Climate Change Adaptation is Everyone’s Business

John A. Miller, FEMA Region 2 Mitigation Liaison

As we learned in a recent FEMA Region 2 Preparedness webinar, the risks of climate change to physical assets have been identified by the United States military for three decades. Companies also are facing increasing threats due to the onset of climate change. The Risky Business Project (2014) foretold what we are experiencing in the United States with “damage to coastal property and infrastructure from rising sea levels and increased storm surge, climate-driven changes in agricultural production and energy demand, and the impact of higher temperatures on labor productivity and public health.”  As Winston (2014) recognized, Hurricane Sandy, now ten years ago, brought attention to climate risk solutions and pressed the widespread recognition of climate change. Since Sandy, we have additional examples that have opened our eyes to the devastating effects of climate change on businesses.

In the multitude of climate change effects are financial impacts on companies, most obviously felt by the increase in extreme weather. Since businesses will experience risks to natural capital and its supply chain due to temperature extremes, and physical asset exposure to sea level rise, climate change adaptation (what FEMA calls “Hazard Mitigation”) will be necessary for what’s already “baked in the cake” due to decades to century longevity of greenhouse gases and the momentum of climate change, even with dramatic carbon emission reductions. The following are some actions that businesses can progress in planning for the risks ahead:

• Climate change risk and opportunities will require scenario planning and storytelling to be prepared for the future;

• Business operations will need backups for each aspect of processes; this will include accounting of interruptions of supply from extreme weather;

• It will be important for businesses to set leaders pay and bonus incentives to addressing climate change;

• Companies must consider the protection of their human capital to be resilient.

Investment in climate change adaptation is like purchasing insurance for the future but has the advantage of buying down the risk rather than insurance premiums increasing with heightened risk. Climate change adaptation can be both ways to make a positive contribution to society, while making a profit. It is a simple conclusion reached by Winston (2014) that your business, your suppliers, natural capital, and your customers must survive for business to make a profit, and that protection of those extended assets is certainly in your business interest. Adaptation (hazard mitigation) is simply good business.

References

Risky Business Project (2014, June). The Economic Risks of Climate Change in the United States – A Climate Risk Assessment for the United States.

Winston, A. S. (2014). The Big Pivot – Radically Practical Strategies for a Hotter, Scarcer, and More Open World. Harvard Business Review Press, Boston, MA.