After much anticipation, the Nobel Peace Prize winning group the Intergovernmental Panel on Climate Change (IPCC) released its long-awaited 5th assessment report this year. The purpose of this series of enquiry is to assess the scientific, technical and socio-economic information available on climate change, in an attempt to understand its potential effects and how we should in turn, respond to these.
One of the most striking developments of the most recent assessment is the weight that has been given to climate change adaptation: the strategic response to current or anticipated climate change impacts. The entire second instalment Impacts, Adaptation and Vulnerability is dedicated to responding to climate change impacts and discusses how people are, and should be responding; demonstrating that adaptation has become central to the global debate.
This is particularly striking considering that in the early reports there was little mention of the process of adapting to the impacts. What this demonstrates is that as more scientific and technical information has become available the more we have come to realise that adaptation is key to successfully managing the climate change challenge. In conjunction with this trend, businesses have increasingly dedicated time and effort into understanding how they should integrate sustainability into their operations in order to increase their resilience.
As every business is unique in the way it operates, there is no ‘one size fits all’ solution that would make every single business ‘adapted’; it is rather an on-going process that is unique to every operation. In order to help businesses become more climate ready a range of strategic methodologies have been developed in order to guide organisations through the process of identifying vulnerabilities in terms of risk and prioritising action.
Broadly speaking, there are two types of climate risks that organisations need to take into account: direct and indirect. Direct risks refer to a business’s direct exposure to extreme weather events, which manifest themselves in the form of flooding, overheating and prolonged periods of drought, threatening the ability of an organisation to function.
Indirect risks refer to those we have little control over such as the climate impacts on the supply chains or stakeholders. As the world is becoming increasing interconnected, it is vital for a business to understand who and what they are relying on in order to firstly define their vulnerabilities and secondly be able to minimise these.
Unfortunately, too often action on climate change is seen as a burden and, at times, an insurmountable challenge. Of course we must somehow manage the known and the unknown risks, but there are also potential opportunities that could be realised in this process. As the changing environment starts to transform the way we operate, new markets will start to emerge as the demand grows for existing, and new, products and services. The fast growing environmental sector is an example of such a realised potential.
As our scientific understanding deepens and our experience of climate change impacts start growing, adaptation will increasingly become a subject we will no longer be able to avoid. Those that engage early will not only be equipped to manage risks more effectively, but they also have the opportunities to capitalise on the markets of tomorrow.