumer goods and appliances, telecommunications, and high technology. Individually and collectively, these companies are demonstrating that it is possible to take action to address climate change while maintaining competitive excellence, growth, and profitability. The BELC is the largest U.S.-based association of corporations focused on addressing the challenges of climate change, with 42 companies representing over 3.8 million employees and a combined market value of $2.8 trillion.