Major businesses call for preparation in the face of increasingly severe weather events and temperature rise
For the first time, leading companies from the food and beverage, insurance, investment, technology, and energy industries today released a step-by-step tool, Business ADAPT, for businesses to assess and prepare for the risks and opportunities posed by climate change. The tool is part of the Value Chain Climate Resilience guide, showing examples of how companies are already addressing the risks caused by increasingly severe and frequent weather events and other climate threats.
The companies called for businesses to take proactive steps to address risks to their operations and the communities they rely on. Community risks are business risks because communities provide key resources to companies, as well as a ‘social license to operate’. The guide cites several recent extreme weather events that are already causing grave economic and social harm and will likely result in even greater risks in the future as the climate changes:
- Nine of out ten companies have suffered weather-related impacts in the past three years and most have seen an intensification of such impacts, but only thirty percent are actively responding to those threats.
- The 2010 heat wave in Russia, which triggered severe wildfires, shaved off approximately 1% of the country’s GDP that year, representing a total loss of approximately $15 billion USD.
- In 2011, Texas suffered a record drought, which cost the agricultural sector at least US$7.6 billion and led to rising cotton prices cutting earnings for a number of clothing manufacturers.
“Extreme weather puts the reliability of not only our distribution system at risk, but also our power generation and transmission systems,” said J. Wayne Leonard, chairman and CEO of Entergy Corporation. “Similarly, our customers and communities are ill prepared to respond to hazards of a magnitude and frequency that we have never seen before. We have to do a better job of working together to understand, prepare, manage and respond to these risks, and ultimately severe events.
Many businesses say they do not feel “sufficiently informed” to take action on climate change. The Business ADAPT tool follows five simple steps to help companies understand the risks they face, identify emerging market opportunities, take into account community needs, and effectively manage threats to their bottom line. The steps are targeted towards company executives and senior managers, and provide detailed guidance in sectors that are considered highly vulnerable including water and energy utilities and companies in the food, beverage, agriculture and general manufacturing industries.
Step 1. Analyze the issues- Have you started thinking about the resilience of your business in the face of climate-related impacts?
Step 2. Develop an internal strategy- Have you mobilized the right team to address climate resilience?
Step 3. Assess risks and opportunities- Have you taken steps to assess the areas where opportunities to build climate resilience or invest in emerging market opportunities exist in your business value chain?
Step 4. Prioritize actions- Have you taken steps to identify and assess measures to build climate resilience in your value chain?
Step 5. Tackle actions, and evaluate progress- How will you successfully implement actions to build climate resilience in your value chain, and evaluate and monitor the effect of your actions over time?
“Worldwide, as severe weather events increase in frequency and intensity, businesses must incorporate weather-related contingency plans throughout their value chains for improved response to severe events while ensuring business continuity, asset protection, and in creating community and eco-system resiliency, says Earth Networks President and CEO Bob Marshall.”
“The Business ADAPT tool is the first of its kind to help companies across sectors as they begin to take action to address the impacts of climate change on their businesses,” said Amy Leonard, Senior Vice President of Product Development, Levi Strauss & Co. “This tool helps companies like ours consider solutions that build resilience in addition to reducing harmful greenhouse gas emissions.”
"The human and economic costs of severe weather are escalating and it is increasingly important that business and communities integrate climate risk into their operational and decision-making processes," said Mark Way, Swiss Re's Head Sustainability Americas Hub. "We hope this report will be of practical value for those just beginning this journey as well as for those who are further along the road toward increased climate resiliency."
Companies who fail to take preventative steps to address climate threats could find themselves facing extreme and unmanageable risks. As James E. Rogers, CEO of Cinergy Corporation, put it “If we’re not ready, we’re in trouble.”
The Partnership for Resilience and Environmental Preparedness (PREP) is a one-year pilot partnership formed to address the risks and opportunities that climate change impacts pose to businesses and the communities on which they depend. Members include Calvert Investments, Earth Networks, Entergy, Green Mountain Coffee Roasters, Inc., Levi Strauss and Co., Starbucks and Swiss Re. BSR and Ceres are also partners. Oxfam America serves as PREP’s secretariat. The firm Acclimatise served as lead authors of the report. For more information, see oxfamamerica.org/prep