“The point of no return is no longer over the horizon,” Secretary-General António Guterres said at the start of the annual U.N. climate talks (COP25), which wrapped in Madrid on Sunday. In the following weeks, representatives from almost 200 countries negotiated how to deal with the threat from climate change at a global level. Many U.S. corporate collaboratives also used the event as a backdrop for their ambitious climate announcements.
Although changing weather trends already impact businesses, private-sector climate leadership is focused almost exclusively on decreasing greenhouse gas emissions rather than also actively adapting to climate impacts. This is a grave omission that goes against the historic 2015 Paris climate agreement and hurts shareholders, communities and the planet.
For the last five years at these annual COP proceedings, high-level government leaders arrived determined to both decrease greenhouse gas emissions and adapt to the current and future changes that aren’t avoidable any longer. Global mean temperatures have already risen by over 1 degree Celsius above pre-industrial levels, causing changes such as more frequent and extreme weather and gradual shifts in rainfall and sea levels. Man-made climate change is locked in for centuries, regardless of future global greenhouse gas reductions.
But many U.S. corporate collaborations have emerged solely to work in partnership on climate change mitigation. These include We Are Still In, America’s Pledge, We Mean Business and a new entrant, the Certified B Corp community. These groups' overarching climate policy priority is to keep average global temperature rise under 1.5 degrees Celsius above pre-industrial levels this century.
Fully aligning corporate actions with the Paris agreement requires corporations to give climate resilience the same level of ambition as emissions reductions. Yet these business coalitions don’t specifically embrace the Paris agreement’s set expectations for planning, implementing and reporting on climate adaptation efforts.
Adaptation is missing from most corporate climate action strategies
Investors define adaptation and resilience as the ability to anticipate, absorb, accommodate and recover from the increased risk and impact of climate change.
Why is the absence of a clear commitment to adaptation so egregious? Because adaptation is material to corporations’ operations and their future prosperity. Global supply chains, business continuity and market growth depend on it. The major credit rating agencies—Standard & Poor’s and Moody’s—certainly grasp that. Both include climate change risks in their evaluations, and Standard & Poor’s even describes how it calculates a resilience benefit in its evaluation of green projects.
Consider also the Financial Stability Board’s Task Force on Climate-related Financial Disclosures. Its guidelines, elements of which are being incorporated into law in some European countries, provide counsel on how investors assess the physical impacts of climate change on their current and future portfolios.
Since physical climate risks impact operations, workforce, markets, infrastructure, raw materials and assets, the Climate Bonds Initiative now certifies bonds not only based on potential for greenhouse gas reduction, but also on their contribution climate change resilience. Even the U.S. Government Accountability Office recently released a repot entitled, Limiting the Federal Government's Fiscal Exposure by Better Managing Climate Change Risks.
Why do companies overlook adaptation?
One reason why corporate collaborations may be avoiding action on climate adaptation is because adaptation is less a sustainability issue and more a legal, governance, finance, human resource and supply chain issue. The challenge has pivoted from an exclusive focus on how we can protect the planet to include how we can protect humans and assets from climate impacts that could create both the market crisis and the humanitarian crisis of our time.
Already, people around the world are enduring deadly heat waves, food insecurity, the spread of disease, imperiled ecosystems, and damaged infrastructure exacerbated by climate change. Scientists calculate that those living in poorer countries are 10 times more likely to be affected by a climate disaster each year than those in wealthy countries. But these impacts also affect developing countries like the U.S. and are expected to worsen. Many climate impacts will increasingly impact lower-income Americans more severely.
Why adaptation matters to purpose-driven businesses
Some corporate climate action collaborations have at least been clear with their members that they have only a greenhouse gas reduction emphasis in their scope. But the omission of adaptation is particularly grave for corporate collaborations that have a remit beyond climate action. This could, arguably, include the B Corp community—which operates under the mission to work “toward reduced inequality, lower levels of poverty, a healthier environment, stronger communities, and the creation of more high-quality jobs.” When corporations sign on to a collaboration’s climate policy agenda in the context of this type of mission, they are led to believe their carbon reduction efforts are enough.
However, without adaptation as a climate action priority—at a minimum, upgrading or moving at-risk infrastructure, using climate resilient crops and adding spare capacity—companies are not serving this mission. They are not working to mitigate physical climate risks that increase inequality, have a disproportionate risk on impoverished communities, increase negative health outcomes, and disrupt communities.
Of course, they also miss the opportunity to create adaptation-related jobs. Besides being a business imperative, assisting in adaptation offers opportunities for corporations. It can open doors to new markets, build efficiencies and enhance communities while addressing risks.
For instance, building flood defenses and stormwater management systems, strengthening water supply and distribution systems, diversifying forest species, creating cooling technologies for outdoor workers, and strengthening electric grid resilience, among other things, are big business already. Plus, helping communities adapt can ensure business continuity and protect the middle-class market that has sparked so much of this decade’s business prosperity.
The bottom line
Corporate failure to adapt necessarily results in higher costs to the business, along with loss of lives and livelihoods. So, here’s the call to action for corporate coalitions on climate: Recognize that mitigation and adaptation are complementary strategies for reducing unmanageable change and managing climate risks. You can also benefit from fresh opportunities created by these strategies—and by exercising adaptation leadership in your communities.
Image credit: Pixabay
Joyce Coffee, LEED AP, is founder and President of Climate Resilience Consulting. She is an accomplished organizational strategist and visionary leader with over 25 years of domestic and international experience in the corporate, government and non-profit sectors implementing resilience and sustainability strategies, management systems, performance measurement, partnerships, benchmarking and reporting.