Climate adaptation: why businesses need to start battening down the hatches

As increasingly severe floods, droughts and wildfires take their toll worldwide, the onus is on businesses of every size and sector to adapt to the very real consequences of global warming
Ca Cover Online

The latest warnings about anthropogenic global warming and climate change are stark. A report published by the United Nations just before its COP27 conference in November stated that, without concerted action this decade, there is no credible way to prevent the planet from experiencing a devastating and irreversible temperature increase. 

In fact, to keep the Earth from warming to no more than 1.5°C above pre-industrial levels – as called for by the UN’s Paris agreement of 2015 – countries would need to cut their greenhouse gas emissions by 45% within seven years and achieve net zero by 2050.

More than 70 nations, including the UK, have signed up to this pledge. But, according to the UN’s Nationally Determined Contributions Synthesis report, their governments’ commitments and actions to date have fallen far short of what’s required. 

In fact, the aggregated national plans of the 193 parties involved in the Paris accord would, as they stand, cause global carbon emissions in 2030 to be 11% higher than they were in 2010. To make matters worse, COP27 has been viewed widely by environmental experts as a failure, given that it produced no new government commitments to phase out fossil fuels. 

Despite the key role it has to play in combating climate change, the private sector has also made disappointing headway. Here too, net-zero pledges are rarely reflected in action, with many companies moving slowly at best and simply greenwashing at worst. 

Learning to adapt

Despite humankind’s sluggish response, climate change is already manifesting itself in extreme weather, leading to ever more disastrous floods, droughts and wildfires. And matters will only get worse. 

So says Professor Matt Gitsham, director of the Ashridge Centre for Business and Sustainability at Hult International Business School.

“Climate change is here, so we need to adapt to it now,” he warns. “Because there’s a time lag between carbon entering the atmosphere and when it shows an impact, even if we manage to limit emissions now, the situation will worsen and adaptation will still be necessary, no matter how well we do on decarbonisation.”

In other words, it is not enough for organisations to rely on climate mitigation – including familiar strategies such as shifting to renewable energy sources – to tackle the long-term problems posed by global warming. While such strategies are important, enterprises must also work on climate adaptation to address the shorter-term risks and ensure their resilience to these. 

Of course, because the impact of climate change will vary from sector to sector, each business will inevitably face different kinds of disruption. This means that there is no handy one-size-fits-all approach available. 

It’s therefore up to each company to assess and manage the climate risks affecting its unique set of assets and operations. This includes weighting and scoring such risks and assigning appropriate budgets for tackling them based on their severity.

Depending on the nature of the business concerned, possible adaptation methods could include introducing natural defences, such as reed beds and mangrove thickets, to help against flooding (and filter out pollution). Other options might involve changing industrial processes to cut their water consumption in drought-affected areas or, as heatwaves become more common, introducing more efficient cooling systems to enable workers and machinery to remain productive.

Size matters 

Small to medium-sized enterprises have tended to make relatively few advances in the climate adaptation stakes, says Claire Benson, founder and director at sustainability consultancy SDG Changemakers. 

She reports that organisations in this size bracket are “still struggling just with decarbonisation. My assessment is that they aren’t understanding climate change, so they’re not yet at a stage where they’re dealing with adaptation and resilience.”

Because there’s a time lag between carbon going into the atmosphere and when it shows an impact, even if we manage to limit emissions now, adaptation will still be necessary

Benson attributes part of the problem to the complex terminology that’s widely used in the sustainability field, which many people struggle to understand. This in turn makes it hard for them to choose the most effective course of action, which means that their approach “often becomes simply a tick-box exercise”, she says. 

The fact that SMEs often have few resources to devote to climate adaptation doesn’t help either, particularly as a global recession beckons.

Most large businesses, on the other hand, are “already adapting to some extent” and even changing elements of their business models, according to Angela Hultberg, global sustainability director at management consultancy Kearney. 

“Some adaptation is happening. It’s definitely being discussed at board level,” she reports. “Those without serious risk analysis systems in place are running to catch up.”

Some corporate boards even have begun to discuss how to achieve the advanced goal of climate resilience, which is about ensuring that “the company stays in business for another 100 years”, Hultberg says. “This is not something that has reached the tangible ‘roadmaps’ stage, but it’s definitely starting to be a topic of conversation.”

Managing climate risk

The companies that have come the furthest in adaptation terms have tended to be national infrastructure providers. BT Group, for example, is running a raft of decarbonisation projects in parallel with adaptation- and resilience-related activities as part of its wider sustainability drive.

To embed adaptation into its operations, the company has created five “risk hubs”, one of which focuses on climate change, says Tiffany Chow, BT Group’s head of climate change. The company’s 16 nominated “risk owners” monitor the situation in their sections of the business – including finance, operations and the supply chain – and meet quarterly to report on it.

BT also completes a detailed scenario analysis and planning exercise every year. This focuses on the potential climate impacts on physical assets and operations both domestically and globally. The aim here is to come up with suitable mitigation and adaptation actions for each business unit to undertake. Such actions can also generate opportunities for the business, Chow notes. 

“When we adopt newer technology, such as switching from copper cable to a full-fibre network, it’s not only helping us to reduce our emissions (and those of our customers); it also improves our service,” she says.

BT is also working with third parties to come up with collective solutions. For instance, it joined three other key providers of critical national infrastructure – Thames Water, National Grid and Network Rail – to aid an inquiry conducted by Westminster’s joint committee on the national security strategy. The committee’s goal was to evaluate the resilience of these vital systems to climate change. It published its recommendations in October.

Such exercises will become more common as more and more of us are affected by the stark realities of the climate crisis. 

“Adaptation and resilience will become increasingly important. Climate change isn’t going away, so there’ll be more and more attention paid to these issues,” Chow says. “Organisations are really going to have to start preparing themselves.”