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ECONOMIST ARTICLE (via KPMG) How will climate change impact your organisation? ... Big questions for a sustainable future Original article: https://impact.economist.com/sustainability/resilience-and-adaptation/big-question-climate-risk-and-resilience Peter Burgess COMMENTARY Peter Burgess | ||
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ARTICLE ... How will climate change impact your organisation? ... Big questions for a sustainable future
Michael Paterra ... Editor PUBLISHED 27 FEBRUARY, 2022 Synopsis The Big Questions for a Sustainable Future is an ongoing series that explores big questions for companies as they prepare to lead their organisations into the sustainable future. This question explores the potential operational impacts of climate change and how organisations can build resilience. In what ways do you expect climate change to have the greatest impact on your organisation’s operations? (Select up to four) Pick at least 1 choice
Explainer article: Facing climate risk, the case for resilience Last year, the Intergovernmental Panel on Climate Change (IPCC) released a damning report, noting that unless there are “immediate, rapid and large-scale reductions” [1] in emissions, the targets set by the 2015 Paris Agreement will be out of reach. It’s not just a problem for the future, we’re already feeling the effects and costs of a changing climate. 2021 ranked as the fourth-warmest year on record in the US, which experienced 20 weather- and climate-related disasters, such as wildfires and hurricanes, that cost $1bn or more—totalling a staggering US$145bn. [2] It’s no surprise then that climate-change related risks are among the top concerns of business leaders, both now and in the long term. [3] To prepare, companies should invest in climate resilience—their capacity to adapt and succeed in the face of the impacts of climate change, as well as maximise the strategic opportunities emerging from the shift to a low-carbon economy. [4] All sectors, many risks There are a number of risks associated with a changing climate and nearly every industry and sector is threatened by the direct or indirect impacts of climate change. [5] Physical risks include the direct risks to existing facilities, supply chains, transport infrastructure, energy and water supplies, as well as employees, customers and the communities in which they live from more frequent extreme and unpredictable weather events. Failure to act also raises liability risks and potential litigation. [6] Companies also face transition-related risks as we undergo economy-wide decarbonisation. There may be further volatility in energy prices as we shift from fossil fuels to renewables, while some companies and investors run the risk of being left with stranded assets. Disagreement over the pace and breadth of decarbonisation will lead to regulatory and legislative uncertainty, especially as climate-related regulations (e.g. carbon taxes) and disclosure requirements evolve at an uneven pace globally. While companies have long navigated shifting business, geopolitical and regulatory environments, facing a shifting physical environment requires dedicated planning. These risks, however, can be managed, and companies can set themselves up to be better able to withstand, recover and succeed if they invest in resilience today. Changing consumer preferences must also be reckoned with, as customers desire more sustainable products and services—and stakeholders demand that companies prove they truly are acting sustainably. Companies also face brand and reputational risks, not only from customers and shareholders, but also from employees as climate action is increasingly a distinguishing factor for recruiting and retaining talent. [7] While companies have long navigated shifting business, geopolitical and regulatory environments, facing a shifting physical environment requires dedicated planning. [8] These risks, however, can be managed, and companies can set themselves up to be better able to withstand, recover and succeed if they invest in resilience today.Strategies for adapting to climate risk Building resilience to climate risk requires companies to go on the offensive. They must undertake ambitious mitigation efforts to reduce risk and actively plan to ensure business continuity in the face of evolving climate-related risks across operations, supply chains and communities. [9] This starts with a clear view of your risks. Strategies such as conducting vulnerability assessments to extreme weather and other climate risks; conducting scenario analyses to identify and quantify risks, opportunities and potential responses; and embedding climate risk measurement into firm-wide financial and risk management can all provide that clarity—and inform where companies should make adjustments and investments. [10] Resilience as opportunity The cost of inaction is too high to ignore. But with every risk comes an opportunity, and taking serious action on building resilience can pay for itself in the long term. According to an estimate from the World Business Council for Sustainable Development, the cost-benefit ratio of investing in resilience is between 2:1 and 10:1. [11] For companies, investing in climate resilience can take many forms, including strengthening, expanding and diversifying supply chains, increasing insurance coverage, establishing disaster risk reduction and recovery plans, and participating in local climate adaptation and resilience efforts. [12] There also is opportunity to expand into new markets and develop new products and services that support climate change mitigation and adaptation efforts, including in the development and construction of much-needed infrastructure. According to a 2019 World Bank study, the world will need to invest an estimated US$90 trillion in infrastructure by the early 2030s, creating an unprecedented opportunity to create opportunities for employment and economic growth. [13] Companies may also see additional financial benefits, including efficiency improvements and access to new financing, from their resilience efforts. [14] The Big Questions for a Sustainable Future A series of questions aligned with key sustainability moments DISCOVER MORE Tall buildings trees and sky References
Delivering on a greener future: What to expect in 2022 2021 could be considered the year when climate and sustainability entered the mainstream. So what are the prospects for 2022? And in particular, where do we see critical progress emerging in the five key areas of Economist Impact’s Sustainability Project? real estate climate risk campaign SPONSOR VIEW by KPMG launch Resilience and Adaptation Article Time to address real estate climate risk Despite the growing risk, many organisations have not yet prepared for the likelihood of natural disasters by comprehensively assessing the vulnerabilities of their buildings and developing a strategy of environmental resilience cargo ship store resilience campaign SPONSOR VIEW by KPMG launch Resilience and Adaptation Article Climate risk and resilience Climate change is reshaping industries. Challenges like these present opportunities—if companies position themselves to adapt and lead. cargo solar panels forest campaign SPONSOR VIEW by KPMG launch Net Zero and Energy Article KPMG IMPACT Managing climate risks and opportunities, implementing long-term sustainability strategy, attracting investors, and improving performance ISSUES & INSIGHTS
| The text being discussed is available at | https://impact.economist.com/sustainability/resilience-and-adaptation/big-question-climate-risk-and-resilience and |