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The Business of Adapting to Climate
Change:
A Call to Action
About IBLF
Redefining growth to help build a sustainable world.
The International Business Leaders Forum (IBLF) is
an independent, not-for-profit organisation working
with leading multinational companies, governments
and civil society on the responsible business
agenda. Founded in 1990 by the late Robert Davies
and HRH The Prince of Wales, IBLF has led the
field in promoting the role of business leadership
in corporate responsibility and development.
The organisation is supported by a network of
over 85 companies from Europe, America, Asia
and the Middle East and more than 200 affiliated
organisations worldwide. Headquartered in London,
IBLF also has active regional offices in Moscow,
Mumbai and Beijing.
www.iblf.org
Acknowledgements
The Business of Adapting to Climate Change
has been produced by the International Business
Leaders Forum.
It has been made possible through the generous
support of Coca-Cola Enterprises.
Written by:
Oliver Balch
Stephen Kenzie
2
Lead Researcher: Nicole Alexiev
3
1
Essential Contributions from:
Mina Badtke-Berkow, Anna Chen, Nick Claridge,
Nabil Haque, Claire Ho, Shivangini Jervis, Jie Jin,
Fatima Kahn, Francesca Leadlay, Elen Paula,
Antoinette Phillips, Jessica Scholl, Heather Sumpter,
Ina Velikova
4
6
7
8
9
5
10
Photo credits
Image 1: Image courtesy of Syngwenta
Image 2: Image courtesy of Climate Himalaya;
Image 3: Photo © iStockphoto.com
Image 4: Image courtesy of iStockphoto;
Image 5: Image courtesy of Tara Oceans
Image 6: Image courtesy of Tree Hugger
Image 7: Image courtesy of un.org © Peter
Arnold, Inc. / Glen Christian
Image 8: Skating at Tower Bridge © Robert
Graves and Didier Madoc-Jones;
<http://www.postcardsfromthefuture.co.uk/>
Image 9: Image courtesy of W Visser Consultancy;
Image 10: Image courtesy of Syngenta
Table of Contents
Foreword
3
Introduction
4
What is Climate Change
Adaptation?
5
Why is Climate Change
Adaptation Important
For Business?
6
A Framework For Corporate
Action on Climate Change
Adaptation
8
Understanding Adaptation Issues:
Water
10
Human Capital
13
Energy
15
Food/Agriculture
18
Ecosystems
21
Extreme Weather Events
23
Call to Action
25
Further Reading
26
End Notes
28
Foreword
Climate change will significantly impact how business develops, produces and markets
its products and services. This represents an enormous risk to businesses that are
unwilling or unable to adapt. However, it also represents an incredible opportunity for
those companies with the foresight and capacity to respond.
In our constantly changing business and social environment, tomorrow’s successful companies
must think beyond quarterly profits and focus on contributing to collaborative, long-term solutions
to global challenges. It is for this reason that Coca-Cola Enterprises (CCE) is proud to support the
International Business Leaders Forum’s industry framework on climate change adaptation, “The
Business of Adapting to Climate Change”. As well as laying out the business case for action, this
report provides practical recommendations on how adaptation strategies can be incorporated
into core operations, community and philanthropic endeavours and public policy engagements.
At CCE, our climate strategy has so far been mainly focused on mitigation and we are making
progress in reducing our emissions while growing our business. Many companies like our own
have adopted a similar focus and so we look forward to using this publication as a springboard
to further encourage business, governments and civil society to work together on coping
with climate change. We truly believe that climate change adaptation should be viewed as an
economic opportunity that advances sustainable development and encourages more green
technologies, green industries and green jobs.
CCE has committed to reducing the carbon footprint of ‘the drink in your hand’ by one third by
2020. To achieve this, we are adopting a value chain approach, and aim to reduce emissions
from our ingredients, packaging, manufacturing, distribution and cooling equipment. To do this
will require not only investing in new equipment and processes but also innovation, collaboration
and partnership with our suppliers, customers and others to reduce our climate impacts across
our value chain. Our goal will undoubtedly help us to work in a targeted way to reduce our
climate impacts and will also help us to adapt our own operations and those of our value chain
to the new low-carbon expectations of our customers, regulators and investors as well as the
challenges that climate change will present.
A new reality is imminent. Responding to that reality is only the first step. Businesses like ours
need to help lead the way in partnership with NGOs, our communities and policymakers to
actually drive change and provide innovative solutions. As you read this report, ask yourself how
we as businesses can adapt together and how can we work in partnership to develop innovative
solutions, now and in the future.
John Brock
Chairman and Chief Executive Officer,
Coca-Cola Enterprises
3
Introduction
Climate change is happening. Incontrovertible
scientific evidence1 shows that our planet
is gradually growing warmer and that the
current warming trend is proceeding at an
unprecedented rate. Twenty of the hottest
years on record have occurred since 1987 and
the ten warmest have been in the last 12 years.
What’s more, many scientists are convinced
that it is already too late2 to avoid further
significant warming of 2-6ºC before the end of
this century.3
Unlike previous cycles, the earth’s current
experience of global warming is most likely induced
by human activity. In theory this is good news as
it means that alterations in mankind’s behaviour
patterns should be able to slow and even reverse
the process. This strategy – known as climate
change ‘mitigation’ – has been tried, but with
very limited success. Isolated advances in cutting
greenhouse gas (GHG) emissions have been
inadequate in the face of a powerful global trend to
increased fossil fuel consumption. Following the
global economic downturn in 2008-9, global GHG
emissions rebounded to record levels in 2011 and
even if GHG emissions were to cease immediately,
the planet would continue to warm due to inertia in
the climate system4.
As climate change dramatically affects the natural
and built environment, the resulting impacts threaten
to be considerable. Not only will temperatures
increase, but sea levels will rise too. A spike in
undesirable weather phenomena can be expected,
meaning more floods, worse droughts and more
frequent, more intense storms. Impacts will be both
urban and rural, affecting the rich and especially the
poor, by triggering unprecedented changes to the
social, political, economic and natural environments.
Respected British economist Sir Nicholas Stern5
wrote: “Climate change will affect the basic elements
of life… Hundreds of millions of people could suffer
hunger, water shortages and coastal flooding as
the world warms.” That was six years ago and his
prediction is proving ever more accurate.
For companies, the implications are huge. Taking
water as an example, come 20306 demand for this
precious resource is projected to outstrip supply
by a staggering 40 percent and half the world’s
population may find themselves living in areas of
high water stress. The early warning signs are
already in evidence - the Aral Sea now measures
just one quarter of its original area. Almost every
business depends, to some extent, on ready
access to water for everyday activities and it is not
only direct operations that will suffer from a water
shortage. Water scarcity poses a pressing threat to
supply chains, distribution networks and consumer
markets too.
It is time for the business world to face up to the
new climate scenario that is unfolding. Given the
severity of the risks, ‘business-as-usual’ models are
no longer tenable. Companies must consider not
only how to avert the situation worsening, but also
how to cope with those changes already in process.
They must begin to adapt to a very different natural
and social environment.
By taking a longer-term view and fully understanding
the challenges ahead, companies can proactively
manage climate-related risks. Early movers can
also get ahead of the competition. A successful
adaptation strategy will see companies develop
innovative products and services that meet the
demands of the changing natural environment as
well as an evolving commercial environment.
This report sets out how leading companies are
starting to meet the adaptation challenge. It notes
how businesses are changing their core operations
to account for issues such as energy and food
insecurity, water scarcity and extreme weather
events. It also identifies early examples of integrating
climate change adaptation into community
engagement and public policy initiatives.
For many companies, it remains early days for
climate change adaptation. The issues are complex
and the precise scenarios far from certain, but these
are not sensible excuses for delay. Businesses must
begin adapting - and they must begin now.
4
What is Climate Change Adaptation?
Many governments, businesses and civil society
organisations have sought to avoid these impacts
by trying to limit the drivers that are causing the
climate to change. This strategy is called ‘mitigation’.
Governments have used a variety of fiscal and
regulatory instruments to encourage reductions in
GHG emissions across society. Some companies
have responded by trying to reduce their direct
emissions and increasingly their indirect or value
chain emissions. Unfortunately, these efforts have
been too little, too late. While it is vital that mitigation
efforts increase to stave off worst-case scenarios,
the deteriorating situation demands an additional
response - ‘adaptation’. Companies must look at
what is already happening and what might happen
in the future, and take substantive steps to cope
with climate change impacts that are now inevitable.
From a business perspective it may be moot
to make a distinction between ‘mitigation’ and
‘adaptation’. In a dynamic, interconnected economic
system, one actor’s mitigation activities will be
another’s adaptation. For example, government
regulations related to public mitigation goals will
drive companies to reduce their emissions. And
there will be a knock-on effect to those companies’
suppliers who may in turn be called upon to decarbonise. From the government’s perspective, the
initial regulation is mitigation, but for companies right
through the value chain this is about adapting to
changes in their operating environment. Arguably,
for companies coping with climate change, it’s all
adaptation.
5
Actual and anticipated impacts of climate change
are going to trigger chain reactions that start with
governments, investors and consumers and end
with companies having to adapt to changing
government regulations, shareholder expectations,
consumer demand patterns, and supplier cost
structures. For most companies the impact of
changes to their operating environment will be
more significant than the actual physical impacts of
climate change, so even if warming temperatures
or rising sea levels don’t affect them directly,
companies will still be adapting to climate change.
© Robert Graves and Didier Madoc-Jones
http://www.postcardsfromthefuture.co.uk/
Dramatic impacts on ice caps, biodiversity
and sea levels are already becoming apparent
and unless GHG emissions slow radically, the
negative trend will accelerate.
It is often difficult to quantify exactly how and
where the impacts of climate change will manifest
themselves, especially in the medium and long-term.
In early 2011, floods wiped out farmlands in Australia
that had been parched from years of drought. Still,
uncertainty is not a justification for inaction. Where
climate change impacts cannot be predicted with
confidence, it is appropriate for companies to hedge
and focus efforts on building the general capacity of
institutions and systems to adapt to climate change.
At present, the world’s social, economic and
environmental systems are poorly prepared. That
poses a threat to all, businesses included. It is vital
that such systems can cope as the planet warms.
Helping them to become more climate-robust is
referred to as building ‘adaptive capacity’.
The IPCC7 defines ‘adaptive capacity’ as the “ability
or potential of a system to respond successfully
to climate variability and change, and includes
adjustments in both behaviour and in resources and
technologies”8. The healthcare industry provides
an illustrative example. Climate change is widely
expected to increase the range of vector-borne
diseases, such as yellow fever and malaria, resulting
in outbreaks in hitherto unaffected regions. If
preparatory steps such as widespread vaccination
and drug stockpiling are not taken, these outbreaks
could quickly become pandemic. Similarly, investing
in water infrastructure in anticipation of more
frequent droughts and floods is another example.
It should be noted that investments in adaptive
capacity may be indistinguishable from typical
development or sustainability projects, adding new
impetus to such endeavours.
Why is Climate Change Adaptation
Important for Business?
Twenty years ago, environmentalists referred
to climate change as the ‘slow motion
catastrophe’9. Scientists worried about
the impact that gradually altering climatic
conditions would have on our children and
our children’s children. The latest scientific
evidence suggests that the pace of change
is far faster than previously feared. Changes
to the planet’s ecosystems are already in
evidence and look set to increase during the
current generation. As the Pew Centre puts it:
“The question is no longer, ‘Is there humancaused climate change?’ but ‘What can be
done to react and adapt to it?’”10
Widespread predictions of changes in temperature,
precipitation patterns and extreme weather events
represent an increasing concern for governments.
In response, adaptation is rising up the public
policy agenda, as evidenced by the United Nations’
most recent summit on climate change (see box).
However, early stage international adaptation
agreements are only just beginning to emerge.
By taking action to address adaptation now, the
business community can show leadership on the
issue as well as help shape future debate.
A second, even more compelling argument is the
impact that climate change promises to have on the
business bottom line. All industries will be physically
affected by climate change. As natural resources like
water become scarcer, industrial processes and the
cost of production will inevitably go up. Admittedly,
some industries will bear the brunt more directly than
others. The agricultural sector as an example of an
industry on the frontline. Global warming threatens
to reduce yields, expand the range of pests,
exacerbate crop diseases and cause pollinator
loss. Colombian coffee producers, for instance, are
already reporting dramatic, record low production11
due to an average temperature increase of one
degree Celsius over the last three decades12.
The implications of climate change for business
go beyond physical impacts on core operations
and assets; the regulatory environment will also be
affected. The private sector must reasonably expect
more stringent controls on water usage as availability
dries up. Stricter regulations on pollution could also
be in the offing, as could costly mitigation initiatives
such as carbon taxes. Companies could face new
and costly health and safety issues for employees.
Changes in customer requirements are likely too.
Nor will suppliers and business partners be exempt
from similar impacts, presenting additional costs and
disruptions in companies’ supply chains.
In anticipation of these changes, it is imperative
that business begins to take the issue of adaptation
seriously.
International Accord: Adaptation at
Durban 2011
The UNFCCC COP1713 in Durban in December 2011
significantly strengthened efforts to advance global
adaptation to climate change.
The Durban Platform centred largely on operationalising
the Adaptation Committee, finance and technology
mechanisms, Green Climate Fund, and National Adaptation
Plans of the Cancun Adaptation Framework.
With political will in place, Christiana Figueres, Executive
Secretary of the UNFCCC, encouraged businesses and
citizens to push confidently ahead in their efforts to build a
climate resilient future.
Companies can answer this call to action by joining
the Adaptation Private Sector Initiative14, which aims to
catalyse private sector contributions to and involvement in
adaptation to climate change.
Reflection was made back to the Cancun Adaptation
Framework15, which set out to enhance adaptation efforts
by all countries, although its particular focus was on
the least developed nations, which were encouraged to
develop and implement so-called ‘national adaptation
plans’. And the Green Climate Fund, designed to support
adaptation and mitigation in developing countries. UNFCCC
had set a target for developed countries to mobilise $100
billion a year in public and private finance by 2020.
6
Climate Risks
The importance of adapting to climate change
should first be viewed in the context of risk.
The key issue for companies is to determine
how vulnerable their business processes
and operations are to altering environmental
conditions.
Such assessments are not easy. The climate-related
changes that a company might face are not linear,
but variable and random. Current climate modelling
lacks precision, particularly with respect to predicting
local impacts. Such uncertainty strengthens the
case for building adaptive capacity.
Where impacts of a changing climate can be
foreseen, appropriate responses will depend on
the size, timing and projected horizon of the risks in
question. In almost every case, proactive adaptation
will prove less costly than reactive measures later
on. The United Nations Food and Agriculture
Organisation16 concurs, stating that the benefits of
early adaptation will “considerably outweigh any
incurred costs” - hence, the importance of early
adaptation for business17.
Opportunities
It should be noted that climate change will not only
create losers. Some winners will emerge too. The
growing reality of climate change is already driving
many industrialised countries to decarbonise their
economies. This will require huge investments in
public and private infrastructure, notably in the
transportation and energy sectors.
7
New market opportunities will emerge for providers
of low-carbon solutions. Renewable energy
producers, train companies, electric vehicle
manufacturers, smart grid providers and other
green tech firms are among those set to benefit.
The Global e-Sustainability Initiative18 demonstrates,
through its study, SMART 202019, how the
information and communications technology sector
is already working together to drive forward nextgeneration, low-carbon products and services20.
The biggest opportunities identified are in reducing
electricity consumption through optimised motor
systems and automation, through improving
efficiency of transport and storage, through
energy efficiency of living and work spaces and
dematerialisation - replacing physical objects and
activities with electronic and virtual alternatives.
*Photo © iStockphoto.com
Another example is the construction industry. Higher
temperatures will increase demand for climate
proofing materials and alternative building designs.
Rising sea levels and water stress, meanwhile,
may require investment in infrastructure, such as
flood controls and modern irrigation techniques
respectively.
Certain industries will even experience risks and
opportunities simultaneously. Tourism is one such
example. While southern Europe may become
uncomfortably hot during the summer, cooler
regions in northern Europe may emerge as popular
holiday destinations as temperatures increase.
Opportunity-focused adaptation strategies can
occur throughout the value chain, from core
business operations to supply chain management
or community involvement. What is crucial is that
companies begin innovating now. By doing so they
will gain a first-mover advantage over competitors
that are slower to respond. Early action will enable
businesses to pre-empt future regulation while
also securing the long-term sustainability of their
operations.
A Framework For Corporate Action
On Climate Change Adaptation
The following diagram illustrates a practical
framework for the private sector to materially
engage in climate change adaptation solutions.
The framework is structured around two key
parameters:
I. the generic fields of activity in which
business operates or has a role to
play (‘spheres of influence’), and
II. the specific issue areas in which companies
will encounter risks and/or opportunities
as a result of climate change.
Spheres of Influence
IBLF identifies three principle ‘spheres’ where
business can exert its influence to varying degrees.
These include: core business, social investment and
policy dialogue. In each separate sphere, business
can leverage distinct opportunities to individually
or collectively address the climate adaptation
challenge.
Core Business Operations and Value Chain
NTERNATIONAL
AL/I
FR
AM
ION
T
EW
NA
Y
T
I
/
S
N
O
/
U
C
O
IET
MM
AL
R
Y
CO
C
RKETPLACE
MA
W
E
Y CHAI
NS
PPL
SU
KPLAC
R
O
KS
LO
This is the sphere where companies have the highest capacity to
adapt their conventional ways of doing business. Action points
could include:
•
•
•
•
•
•
•
Making key infrastructure climate-resilient
‘Greening’ products and operating facilities
Meeting energy challenges through new technologies
Localising supply chains and improving sustainability
Fostering internal eco-entrepreneurship
Assessing corporate water risks
Supporting technology transfer
Social Investment and Philanthropic Contributions
Climate change is set to impact the communities in which
companies operate. Business can help them adapt to pending
threats through a variety of means. Examples might include:
•
•
•
•
•
Supporting local conservation projects
Raising community awareness of climate change threats
Enhancing the adaptation capacity of local communities
Investing in eco-entrepreneurs
Providing cash and in-kind assistance during natural
disasters
Public Advocacy, Policy Dialogue and Institution
Strengthening
All companies operate within policy frameworks, be they local,
national or international. As adaptation moves up the public policy
agenda, businesses should engage productively and collectively in
the debate. Some of the options open to them include:
•
•
•
•
•
•
Participating in global dialogues, such as the UNFCCC
process or the UN Global Compact
Promoting a binding global treaty on climate change
Supporting governments in adapting social infrastructure
Backing efforts to stop illegal logging and pollution
Promoting regulatory transparency
Helping co-develop educational tools and curricula
8
What Business Can Do to Adapt to Climate Change
Adaptation Issues
Core Business Activities
Social Investment and
Philanthropy
Policy Dialogue and
Advocacy
Understanding
Adaptation
Issues:
• Adopt voluntary standards
• Support local water
• Understand water risks
WATER
• Reduce water
consumption
•
Innovate
Climate change poses threats
toproducts
some of
and
services
our most basic needs, from the provision
• Account for
of clean water and the availability of food,
regional realities
to the increase of health risks, degradation
of ecosystems and increasingly dangerous
extreme weather events. These factors can
• Anticipate health
HUMAN CAPITAL
contribute to social instability with disproportionate
impacts of climateimpacts on rural and poor communities,
especially
related health disasters
in the developing world. The
following
sections
• Develop tools to track
and communicate
epidemiological diseases
9
on corporate water
conservation
use and reporting
• Work collectively to
•
Pursue
protect
river
basins
illustrate how certain impacts
of water-focused
climate change can
dialogue
with Governments
• Integrate
water
materially affect business’ core operations,
social
and civil society
needs in disaster
licence to operate and the regulatory environment.
• Engage with government
response activities
Applying the spheres of influence
framework to
and civil society where there
actual examples of privatearesector
adaptation
common interests activity
is meant to inspire other businesses to address their
• Support moves to
• Support public efforts
own adaptation challenges.
facilitate the employment
to stockpile medicines
climate
for pandemic
diseases
The adaptation issues areoflaid
out migrants
as follows:
• Support moves to
• Help bolster the
prevent mistreatment
capacity of disaster
of ‘climate migrants’
relief organisations
ENERGY
• Invest in new
technologies to address
energy challenges
• Develop new and
renewable sources
of energy
• Locate and design
facilities to cope with
climate change
• Assist communities
in meeting future
energy challenges
• Support measures to
secure energy access
and availability
• Support research into
the development of
alternative fuels and
energy sources
• Support voluntary
adaptation measures
• Advocate for energy
policies and initiatives that
consider adaptation
FOOD &
AGRICULTURE
• Invest in droughtresistant or heattolerant crop varieties
• Leverage opportunities
in the value chain to
enhance adaptive
agriculture practices
• Bring poor farmers into
the procurement system
• Support crop insurance
for small farmers
• Assist farming
communities in becoming
more climate resilient
• Help initiatives to raise
farmers’ awareness of
adaptation measures
• Encourage public policy
dialogues on food
security and climate
change adaptation
• Work across sectors
to highlight the impact
on crops, food inputs
and medicinal inputs
ECOSYSTEMS
• Develop products
that reduce impacts
on ecosystems
• Conduct an ecosystems
impact assessment
• Promote products
that monetise
‘ecosystem services’
• Encourage employee
and community
volunteering in
conservation efforts
• Support research
efforts into climate
change impacts on
natural ecosystems
• Promote the
development of valuation
methodologies for
ecosystems services
• Advocate for better corporate
ecosystems management
• Create voluntary
standards on ecosystem
services evaluation
EXTREME
WEATHER EVENTS
• Ensure physical assets
are disaster-proof
• Develop products that
account for the impacts
of climate disasters
• Support initiatives
to improve disaster
forecasting and
warning systems
• Promote employee
capacity to respond to
weather-related disasters
• Encourage crosssectoral collaboration on
disaster preparedness
Water
HOW CAN BUSINESS ADAPT?
Many of the planet’s most urgent crises – and
most promising solutions – are tied to a single
substance: water. Access to clean water is a
critical component of economic empowerment,
food security, public health, and even political
stability. Yet a global water crisis is already
underway. Businesses must anticipate greater
incidence of flooding and sudden drought
as climate change progresses. Changes to
temperature and precipitation patterns also threaten
a reduction in water availability. By 2025, it is
predicted that two-thirds of the world population
could be under so-called ‘water stress’ conditions21.
It has been said that climate change mitigation
is about carbon, but adaptation is about water.
Businesses with operations in regions that are
currently, or soon to be, water stressed must adapt.
The most obvious response is for them to reduce
their ‘water footprint’, either by using fewer water
inputs or by improving wastewater management.
Innovations in the value chain must also be
considered. Reducing water use in their products’
lifecycle is one such example. As competition
for water increases, companies must also take
measures to justify their ‘social licence’ to use
this dwindling resource. This is particularly true for
heavy water users, such as mining companies and
power generators. In such cases, corporate social
investment activities and policy advocacy activities
will be critical.
Specific opportunities for business to engage on the
issue of water security could include:
Core Business Activities
(1) Understand water risks – all corporations
should assess their corporate water use and their
water-related risks. This provides a solid baseline on
which to develop an effective water strategy.
Source Water Vulnerability Assessments22:
in line with its 2020 water stewardship targets,
Coca-Cola Enterprises (CCE) conducted
source water vulnerability assessments for all its
production facilities. The local studies examined
the likelihood of the company’s current water
sources being affected by future quality and
scarcity issues. CCE consequently developed
protection plans to reduce water pollution risks
and to minimise the impact of its equipment and
water use on local ecosystems for each site.
(2) Reduce water consumption – a combination
of abundant supply and economical rates have
historically made water consumption a low priority.
In the future, companies must consider ways to
maintain output with less water.
Minimising water use23: Scandinavian retailer
IKEA uses a printing technique for its textile
products that requires three-fifths less water than
traditional printing. It has also fitted all taps with
aerators that limit water pressure and add air to
the water flow, reducing total water use by around
a third.
(3) Innovate products and services - examples of
existing technological innovations to increase water
efficiency include desalination, wastewater treatment
and reverse osmosis.
Water purification24: Siemens Water
Technologies has developed a portable waterpurification system that does not require electric
power or purification chemicals. The SkyHydrant
system is subsequently low-cost (less than 20
Euro cents per person per year) and therefore
affordable for very poor communities.
“59% of respondent
companies report exposure
to water-related risk and
over one third have already
suffered recent water-related
business impacts, with
associated financial costs as
high as US$200 million”
CDP Water Disclosure 2011 Global Report25
10
(4) Account for regional realities – climate change
will affect water patterns differently in different
geographies. Low-lying coastal regions will be
subject to increased floods, whereas water scarce
areas will see the likelihood of drought increase.
Rainwater harvesting26: food and beverage
company Cadbury Schweppes installed a
rainwater harvesting system to service the cooling
towers at its plant near Melbourne, Australia. The
project saves an estimated 7.5 million litres of
potable water per year.
Social Investment and philanthropy
(1) Support local water conservation - water is
a give-and-take affair when it comes to community
perceptions. A direct correlation is generally
expected between how much water a company
consumes and its conservation efforts.
Promoting volunteerism27: UK utility Anglian
Water established a volunteer programme for
community residents aimed at cleaning up local
waterways. Run in conjunction with the charity
Keep Britain Tidy, the RiverCare initiative counts
more than 1,000 regular volunteers in almost 50
separate groups.
(2) Work collectively across industry water-related challenges are local, national and
international in scope. For business to make a
difference beyond their immediate operations, a
collaborative approach is needed.
Protecting Bogota’s river basin28: SABMiller’s
Colombian business, Bavaria, is working with local
charity and utility partners to protect a river basin
that provides water to Bogota city. The basin is
“The global public has
become increasingly aware
how climate change and
water scarcity threaten the
populations of heavily settled
parts of the world. They
understand how it breeds
conflict. They know how
man-made climate change
and growing consumption
of water are putting
unprecedented stress on this
dwindling resource.”
UN Secretary General, Ban Ki-moon, 2011
being seriously deforested, resulting in excessive
sediment and therefore higher purification costs.
Promoting Collective Action29: The Water
Action Hub is a project of the UN Global
Compact’s CEO Water Mandate initiative
supported by Deloitte, The Coca-Cola Company,
SABMiller, Veolia, Reed Elsevier, GIZ and IBLF. It
is an online tool being developed to bring water
stakeholders with shared interests in improving
water management together on location specific
basis.
(3) Integrate water needs into disaster
response activities – the lack of drinking water
in the immediate wake of natural disasters can
acerbate the plight of victims.
Water-related assistance30: the GE Foundation
provides solar-powered water purification units to
the victims of natural disasters, such as the Haiti
earthquake in 2010.
11
Image courtesy of OECD
Image courtesy of Allianz
Policy Dialogue and Advocacy
(1) Adopt voluntary standards on corporate
water use and reporting - voluntary standards
motivate companies to proactively improve their
water stewardship, possibly pre-empting regulation,
but if not, preparing for it.
Disclosing water risks and strategies31: Anglo
American, Allianz Group, BP, HSBC Holdings
and Standard Chartered are among the 170
large corporations cooperating with the Water
Disclosure Project. Sponsored by Deloitte, and
run by the pro-transparency Carbon Disclosure
Project, the programme provides critical waterrelated data to the world’s investment community.
(2) Pursue water-focused dialogue with
Governments and civil society – cross-sector
co-operation has a strong track record in enhancing
water and sanitation provision in poor communities.
Ghana, Kenya, Nigeria and South Africa. The
discussions centred on the private sector’s role in
supporting responsible public water policy. Work
is now underway to establish sustainable water
stakeholder networks in these markets to foster
ongoing cross-sector dialogue.
(3) Engage with government and civil society
where there are common interests – the
widespread privatisation of water services places
an extra responsibility on business to contribute to
water-related solutions.
South Durban Basin Tri-Sector Partnership33:
South African water utility NCWSC is supporting
an environmental alliance aimed at protecting the
South Durban Basin, a biodiversity-rich coastal
dune system. The cross-sector partnership
addresses a variety of water quality issues.
Encourage cross-sectoral dialogue32: in
2010, beverage company Diageo partnered
with IBLF to launch a series of business
roundtables in five African countries: Cameroon,
12
Human Capital
HOW CAN BUSINESS ADAPT?
The physical health and general wellbeing of
the world’s population is critical to sustaining
levels of human (i.e. economic, social and
cultural) capital and, by extension, business
productivity. In some instances, the effects of
climate change will be direct and dramatic,
such as heat waves, floods or large-scale
migration. Other impacts on human capital
promise to be indirect. A jump in infectious
diseases and psychological disorders provide
two cases in point.
It is important to note that climate change is set to
disproportionately affect developing countries (where
human capital levels are already low). As a direct
result of global warming, incomes in sub-Saharan
Africa34 could drop by up to one quarter (23.5%)35. It
should also be recognised that climate change is not
gender neutral. Women, particularly in developing
countries, are more vulnerable36 to climate impacts
due to prevailing social inequalities that limit their
adaptive capacity and because women are more
dependent upon the sectors that will be hardest hit
by climate change37.
Coping with issues related to human capital will,
for the most part, require a focus on building
adaptive capacity. While a wide range of possible
interventions exists, companies have so far
been slow to act. The examples illustrate where
businesses are taking some initial steps:
Core Business Activities
(1) Anticipate health requirements during
climate-related health disasters – companies
must ensure employees are cared for in the wake of
increasing infectious diseases or natural disasters.
Employee sensitisation38: Indian construction
firm HCC provides employees with basic lifesaving skills, equipping them to act as ‘first
responders’ in the event of extreme weather
events. It also runs a seven-day workshop to
equip its engineers with advanced emergency
response skills.
13
(2) Develop tools to track and communicate
epidemiological diseases – warmer temperatures
allow microbes to exploit the world’s intricately
balanced ecological systems, potentially increasing
the lifespan of pathogens as well as expanding the
range of their carriers.
The UK will continue to be
vulnerable to severe weather
with some risks having the
potential to become more
significant over the next 2030 years, such as increases
in summer mortality due to
heatwaves and prevalence of
some pests and invasive nonnative species.
The UK Climate Change Risk Assessment
2012 Evidence Report39, January 2012
RBM toolbox40: the business-led Roll Back
Malaria programme cites more than a dozen
tools for monitoring and evaluating the spread
of malaria. The tools, which are available online,
form part of a collective effort to capture and
disseminate proven best practices.
Social Investment and Philanthropy
(1) Support public efforts to stockpile
medicines for pandemic diseases – companies
can contribute financially or through drug donations
to public efforts to build up medical stockpiles.
Stockpiling yellow fever medicine41:
pharmaceutical firm Sanofi Pasteur provides
its multi-dose vaccine against yellow fever to
UNICEF and to government-organised emergency
stockpiles.
(2) Help bolster the capacity of disaster relief
organisations – technological know-how can drive
crucial efficiencies in relief operations.
Google Crisis Response portal42: via a
dedicated website, search engine Google helps
relief agencies gain access to updated maps and
satellite images during crisis situations. In a similar
vein, it launched an online service to facilitate
information sharing about missing persons after
Japan’s 2011 tsunami that will also be useful in
the aftermath of extreme weather events.
Policy Dialogue and Advocacy
(1) Support moves to facilitate the employment
of climate migrants – for migration policies to be
sustainable, they must envision providing jobs for
those forced from their homes due to the effects of
climate change.
Direct dialogue with politicians43: French
transport and power company Alstom hosted
a visit by the Swedish minister for migration at
its Norrköping facility in Sweden. The visit came
prior to an important Parliamentary bill aimed at
liberalising labour laws for migrants.
Image courtesy of Sanofi Pasteur
(2) Support moves to prevent mistreatment
of ‘climate migrants’ – according to the
Environmental Justice Foundation, there may already
be as many as 26 million refugees displaced as a
direct result of climate change. It is estimated that
by 2050 that number will rise to 150 million climate
refugees worldwide44. Migrants are at risk of unfair
treatment and abuse. This is particularly true for
women and children.
Buy Responsibly Campaign45: the UN-backed
International Organisation for Migration launched
a short film in 2009 to encourage consumers to
question retailers and other companies about
the exploitation of migrant labour in their supply
chains.
14
Energy
HOW CAN BUSINESS ADAPT?
As with all industries that rely on substantial
physical assets, the energy industry is subject
to operational risks from extreme weather
conditions brought on by climate change. Heat
waves in Europe in 2003 and the unprecedented, record breaking temperatures in 2010, for
example, caused nuclear power plants to shut
down46 due to unsafe temperature levels of the
facilities’ cooling reservoirs47. Likewise, a sustained drought across China has led to hydroelectric
power shortages over recent years.
The secondary impacts of climate change on
the operating environment for energy companies
must be accounted for as well. Population growth
resulting from climate-induced migration will increase
energy demand in some regions (and reduce it
in others). Changing agricultural patterns, on the
other hand, could put strain on current distribution
systems or create socio-political instability in areas
of energy extraction.
Compared to other industries, the energy sector will
be disproportionately affected by climate change
regulations. This will be most notable around
mandatory emissions reductions or carbon taxes.
Legislative impacts, occurring as world energy
demand increases, represent significant risks to
business as usual, but also magnify opportunities for
low-carbon energy.
“The world faces the
daunting combination of
surging energy demand,
rising greenhouse gas
emissions and tightening
resources. A global energy
technology revolution is both
necessary and achievable;
but it will be a tough
challenge.”
15
Nobuo Tanaka, executive director,
International Energy Agency48, June 2008
The following examples highlight the need for
companies in the energy sector to implement
adaptation strategies:
Core Business Activities
(1) Invest in new technologies to address
energy challenges – changing how businesses
produce, store, distribute and use energy is essential
in a low-carbon, resource-constrained world.
Building management49: German engineering
company Siemens has developed building
management systems that automatically control
household appliances such as air conditioners
and central heating. The approach has resulted in
energy reductions of up to 30 percent.
(2) Develop new and renewable sources of
energy – developing alternatives to fossil fuels is
critical if the energy sector is to satisfy growing
demand while reducing its environmental footprint.
Algae-based biofuels50: US oil major
ExxonMobil has struck up a partnership with
biotech firm Synthetic Genomics to develop nextgeneration biofuels from photosynthetic algae.
Unlike other biofuel sources, algae rely on sunlight
rather than fresh water or arable land (both of
which are likely to be scarce under expected
climate change scenarios).
(3) Locate and design facilities to cope with
climate change – this requires resilience to extreme
weather events, as well as preparedness for differing
demand patterns due to changing consumer
patterns.
Flood defence51: power company EDF raised
the dyke around its Le Blayais nuclear facility in
France by one metre in response to the threat of
floods. In addition, it constructed an ‘anti-surge’
wall on top of the extended dyke.
Social Investment and Philanthropy
(1) Assist communities in meeting future energy
challenges – increasing reliable and affordable
energy for poor communities requires decentralised
energy solutions such as solar lighting, biogas and
micro-hydro.
Enterprise-based approach52: oil major
Shell is supporting local entrepreneurs in India
who are providing affordable energy services,
such as solar-powered lighting in off-grid rural
areas. The ‘Excelerate’ programme also offers
consumer-financing solutions to enable lowincome communities to purchase modern energy
products.
(2) Support measures to secure energy access
and availability – this requires improvements to the
adaptive capacity of energy infrastructure, ensuring it
becomes more robust and ‘climate smart’.
Smart meters53 British Gas is running a pilot
to install wireless-enabled meters in UK homes.
These enable suppliers to receive real-time
consumption data, while allowing residential
customers to monitor their electricity use and
identify power-hungry appliances.
(3) Support research into the development
of alternative fuels and energy sources
– companies can gain significant commercial
opportunities by adding their weight to publicly
financed research efforts.
Clean Energy Partnership (CEP)54: financed
by the German government to the tune of €1.2
billion, CEP aims to develop hydrogen-powered
transportation. Partners in the collaborative
research initiative include energy companies Shell,
Statoil and Total.
Policy Dialogue and Advocacy
(1) Support voluntary adaptation measures –
industry bodies in the energy sector are well placed
to raise the bar on adaptation by implementing
standards that go above and beyond government
requirements.
Investors will need to spend
$45 trillion by 2050 to keep
pace with growing energy
demand while addressing
concerns over climate change
International Energy Agency57 2008
carbon emissions of trucks in the United States.
Their recommendation strive to reinvent the
industry through lobbying for reducing the national
speed limit to 65 mph for all vehicles, reducing
congestion by improving highways, supporting
national fuel economy standards for trucks,
reducing idling and increasing fuel efficiency.
(2) Advocate for energy policies and initiatives
that consider adaptation – this signifies a
turnaround in traditional corporate lobbying, which
typically aims to weaken environmental obligations
on business.
Progressive corporate lobbying58: in March
2012, the Prince of Wales UK Corporate Leaders
Group, whose membership includes Anglican
Water Group, BAA, BT, EDF Energy, Shell
International and Unilever, wrote to the UK’s
Chancellor of the Exchequer, George Osborne,
urging the government to support a low carbon
economy and to set out a clear policy framework
to encourage low carbon investment.
Tougher standards55: Following major
hurricanes such as Gustav in 2008 and Katrina in
2005, the American Petroleum Institute tightened
its hurricane preparedness requirements for the
2011 hurricane season for all offshore structures,
which must now be able to withstand winds of up
to 115 mph and wave heights of 70 feet.
Collective Industry-wide Initiatives56: The
American Trucking Associations (ATA), comprising
of 37,000 members, is committed to voluntary,
collective measures aimed at further reducing the
16
Food & Agriculture
HOW CAN BUSINESS ADAPT?
Problems associated with producing and
supplying food due to climate change will
impact companies profoundly. The looming
prospect of decreased crop yield, damaged
infrastructure, increased workforce migration
and increased commodity prices all put
adaptation centre stage for agriculture-based
businesses. More droughts and floods will
inevitably lead to failed harvests. Without
adaptive action, reduced production could
cause price rises between 42% and 131% for
maize, up to 78 % for rice and up to 67% for
wheat by 205059.
Agribusinesses and commodity traders, together
with food and beverage retailers, find themselves
in the frontline of adaptation. All have considerable
leverage through their core competencies,
community involvement and international reach
to create adaptation strategies that increase food
security while also adding to their bottom lines.
A clear example is the development of heattolerant and increased-yield crop varieties. Such
solutions promise to widen market access as well
as reduce energy and water use - a classic ‘winwin’. Related risks and opportunities also face the
communications, biotechnology, insurance and
finance sectors, among others.
Specific opportunities for business to adapt in the
light of food security issues could include:
Core Business Activities
(1) Invest in drought-resistant or heat-tolerant
crop varieties – this requires large scale research
and development investments, primarily by
agribusiness and biotech companies.
Climate-resistant crops60: Agrichemical
companies Bayer CropScience, Syngenta, BASF
and Monsanto, plus brewer Anheuser-Busch are
among those companies active in seed research
designed to develop crops that can be grown
commercially in a much less hospitable climate.
(2) Leverage opportunities in the value chain to
enhance adaptive agriculture practices – to be
successful in the long term such practices must also
be environmentally and economically sustainable.
17
Working with smallholder farmers61: The
Sustainable Agriculture Initiative at Nestlé (SAIN)
works with smallholder farmers to ensure the
Image courtesy of Syngenta
long-term supply of safe, high quality and
compliant agricultural materials. Nestlé offers
around $25 million in microcredit each year to
small farmers to fund installations that improve
the efficiency and quality of production. In total,
the Swiss food company has 800 agronomists
working with 600,000 smallholder farmers.
Industry Collaboration62: Danone, Unilever and
Nestlé have founded the Sustainable Agriculture
Initiative (SAI), in part, to manage the potentially
adverse impacts of agricultural practices on
natural resources and environment, which may in
turn affect agricultural productivity.
(3) Bring poor farmers into the procurement
system – inclusive business models help stimulate
local economic growth, as well as securing the
supply chain for agricultural and food-based
companies.
New business models63: UK beverage firm
Diageo is integrating small farmers into its supply
chain in Nigeria by teaching them how to grow a
beer-friendly variety of the cereal crop, sorghum.
This project has helped increase farmers’ yields
by 35 to 50 percent. Diageo sources 95% of all its
grain for Nigerian production from local farms.
(4) Support crop insurance for small farmers – a
failed harvest due to the effects of climate change
can be disastrous for subsistence farmers.
Guarding against disaster64: Credit Suisse,
ING, MasterCard, Nike and UPS are among the
corporations that help fund microfinance provider
Opportunity International, which offers weatherindex crop insurance to small-scale farmers.
Social Investment and Philanthropy
(1) Assist farming communities in becoming
more climate resilient – part of helping farmers
cope with the threat of climate change involves the
adoption of energy and water efficient agricultural
techniques.
ITC e-Choupal network65: in India, the
agriculture-based conglomerate ITC has
established village-based internet kiosks to inform
farmers about drip irrigation techniques, hybrid
seeds, timely weather information and other
information designed to help them adapt and
improve their production methods. The agriextension service covers over 40,000 villages and
has benefited more than four million farmers.
(2) Help initiatives to raise farmers’ awareness
of adaptation measures – small farmers can
benefit hugely from gaining knowledge about simple
steps to make their production methods more
‘climate smart’.
Making information available66: US
agribusiness Syngenta supports training and
agricultural extension services in Africa, south
east Asia and Brazil that help smallholder
farmers improve crop yields and income through
conservation-oriented farming practices.
Policy Dialogue and Advocacy
(1) Encourage public policy dialogues on food
security and climate change adaptation –
adaptation policies, programmes and incentives will
be most effective when government, business and
civil society are acting in concert and small farmers
benefit.
Regional policy advocacy68: non-profit network
FANRPAN unites a wide range of research and
advocacy groups in Southern Africa with a view
to raising capacity for policy analysis and policy
dialogue on food security issues. It counts the
Pan African Agribusiness Consortium, the Africa
Seed Traders Association and the industry-funded
NEPAD Business Foundation among its funding
partners.
(2) Work across sectors to highlight the
impact on crops, food inputs and medicinal
inputs – such coalitions would typically (although
not exclusively) involve the agricultural, food and
beverage, and pharmaceutical sectors.
Voluntary roundtables69: driven by consumergoods company Unilever, a 434-member coalition
of international businesses and environment
groups has established the Roundtable for
Sustainable Palm Oil which in turn has developed
guidelines for sustainable management of palm
oil. The approach is being replicated in the soya,
sugar cane, and cocoa industries.
Agriculture is among the most vulnerable sectors to the effects of climate change
because changes in temperature and rainfall, more frequent weather extremes and the
growing presence of carbon dioxide in the atmosphere have mostly negative effects on
productivity. Yet the projected increase in world population during the next 40 years,
which should reach 9.1 billion in 2050, calls for agriculture to significantly step up its
productivity levels.
FAO, “Global Action on Climate Change in Agriculture: Linkages to Food Security, Markets
and Trade Policies in Developing Countries67, 2011
18
Ecosystems
HOW CAN BUSINESS ADAPT?
The natural environment delivers a range
of so-called ‘ecosystem services’ on which
businesses of all shapes and sizes depend. The
world’s forests, for instance, help purify water,
regulate climate and yield genetic resources.
River systems, meanwhile, provide freshwater,
power and recreation. Similar arguments can
be made for coastal wetlands and oceans.
Yet the world’s ecosystems are under threat from
climate change. Natural habitats have declined more
rapidly since 1950 than any other comparable time
in history, according to the UN-endorsed Millennium
Ecosystem Assessment70. Ecosystem services, and
by extension business profitability, will be threatened
as well. Local communities are also set to suffer,
further impacting the operating environment for
companies.
Steps to adapt to the threat of degraded
ecosystems could include:
Core Business Activities
(1) Develop products that reduce impacts on
ecosystems – such impacts could occur at both
the manufacturing and consumption stages.
“The loss of natural capital
(including ecosystems,
biodiversity and natural
resources) has direct and
widespread negative effects
on financial performance.
Many companies face
specific risks from
disruptions of vital
ecosystems through their
supply chains.”
Colin Melvin, CEO, Hermes Equity Ownership
Services71, July 2010
19
Image courtesy of Tara Oceans
Product labelling72: US retail giant Wal-Mart
uses a ‘Sustainable Product Index’ to assess
products’ environmental impacts, such as energy
usage and material efficiency. This information
is communicated to customers via an on-pack
labelling system.
(2) Conduct an ecosystems impact assessment
– this will enable companies to ascertain the extent
to which they depend on nature’s ‘free’ inputs.
Biodiversity impact studies73: consumer goods
company Unilever has carried out assessments in
Ghana and Tanzania to determine the impact that
the cultivation of Allanblackia, an oil-based crop,
is having on local biodiversity.
(3) Promote products that monetise ecosystem
services – at present, the lack of financial
value attributed to the services rendered by
nature reduces the motivation to protect natural
ecosystems.
Rainforest bonds74: forest bonds aim to
leverage the relatively predictable cash flows that
sustainable forestry and forest-related activities
generate. Bank of America Merrill Lynch is one of
several banks considering adding such a bond to
its product portfolio.
Social Investment and Philanthropy
(1) Encourage employee and community
volunteering in conservation efforts – and then,
companies would ideally use employees volunteering
experiences to inform internal adaptation strategies
and practices.
Channelling volunteer experience75: employee
volunteers from UK bank HSBC join researchers
from conservation charity Earthwatch in
investigating how human activity affects forest
vulnerability to climate change. The volunteers are
subsequently expected to implement a practical
climate change project within the business.
(2) Support research efforts into climate
change impacts on natural ecosystems – it is
still not well understood how some ecosystems will
be impacted by climate change, making research a
top priority.
Tara Oceans76: this three-year research
expedition aims to assess the impact of climate
change on plankton and other micro-organisms
in the world’s oceans. The multi-partner project
is backed by energy company Veolia and retailer
agnès b.
(3) Promote the development of valuation
methodologies for ecosystems services – as
a new field, communication between companies
and institutions from the public, NGO and academic
sectors is critical.
The Natural Capital Project77: is developing
tools for quantifying the values of natural capital in
clear, credible and practical ways. A joint venture
between leading universities and environmental
non-profits, it has worked with mining company
Lafarge to enhance the company’s land
management plans for quarry reclamation.
The cost of environmental
degradation could reach
$28.6 trillion by 2050,
representing almost a fifth
(18%) of global economic
output.
Source: ‘The Economics of Ecosystem
Services and Biodiversity Report’, or TEEB79,
October 2010
precipitated a moratorium on deforestation, while
also strengthening Brazil’s existing Forest Code.
(2) Create voluntary standards on ecosystem
services evaluation – this will assist companies
to incorporate the true costs of using nature in their
business operations.
Navigating standards80: Rio Tinto, Syngenta
and Weyerhaeuser were among thirteen
international businesses to ‘road test’ a new
framework designed to enhance business
understanding of ecosystem services. The
Corporate Ecosystems Services Review was
launched by WBCSD and drew on feedback from
over 125 businesses, NGOs and government
agencies.
Policy Advocacy and Dialogue
(1) Advocate for better corporate ecosystems
management – this could be achieved through
policy instruments, such as financial and tax
incentives for companies that incorporate ecosystem
services into their business models.
Tracking Deforestation78: US agribusiness
Cargill has helped develop a satellite-tracking
programme in Brazil that identifies where soya
cultivation has led to deforestation. The initiative
20
Extreme Weather Events
HOW SHOULD BUSINESS ADAPT
Many climate scientists believe that as the
earth becomes 2°C warmer it will face more
frequent and more intense droughts, floods,
heat waves and other extreme weather events.
Operational interruptions, increased insurance
costs and workforce displacement represent
just some of the adverse business outcomes
from climate-driven disasters.
Potential measures by companies to adapt to
weather-related disasters include:
Core Business Activities
(1) Ensure physical assets are disasterproofed – this may require retrofitting facilities in
high-risk areas, as well as ensuring new corporate
constructions are located in low-risk regions
Elastocoast81: developed by Germany’s BASF,
this environment-friendly flood protection system
protects dykes by using elastomer polyurethane
to absorb the force of breaking waves and
floodwater.
(2) Develop products that account for the
impacts of climate disasters – helping companies
and individuals adapt to disaster situations has
particular application to the insurance industry.
Disaster-related financial products82:
insurance company Allianz boasts an innovative
catastrophe bond that transfers the risk of severe
river floods in the UK, as well as earthquakes in
Canada and most of the US.
Social Investment and Philanthropy
(1) Support initiatives to improve disaster
forecasting and warning systems – given their
expertise in real-time communication, technology
companies can play a particularly key role in this
area.
Disaster early warning text alerts83:
Bangladeshi mobile phone operators
Grameenphone and state-owned Teletalk set
up a system to send text alerts warning their
customers of an impending disaster. The service
is available in the country’s most flood and
cyclone-prone regions.
21
(2) Promote employee capacity to respond to
weather-related disasters – training employees
not only helps increase their safety, but also provides
a ready resource to lend assistance to others in
times of crisis.
Training employee volunteers84 – in 2010,
Cisco embarked on a global training partnership
with the aid charity American Red Cross. Among
other skills, Cisco volunteers learn how to provide
mass care related to distribution of first aid,
shelter, food and supplies.
Policy Advocacy and Dialogue
(1) Encourage cross-sectoral collaboration on
disaster preparedness – this will ensure the most
efficient use of resources, as well as leveraging the
contribution of business.
High-level advice85: senior business experts
make up a private sector advisory group for the
secretariat that oversees the UN’s International
Strategy for Disaster Reduction. The eleven
companies represented include DuPont, Deloitte,
Cisco, Credit Suisse and Arup Group, among
others.
In 2011 alone, the US was hit
by 14 extreme weather events,
causing damages exceeding one
billion dollars each. In 2010,
Western Russia experienced the
hottest summer in centuries,
while in Pakistan and Australia
there were record-breaking
amounts of rainfall. Global
warming can generally not
be proven to cause individual
extreme events, but in the sum
of the events, the link to climate
change becomes clear.
Potsdam Institute for Climate Impact Research86,
March 2012
Call to Action
The business community has not been inactive in the face of climate change. Many progressive
companies have taken on board the environmental and economic necessity of tackling the issue. The
array of mitigation strategies now in evidence is proof of such intent.
However, the focus must change. To date, both the private and public sectors have concentrated their
efforts on reducing GHG emissions. They have done so in the hope of avoiding climate change. The strategy
is understandable and remains vitally important. Unfortunately, too little action starting too late means that
mitigation alone will no longer suffice.
Companies must also adapt to the inevitable impacts of climate change. Such a strategy has been dismissed in
the past as ‘defeatist’. It is not. Rather, it is a pragmatic response to a very real issue. The natural environment
is set to change and all sectors of society, including and especially companies, must ready themselves to cope
with that. Not taking adaptation seriously means compromising future competitiveness and sustainability.
Adaptation, it should be emphasised, does not negate the need for mitigation. Both are vital responses to the
threat of climate change. In practice, it is usually the same motivation that drives companies to mitigate and
adapt: namely, reducing climate-related risks and increasing climate-related opportunities. Indeed, in practice,
adaptation and mitigation activities often fall within the same project scope. Going forward, however, it is
imperative that adaptation no longer be the ‘also ran’ option. It must be pursued at the same time and with
equal vigour as mitigation efforts.
Time is of the essence. The climate change clock is ticking. The established consensus among climate
scientists is that temperatures will inevitably rise if there are more than 350 parts per million of carbon dioxide in
the atmosphere. We are already at 39387 and the figure is trending up, not down. In short, climate change has
reached a point of no return. The moment to act therefore is now.
As this report illustrates, a number of pioneering companies have already embarked on adaptation measures.
Most have not, however. The same is true for society at large. This lack of preparedness puts the world’s social,
economic and environmental systems in danger. That poses a threat to all, businesses included.
Of course, appropriate responses will differ from company to company. This problem does not have a one-size
fits all solution. The impacts of climate change will not be universal. A company’s geographical location, industry
type and value chain all influence how it should best adapt. Some businesses, for example, may identify climate
change risks in their core operations that require immediate action. For others, the impacts may be less direct. In
such cases, helping build levels of adaptive capacity in their various spheres of influence may represent a more
suitable approach.
Finally, adaptation demands bold communication as well as bold decision-making. Considerable conceptual
confusion and political ambiguity still surround the issue. IBLF’s Spheres of Influence framework represents
an attempt to bring clarity to the debate and to show companies where and how they can act. Adapting to
climate change is a business imperative, but it requires forward-thinking companies to spell that out in action –
companies that understand the business risks and opportunities, and are willing to tackle both head on.
Clare Melford
CEO,
International Business Leaders Forum
22
Further Reading
• Impacts, Adaptation and Vulnerability.
Contribution of Working Group II to the Fourth
Assessment Report of the Intergovernmental
Panel on Climate Change, M.L. Parry eds,
et al, Cambridge University Press, 2007.
• Adapting to Climate Change: State and
Outlook, The European Environmental
Agency, 28 November 2010
• Adapting to the Impacts of Clhttp://www.
nestle.com/Common/NestleDocuments/Documents/
Library/Documents/Corporate_Governance/Corporate-
Change. America’s
Choices: Panel on Adapting to the Impacts
of Climate Change, National Research
Council, Board of Atmospheric Sciences and
Climate, National Academy Press, 2010.
Adaptation Policy Frameworks for Climate
Change: Developing Strategies, Policies and
Measures, Lim, B. and E. Spanger-Siegfried
eds, United Nations Development Programme.
Technologies for climate change adaptation:
emerging lessons from developing
countries, Tessa, B & Kurukulasuriya P.
Journal of International Affairs, New York,
Fall 2010, Vol. 64, Issue 1, p. 17.
Climate Change 101: Adaptation, Pew Center
on Global Climate Change, January 2011.
Progress Report of the Interagency Climate
Change Adaptation Task Force, White House
Council on Environmental Quality, October 2010.
Effective Governance of Climate
Change Adaptation, Rao, P.K. Rutgers
University, USA, 22-23 March 2012.
Harmonising Climate Risk Management:
Adaptation screening and assessment tools
for development co-operation, Hammill, Anne
and Thomas Tanner, OECD,29 July 2011
Successful Adaptation to Climate Change
Across Scales, Adger, W. N., N.W. Arnell,
and E.L. Tompkins, Global Environmental
Change 15(2):77-86, 2005.
Uncertainty and Climate Change Adaptation: A
Scoping Study, Dessai, S. and J. van der Sluijs,
Utrecht: Copernicus Institute for Sustainable
Development and Innovation, Department of
Science Technology and Society, 2007.
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•
•
•
•
23
• Community-Based Adaptation: A vital approach
to the threat climate change poses to the poor,
Briefing Paper 17005IIED, IIED, May 2007.
• Corporate Action on Climate Adaptation
and Development, Jane Nelson, The
Brookings Institution, 2008.
• Durban Adaptation Charter for Local
Governments as adopted on the 4th December
2011 of the occasion of the “Durban Local
Government Convention: adapting to a changing
climate” – towards COP17/ CMP7 and beyond• UK Climate Change Assessment Risk
(CCRA), Defra, 25 January 2012.
Relevant Links:
• Adaptation (http://www.ipcc.ch/pdf/glossary/tar-ipccterms-en.pdf) versus Mitigation (http://www.
ipcc.ch/pdf/glossary/tar-ipcc-terms-en.pdf)
• Africa Enterprise Challenge Fund
(AECF): http://www.aecfafrica.org/?goback=.
gde_934207_member_80287274
• Environmental Justice Foundation:
http://www.ejfoundation.org
• GIZ Business Coaching “Adaptation to Climate
Change”: http://www.gc21.de/ibt/en/modules/
gc21/ws-FLEXdialogue/info/ibt/acc-dis.sxhtml
• Investment and Financial Flows to Address
Climate Change: Technical paper: http://unfccc.
int/documentation/documents/advanced_search/
items/3594.php?rec=j&priref=600004974#beg
• Private Sector Initiative - Database of Actions
on Adaptation: http://unfccc.int/adaptation/nairobi_
work_programme/private_sector_initiative/items/6547.php
• Private Sector Initiative Fact Sheet: http://unfccc.
int/files/adaptation/nairobi_work_programme/joining_the_
nwp/application/pdf/nwp_psi_facsheet_may2011.pdf
• The Partnership for Resilience and
Environmental Preparedness: http://oxfamamerica.
org/articles/business-partnership-to-promoteresilience-and-environmental-preparedness-forms
• World Bank Institute – Global Dialogue
on Adaptation and Food Security:
http://wbi.worldbank.org/wbi/Data/wbi/wbicms/files/
drupal-acquia/wbi/WBI%20Global%20Dialogue%20
on%20Food%20Security%20and%20Adaptation%20
-%20Summary%20of%20emerging%20issues.pdf
Publications:
Useful Organisations
• Global Compact: Adapting for a Green
Economy: Companies Communities and
Climate Change: http://www.unglobalcompact.
•
•
•
•
•
•
•
•
org/docs/issues_doc/Environment/climate/C4C_
Report_Adapting_for_Green_Economy.pdf
• Intellecap: Opportunities for Private Sector
Engagement in Urban Climate Change
Resilience Building: http://unfccc.int/files/adaptation/
application/pdf/intellecap_furtherinfo_250311.pdf
• International Union of Railways: Adapting
Rail infrastructure to Climate Changes:
http://unfccc.int/files/adaptation/application/
pdf/iuc_further_information_101110.pdf
• OECD: Private Sector Engagement in
Adaptation to Climate Change: http://www.oecdilibrary.org/content/workingpaper/5kg221jkf1g7-en
• Oxfam America: The New Adaptation Marketplace
– Climate Change and Opportunities for Green
Economic Growth: http://www.oxfamamerica.
org/publications/the-new-adaptation-marketplace
• PwC: Business Leadership on Climate Change
Adaptation: Encourage Engagement and Action:
http://unfccc.int/files/adaptation/nairobi_work_programme/
partners_and_action_pledges/application/pdf/encouraging_
engagement_and_action_exec_summ_publication.pdf
•
•
•
•
•
•
•
•
•
•
•
•
350 org
Adaptation Scotland
Al Gore
Carbon Trust
Carbon War Rooms
Care Climate Change
Centre for International Forestry Research
CERES/Business for Innovative
Climate and Energy Policy
Climate & Development Knowledge Network
Conservation International
Defra
Energy Networks Association
Environment Agency
The Climate Group
The Nature Conservancy
United Kingdom Climate Impacts
Programme (UKCIP)
United Nations Development Programme
World Resources Institute
World Wildlife Fund, World Wildlife Fund
United Nations Framework Convention on
Climate Change (Nairobi Working Group:
Adaptation Private Sector Initiative)
24
Endnotes
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
25
National Aeronautics and Space Administration: Global
Climate Change: http://climate.nasa.gov/keyIndicators/
US Government Info: http://usgovinfo.about.com/od/
technologyandresearch/a/climatetochange.htm
NCAR Research: http://usgovinfo.about.com/od/
technologyandresearch/a/climatetochange.htm
IPCC: http://www.ipcc.ch/publications_and_data/
publications_and_data_reports.shtml
Stern Report: http://webarchive.nationalarchives.gov.uk/+/
http:/www.hm-treasury.gov.uk/sternreview_index.htm
McKinsey: http://www.mckinsey.com/clientservice/
water/charting_our_water_future.aspx
IPCC: http://www.ipcc.ch/publications_and_data/
publications_and_data_reports.shtml
IPCC: http://www.ipcc.ch/publications_and_data/
publications_and_data_reports.shtml
David Suzuki: http://know.climateofconcern.org/index.
php?option=com_content&task=article&id=137
Pew Centre: http://www.pewclimate.org/
docUploads/Business-Adaptation.pdf
Yahoo Finance News: http://finance.yahoo.com/news/
Colombia-Coffee-Yield-Record-zacks-917103599.html
New York Times: http://www.nytimes.com/2011/03/10/
science/earth/10coffee.html?_r=2
UNFCCC COP17: http://www.cop17-cmp7durban.com/
Adaptation Private Sector Initiative: http://
unfccc.int/adaptation/nairobi_work_programme/
private_sector_initiative/items/4623.php
Cancun Adaptation Framework: http://unfccc.int/adaptation/
cancun_adaptation_framework/items/5852.php
FAO: http://www.fao.org/docrep/012/i1323e/i1323e00.htm
FAO: Profile for Climate Change: ftp://ftp.fao.
org/docrep/fao/012/i1323e/i1323e00.pdf
GeSI: http://www.fao.org/docrep/012/i1323e/i1323e00.htm
GeSI Publication: http://www.gesi.org/LinkClick.as
px?fileticket=7X8GQ7HNR%2bg%3d&tabid=71
GeSI: http://www.gesi.org/
FAO Water Unit: www.fao.org/nr/water/issues/scarcity.html
http://www.thecoca-colacompany.com/
citizenship/water_main.html
http://www.ikea.com.kw/en/the-never-ending-story-list.html
http://www.siemens.com/press/en/presspicture/
index.php?type=2&tag=pn&view=special
CDP Water Disclosure 2011 Global Report:
https://www.cdproject.net/CDPResults/CDPWater-Disclosure-Global-Report-2011.pdf
https://www.citywestwater.com.au/documents/Cadbury_
Schweppes_-_Rainwater_Harvesting_Case_Study.pdf
http://www.anglianwater.co.uk/
environment/our-projects/rivercare/
28. http://www.sabmiller.com/index.
asp?pageid=917&year=2009
29. http://ceowatermandate.org/
30. http://www.ge.com/foundation/disaster_relief/index.jsp
31. https://www.cdproject.net/water
32. http://water-a-business-imperative.ning.com/
33. http://www.earthplatform.com/south/durban/basin
34. World Bank: http://web.worldbank.org/WBSITE/EXTERNAL/
COUNTRIES/AFRICAEXT/0,,contentMDK:21772010~pag
ePK:146736~piPK:146830~theSitePK:258644,00.html
35. Rehdanz and Maddison (2005), p.31: pubs.
aeaweb.org/doi/pdfplus/10.1257/jep.23.2.29
36. Disaster Watch: http://www.disasterwatch.
net/climatechange/gndr_climt07.pdf
37. Integrated Research and Action for Development: http://
www.disasterwatch.net/climatechange/gndr_climt07.pdf
38. HCC Infrastructure: http://www.
hccinfrastructure.com/csr/csr_drn.aspx
39. UK Climate Change Risk Assessment 2012
Evidence Report: http://www.gripweb.org/gripweb/
sites/default/files/documents_publications/
The%20UK%20Climate%20Change%20Risk%20
Assessment%202012%20Evidence%20Report.pdf
40. Roll Back Malaria: http://www.rollbackmalaria.
org/toolbox/index.html
41. http://en.sanofi.com/Images/14167_080226_
FIEVRE_JAUNE_AMERIQUE_LATINE_pdf.pdf
42. Google Crisis Response: http://www.
google.org/crisisresponse/
43. Alstom: http://www.alstom.com/press-centre/2007/12/
Tobias-Billstrom-Minister-for-Migration-visitedAlstom-at-Norrkoping-20071204/
44. http://www.ejfoundation.org/page563.html
45. Buy Responsibly Campaign: http://www.buyresponsibly.org/
46. Simple Climate Worldpress: https://simpleclimate.
wordpress.com/2011/03/19/2010s-europeanheatwave-unmatched-in-centuries/
47. Reuters: http://af.reuters.com/article/
energyOilNews/idAFLDE6670U420100708
48. p. 16 International Energy Agency: http://www.iea.org/
49. Siemens: http://www.siemens.com/
innovation/en/publikationen/publications_pof/
pof_fall_2008/gebaeude/umwelt.htm
50. ExxonMobil: http://www.exxonmobil.com/
Corporate/energy_vehicle_algae.aspx
51. York Academia: http://york.academia.edu/NatalieKopytko/
Papers/409827/Climate_change_nuclear_power_
and_the_adaptation-mitigation_dilemma
52. Shell Foundation: http://www.shellfoundation.org/pages/
core_lines.php?p=corelines_content&page=excelerate
53. British Gas: http://www.britishgas.co.uk/smarter-living/
control-energy/smart-meters/what-are-smart-meters.html
54. Clean Energy Partnership: http://www.
cleanenergypartnership.de/
55. American Petroleum Institute: http://www.api.org/Newsand-Media/hurricane-information/hurricane-preparation.aspx
56. International Energy Agency: http://www.iea.org/
57. American Trucking Associations: http://www.
trucksdeliver.org/recommendations/index.html
58. UK Corporate Leaders Group: http://www.cpsl.cam.
ac.uk/Leaders-Groups/The-Prince-of-Wales-CorporateLeaders-Group-on-Climate-Change/UK-CLG.aspx
59. IFPRI: www.ifpri.org/sites/default/files/pressrel20101201.pdf
60. Earth Times: http://www.earthtimes.org/scitech/scientistsunite-global-hunt-climate-change-resistant-crops/119/
61. http://www.earthtimes.org/scitech/scientists-uniteglobal-hunt-climate-change-resistant-crops/119/
62. Nestlé:
63. Diageo: http://www.diageo.com/en-row/
csr/valuechain/Pages/suppliers.aspx
64. Opportunity International: http://www.opportunity.org/
65. ITC E-Choupal: http://www.itcportal.com/itcbusiness/agri-business/e-choupal.aspx
66. Syngenta Foundation: http://www.
syngentafoundation.org/index.cfm?pageID=594
67. FAO: http://www.fao.org/docrep/015/i2533e/i2533e00.pdf
68. FRANPAN: http://www.fanrpan.org/
69. Roundtable on Sustainable Palm Oil: http://www.rspo.org/
70. Maweb: http://www.maweb.org
71. Hermes Equity Ownership Services: http://www.hermes.
co.uk/Default.aspx?alias=www.hermes.co.uk/eos
72. Walmart Stores: http://www.walmartstores.
com/sustainability/9292.aspx
73. Unilever: http://www.unilever.com/sustainable-living/
sustainablesourcing/biodiversity/index.aspx
74. Rainforest Bonds: http://www.teebweb.
org/LinkClick.aspx?fileticket=fiUWxgbpHs%3D&tabid=1021&language=en-US
75. EarthWatch Institute: http://www.teebweb.
org/LinkClick.aspx?fileticket=fiUWxgbpHs%3D&tabid=1021&language=en-US
76. Tara Oceans: http://oceans.taraexpeditions.org/
77. The Natural Capital Project: http://www.
naturalcapitalproject.org/index.html
78. Cargill: http://www.cargill.com/corporateresponsibility/pov/soy-production/amazonreport-a-conservation-success/index.jsp
79. TEEB: http://www.teebweb.org/AboutTEEB/
Background/tabid/1038/Default.aspx
80. WBCSD: http://www.wbcsd.org/Pages/EDocument/
EDocumentDetails.aspx?ID=28&NoSearchContextKey=true
81. BASF: http://www.basf.com/group/corporate/en/
sustainability/eco-efficiency-analysis/projects/elastocoast
82. Allianz: https://www.allianz.com/en/press/news/
company_news/point_of_view/news_2011-04-19.html
83. http://www.scidev.net/en/climate-change-andenergy/renewable-energy/news/mobile-phonealerts-to-warn-of-disaster-in-banglad.html
84. Cisco: http://newsroom.cisco.com/
dlls/2010/prod_042010d.html
85. UN International Strategy for Disaster Reduction:
http://www.unisdr.org/partners/private-sector
86. Potsdam Institute for Climate Impact Research: http://www.
pik-potsdam.de/news/press-releases/wetterrekorde-alsfolge-des-klimawandels-ein-spiel-mit-gezinkten-wurfeln
87. CO2Now: http://co2now.org/
26
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