4 Ways Companies Should Adapt to Climate Change

Published September 20, 2011

Consider the following three developments:

In the Arctic, the Northwest Passage is growing in size every year, creating new competition for faster shipping and resource exploration, and new engineering and safety challenges.

In California, the number of seniors dying from heat-related issues is set to rise sharply in coming decades, creating new challenges for health-care companies and insurance-providers alike.

Across the globe, the increase in temperature spikes and storm surges is making it harder for electric utility providers to offer uninterrupted power as profitably as they have in the past.

Although it's difficult to attribute a single storm or season to climate change, it is fair to say that we'll see more of these events as climate change sets in. For business managers who are focused on reducing greenhouse gas emissions as a key element of addressing climate change, these examples show that business must adapt to volatile and uncertain future weather to achieve sustainability.

Adaptation and Mitigation: It's Not Either/Or

Taking climate change adaptation seriously does not mean abandoning efforts to stop climate change. It means addressing future changes that are already locked in.

Indeed, mitigation and adaptation of climate change are not only inclusive of one another, they can and should be mutually reinforcing. Areas like green building, energy management, and land-use planning offer tools to accomplish both. Moreover, for companies in industries where warmer temperatures will increase energy demand of air-conditioning and water-distribution products, effective management of greenhouse gas emissions is likely to become a vital part of successfully adapting to the future climate.

To better understand what the private sector is and should be doing, BSR examined more than 500 company responses to the Carbon Disclosure Project, which represents more than 80 percent of Global 500 companies.

We considered three things in our research:

Company disclosures on the risks and opportunities of climate change
What companies are doing about it, and
Opportunities for innovation based on current gaps.

Our research yielded briefs on several different industries, available at www.bsr.org/adaptation.

We identified four steps companies should consider as they develop climate change adaptation strategies:

1. Create value by understanding and addressing new customer needs. All companies need to evaluate how a changing and uncertain climate will affect customers, and consider how to better serve current and new markets.

Hydration, energy management, micro-insurance, advanced weather prediction, better science and technology for agriculture, and real estate and building solutions are just a few areas in which companies can provide new products and services to address growing needs.

2. Protect value by securing assets, operations, and supplies. Most companies will also be well served by taking action now to mitigate their operating risks. Companies that have operations or depend on suppliers near coasts, at flood plains, and in deserts will find that more extreme and frequent weather events can compromise infrastructure and disrupt suppliers.

A number of sustainability approaches -- such as local procurement, green building, and dialogue with communities -- can help address these risks by diversifying assets and establishing redundant systems.

Next page: 7 Ways Your Company Might Be Vulnerable to Climate Change

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