Action on climate resilience is business critical
As climate impacts bite, greater resilience becomes critical. Tom Mitchell sets out four areas where businesses can protect themselves and others, while seizing opportunities to market resilience-enhancing products.
Many businesses are acting on climate change: setting net-zero or for cutting their emissions and those generated by suppliers and consumers. But to keep pace with weather and , reducing emissions is : business must also commit to building climate resilience.
Positively, some companies are acting on already, driven by necessity and because it brings . have noticed the impacts of climate-related disasters on their operations, workforce and profitability; and we have also seen the in line with climate risks.
With climate change impacts set to escalate in severity and as the nature-positive investment movement takes hold, what does it take for a business to be a climate resilience leader?
Four scopes for climate resilience
Businesses working to reduce emissions are familiar with : the globally accepted standard for reporting on greenhouse gases (a voluntary counts the emissions a business helps to avoid). Building on this model, we suggest four ‘scopes’ for climate resilience that can protect business interests while also benefiting climate-vulnerable people and places.
Scope 1: Protect your operations, facilities and people
Companies need to maintain operational continuity in the face of climate-related impacts, whether extreme events causing sudden disruption, such as hurricanes, or more insidious and ongoing damage, like or high salinity.
To do this, businesses must understand , both present and future, and take appropriate action to limit their effects (for example, using climate models and other credible scientific tools to assess future risk; having reserve options if a key system or location is disrupted; supporting the workforce to be better prepared).
Scope 2: Protect your supply chains, suppliers and customers
Many businesses depend on suppliers and customers in diverse, often global, locations. The COVID-19 pandemic highlighted the protracted challenges of interrupted supply chains; we saw how local challenges – such as disruption to Shanghai port – can cascade worldwide.
Yet supply chains and productive capacity in many sectors show signs of incremental stress caused by climate impacts. Recent disrupted the automotive and computer industries, caused high sickness rates and lower factory productivity, and curtailed energy and mining supplies.
Businesses must take measures to protect their supply lines and the people in their supply chains. Existing mechanisms to address climate risks include: offering climate resilience advisory services; grants or loans for resilience action; using local suppliers; certification or standards schemes; and smart contracting.
Alongside this, the private sector should work with governments to ensure that business-critical infrastructure is climate resilient. This may include ports, road or rail, where initiatives like the are bringing government and business together at country level.
Scope 3: Invest in and deliver products and services that foster climate resilience
Given the , it makes sense to develop products and services that strengthen climate resilience; there are emerging sector-by-sector categories of . At very least, products and services climate defenses.
The struggle to strengthen climate resilience is also an , inspiring a rapidly growing number of dedicated start-up accelerators, climate-resilience venture funds and .
Luxury fashion brand Chanel recently to a climate-resilience investment fund. A hosted by the Lightsmith Group closed its first raise with $186m from insurers, banks and venture capitalists – it invested in companies deploying water harvesting technology and digital solutions to improve climate-vulnerable farm output.
Companies of all sizes can take seize these opportunities to support early-stage resilience enterprise or the emergence of . Indeed, millions of small business entrepreneurs globally are already delivering locally-appropriate .
Scope 4: Take climate justice responsibilities seriously
Climate change is deeply unjust: the communities who have done the least to cause this crisis suffer the most. Most big businesses have contributed to climate change, which cannot be undone. But companies now have an opportunity to recognise that legacy and act to help climate-vulnerable people and places achieve resilience, and even thrive.
There are precedents: Salesforce is over 10 years to organisations working directly on climate justice and restoring nature. is transferring all its profits to a non-profit fighting climate change, and .
A number of guides and have emerged to explore how the private sector can contribute to climate justice. Many companies set up philanthropies to pursue social and environmental aims – some already focus on – but the total spend on resilience barely registers, and even less reaches the low-income communities contending with climate impacts. This must change.
Davos 2023 heard integrating business, philanthropy and governments to support climate justice; campaigns like and are rallying business to better serve society on climate resilience.
To avoid a proliferation of uncoordinated initiatives, the private sector could establish a ‘business champions for resilience’ group (mirroring ) and collectively build solidarity with climate-vulnerable people by contributing to existing mechanisms that support their interests, such as the and the .
Get the competitive edge on climate action
The latest demands massive, simultaneous action on climate resilience and on climate-driven loss and damage. For business, this means acting across the four climate resilience scopes at once.
IIED can help companies looking to strengthen their strategic approach to resilience. Please get in touch if you wish to discuss specialist support or connect with other businesses on a similar path.