In the face of continuing non-action on climate change policy at the national and international levels, we’ve seen a growing fatigue develop around the topic of corporate climate change mitigation. But regardless of the lack of government action, companies can’t be seen to be ignoring climate change. Additionally, there is a growing recognition that a lack of mitigation will mean increased climate impacts. As a result we’re seeing a rapid increase in corporate discussion of climate change adaptation.
Climate change adaptation historically has been seen as quite distinct from climate change mitigation. Indeed, distinguishing between climate change “mitigation” and climate change “adaptation” is not conceptually difficult if one looks at the typical formula for risk:
Risk = H x E x V
Where H = Hazard (e.g. sea level rise), E = Exposure (e.g. exposure to sea level rise), and V = Vulnerability (e.g. damage from sea level rise).
In this formulation, climate change mitigation reduces risk by addressing the level of the hazard (e.g. GHG concentrations in the atmosphere). Climate change adaptation, on the other hand, moderates risk by reducing either exposure to or vulnerability to the hazards of climate change. For example, reducing one’s exposure to sea level rise could mean building farther away from an exposed coastline; reducing one’s vulnerability to sea level rise could mean building high enough to avoid storm surges.
In this context, the distinction between mitigation and adaptation seems clear. And it makes sense to distinguish between mitigation and adaptation efforts at a societal level. The policy objectives are different, the policy measures you would use are different, and the distributions of policy costs and benefits are likely to be very different.
The same logic is filtering down into, for example, commitments by multilateral development banks (MDBs) to dedicate distinct percentages of their lending portfolios to mitigation and adaptation efforts. MDBs are now trying to figure out a metric by which to measure where their portfolio dollars are going. This is not as simple as it sounds when you get into possible multiple impacts of a given loan, but as representatives of societal policy one can see why the MDBs want to be able to differentiate between mitigation and adaptation.
But does the same logic apply in the context of private sector decision making? Is it important for companies to record and report climate change mitigation vs. adaptation initiatives separately? This question can be approached from two perspectives: 1) is there a significant societal value in such a distinction? And 2) is such a distinction practical to implement?
I would argue that there is no obvious societal value in being able to separately sum up private sector mitigation and adaptation activities. Such summations simply cannot answer the question of whether a societal climate change mitigation goal is being met; the only way to assess that outcome is to measure GHG emissions at the societal level. The same argument applies to tabulating private-sector adaptation activities. In neither case can corporate actions be summed to yield insights into societal outcomes, not to mention the fact that many activities will be listed in both categories, leading to inflated numbers.
The practical impediments to implementing such a differentiation through corporate reporting are even more convincing. Companies are not actually driven by societal climate change mitigation and adaptation objectives; rather, they are driven by their need to reduce their own business risks by adapting to changing policy, market, and climate forces, and to enhance their competitive advantage through new products and services.
Next page: No clear standards