Helping Business Adapt to Climate Change

As climate change sets in, its impacts — increasing severity of storms and weather disasters, receding snow and rivers, advancing deserts, and more frequent landslides and floods — will test companies’ ability to effectively deliver high-quality products and services.

In response, BSR is launching a series of briefs to illustrate how these changes will affect each industry and what current adaptation practices look like, beginning with an examination of the food, beverage, and agriculture sector (PDF).

Some effects of climate change will be familiar, such as crop failures and ensuing price shocks, but over the next several years, they will happen with more frequency and with even higher insurance costs. Beyond direct business impacts, companies will also need to understand how climate change will affect their most vulnerable stakeholders — the poor, citizens of developing countries, and women — who will face increasing risks due to drought, disease vectors, and the perils of migration.

The good news is that many resources on business adaptation to climate change are already available (see end of article). McKinsey & Company developed a cost curve for adaptation (PDF), for example, which highlights different adaptation options and shows that investment paybacks can be short. Also, companies do not need to choose between adapting to climate change and helping to mitigate it; the distinction between these two is rarely clear and we should do both together.

There are also tools that translate state-of-the-art climate monitoring, prediction, and imagery into practical information to help companies improve their relevant governance and decision-making processes. These tools include: the Climate Administration Knowledge Exchange (CAKE), Google Earth Engine, the International Research Institute for Climate and Society, the National Oceanic and Atmospheric Administration’s Climate Prediction Center, and weADAPT. Companies can also take advantage of new market opportunities by providing solutions to enable effective adaptation.

There are several obstacles to climate adaptation, even for those most committed to proactive and responsible responses. First, the language of adaptation does not resonate well beyond specialists, so communicating on the topic is difficult. As Carmel McQuaid, Climate Change Manager at Marks & Spencer, recently told us, it’s usually more effective to engage stakeholders by communicating on the topics that matter most to them. For example, retailers would be most concerned with their ability to continue to sell high-quality products, such as coffee. For companies that thrive on innovation, positioning adaptation as part of the portfolio of trends affecting the industry is usually more effective than treating it as a standalone topic.

Another obstacle is the complexity and uncertainty of the climate. This goes for today’s weather, let alone the future of the climate more broadly, as evidenced by the fact that we are not well-equipped to handle disasters such as the recent floods in Pakistan and Australia. The fact is that we do not know how to properly prepare for disasters even when they are expected. This is partially due to the cognitive difficulty of coping with low-probability, high-impact consequences, and it is also a result of markets and organizations that don’t encourage or reward proactive preparation.

Third, our first reactions may not serve us well. Companies are at risk of taking seemingly sensible actions that may lead to adverse effects elsewhere or on others. Such “maladaptation” (PDF) can take many forms, such as combating heat by turning up the air conditioning (which would produce more greenhouse gas emissions), using desalinization technologies that pollute marine environments, raising prices or otherwise excluding vulnerable customers that depend on insurance or other essential services, or giving customers more resources without the incentives to conserve.

This is partly a result of focusing on the specific, current problem at hand while not taking into account the broader repercussions. It is also a result of failing to identify where weather risk and other familiar issues have climate change dimensions.

Identifying the Hotspots

Over the past year, we’ve been following the topic of adaptation through discussions with BSR member companies, leading and participating in workshops and forums, including the U.N. climate talks in Cancun, and examining business responses to the Carbon Disclosure Project on climate risks and opportunities.

In doing so, we’ve found that while climate change impacts are ubiquitous, there are some approaches companies can use to identify and focus on vulnerable “hotspots” in their operations, supply chains, and key markets. Hotspots emerge both as physical locations and features of the company.

In terms of location, companies with operations in Asia, Africa, and Latin America face some of the greatest risks due to the extreme water loss or flooding predicted for those regions. In addition, these areas suffer from a general lack of resources to respond to problems.

In all parts of the world, coasts, flood plains, and ecological boundary zones, including mountains and islands, are vulnerable. In many cases, cities (PDF), as well as settlements where subsistence is marginally viable, are especially risk-prone. Companies should consider how their direct operations and key partners and markets are situated in relation to these physical areas.

As for companies themselves, a key vulnerability is a dependence on natural conditions to foster crops, snow, and other climate-sensitive inputs, which are likely to migrate and, on average, degrade. In general, long-lived and fixed assets, such as mines, as well as extended supply chains and distribution routes, tend to be more exposed to physical disruption.

Finally, lack of transparency is a problem: A combination of weather events and climate-related political actions are increasingly likely to disrupt energy availability and general operations of suppliers and other partners. While companies may be able to take steps to mitigate their vulnerability, they will have a hard time doing so if they are unable to make informed judgments about their partners’ key issues, options, and systems for making decisions.

When companies look ahead, here are some issues that they should tune into:

Communicating about climate risks and opportunities: Investors expect companies to report on physical, regulatory, and other risks and opportunities of climate change through the Carbon Disclosure Project. The U.S. Securities and Exchange Commission has also made informed reporting on climate risks a requirement. Also, working with distressed communities to cope with climate change is an increasingly material issue for annual sustainability reporting.

Meet needs responsibly: The private sector is being called upon to drive an effective response to climate change, ranging from delivering hydration and other growing basic needs, applying finance and information and communications technology to build more resilient infrastructure, and solving the potential problems of maladaptation.

To do so, businesses need to foster connections and discussions that help deliver sustainable solutions to society under dynamic and uncertain conditions.

Create climate-resilient local benefits: Many sources of risk for companies are likely to be found far away from their headquarters and centered in local communities where, for example, vulnerabilities to floods, windstorms, and droughts are growing. These communities need help with local investments to developing disaster-response systems and continuity plans. Companies should look for ways to help their community partners achieve triple-win impacts by reducing the effects of disasters, adapting to climate change, and safeguarding development gains.

Each month through July, we will produce discussion briefs for specific industry sectors on what they are and should be doing about climate adaptation. Each brief will include basic tools and references. As we produce this series, we’ll be holding discussions with BSR members and inviting feedback. We’ll also store our resources and other tools at www.bsr.org/adaptation.

Further Information

Climate change adaptation can be defined as “adjustments in ecological, social, or economic systems in response to actual or expected climatic stimuli and their effects or impacts,” including “changes in processes, practices, and structures to moderate potential damages or to benefit from opportunities associated with climate change.” For more information and a list of suggested reading, visit www.bsr.org/adaptation.

First posted at GreenBiz.

Going for the Cold: What the Vancouver Games Can Teach Us About Adaptation to Global Warming

When the winter Olympics kicked off virtually snowless last week, the record heat was due not only to El Niño, said Tim Gayda, vice president of the Vancouver Organizing Committee, but to “something else that nobody understands at this point.”

Though his hesitation to mention climate change raised eyebrows, pointing fingers at the cause doesn’t matter as much as how this snow slump is being dealt with. If what scientists are saying is true—that the 30 remaining glaciers at Glacier National Park and diminishing snow cover in Colorado and Utah are likely to be gone soon—this winter Games may be a dress rehearsal for warmer and wetter events to come.

The Vancouver Olympics have shown us that we can adapt to warmer and more erratic weather events, but there are caveats.

Some resiliency is built in—for example, snowmaking machines can pipe in water, then freeze and spray it around. But only up to a point. Even with the best technology, snowmaking works only when temperatures are well under freezing, the air is dry, and there is a solid base of snow. And even then, it makes only a coat. So scaling up efforts to make snow is only possible within a narrow band, meaning that planning is difficult if climate change runs away uncontrolled, making adaptation and mitigation tightly linked.

Another big challenge with adapting to variability and change is the incremental cost, which can be high and steepen quickly. The most advanced snowmaking machines cost upward of US$30,000 each just to install, and it takes 250 of them to blanket even a small peak like Vermont’s Mt. Snow. When snowmaking proved insufficient at the Olympics, equipment-moving Sikorsky S-64 helicopters were brought in to carry snow from higher-elevation mountains. Those machines are extraordinarily expensive to operate, and few and far between. Compare that to snow falling from the sky for free. The upshot? It’s much cheaper to prevent climate change than to try to “cure” it.

In the end, companies must plan to adapt to climate change to some extent because, at this point, some climate change is inevitable. But our currently programmed responses can be resource- and pollution-intensive, leading to a vicious cycle. Snowmaking can take 160,000 gallons of water to make just a foot of snow for one acre. And the impacts of flying in extra snow are just as high: My own back-of-the-napkin calculation shows that the helicopters used for snow rescue in Vancouver emit 100 pounds of carbon-dioxide per mile (assuming a 4,992-liter fuel capacity, 370-kilometer range, and aviation gasoline with an emissions coefficient of 18.355 pounds of carbon-dioxide per gallon).

In summary, the Vancouver Olympics show us that businesses will—and has already begun to—build more resiliency into planning, strategies, and overall expectations about climate variability and climate-led environmental change. But as we do, it is important to keep in mind that adaptation can exert more strain on the global climate system. And perhaps it makes more sense to prioritize and demand responsible, sustainability-supportive solutions.

First posted at BSR.

Mountains: The Bellwethers of Climate Change

Today is International Mountain Day. And in flat Denmark, the role of mountains is getting more attention as part of the international climate negotiations. Some prominent mountain-oriented activities at COP 15 include:

  • Bhutan’s campaign to raise awareness about the increasing frequency of glacial lake outburst floods, the alpine equivalent of tsunamis that occur when natural ice dams give way
  • A presentation by Al Gore and a group of Nordic country officials on data showing that snow and ice are changing much faster than anticipated globally
  • A discussion hosted by the UN Food and Agriculture Organization on climate changes’ impact on the world’s mountain regions, especially related to political commitments and opportunities for adaptation
  • World-champion skier Alison Gannett’s completion of a 250-mile, self-supported walking journey, with skis on her back, to discuss what climate change means for skiing

Why do mountains matter? Consider these likely consequences, described in the book Six Degrees: With 3°C of warming, the U.S. Rockies will be virtually snowless. At 4°C, the Alps will lose their ice and look more like the Atlas Mountains of Morocco. At 5°C, at least 90 percent of California’s winter snowpack will disappear, and there will probably be significant migration to northern countries like Canada and Russia.

As the storage tanks of our ice and water, mountains distribute water in rivers to farms and communities, even while providing ecosystem services such as pollination and erosion control from wild plants, across broad regions. If snowpack is significantly reduced, these services will probably be severely diminished.

With climate change, mountains could become dangerous rather than life sustaining. As they unfreeze, once firm building materials like rock and ice give way, resulting in slides and floods. As weather becomes more erratic, snow falls less evenly and temperatures are more extreme, increasing the chances of destructive avalanches. While these natural tipping points are already present and observed regularly in natural annual cycles, evidence points to greater frequency and severity with climate change.

As host to a disproportionate share of the world’s marginalized people, mountains also reflect one of the potential human impacts of climate change. This is easy to see in the great ranges of the Himalaya, Karakoram, Pamir, Tien Shan, and Caucuses, which serve as natural border areas. In these regions, sociopolitical stability is already in a delicate balance, and communities can be particularly vulnerable.

Like low-lying islands and the arctic, mountains are the canaries in the coalmine. But they are more than symbolic. For companies that follow their supply chains far enough, they almost certainly hit mountain regions. This highlights the importance of maximizing the resilience of your company and its partners to climate-induced environmental change, while at the same time doing what you can to stop climate change from worsening.

First posted at  BSR.

Climate Change Lessons from the Slopes

A recent study presented at last month’s American Geophysical Union conference holds chilling news for the $2 billion U.S. ski industry: Climate change might end skiing in Aspen and Park City by 2100.

It stands to reason that if the snow pack dries up, the ski industry could, too. But the study from Mark Williams and Brian Lazar could be a harbinger of things to come for other consumer-facing industries as well. As one of the first industries to face climate change head-on, skiing provides three key lessons for other sectors.

Learn the Terrain: Know and Promote the Facts

Climate change myths abound. On a recent Google search for “climate change facts,” five out of the first 11 hits led me to websites that downplay or contradict the science. Media watchdog groups substantiate my findings: According to Media Matters, recent content by CNN, the Wall Street Journal, Fox News, and other mainstream papers and broadcast outlets have contained inaccurate and flawed information about climate change.

In light of this misinformation, consumer-facing industries have a responsibility to get their facts straight and share them with their customers. According to the best assembly of experts on the subject — the UN’s Intergovernmental Panel on Climate Change — here’s what we know: The climate is destabilizing, this destabilization is driven by greenhouse gas emissions, and humans are directly responsible for causing those emissions (see sidebar).

With this gap between public knowledge and the scientific facts, one of the most powerful things companies can do about climate change is use their communication channels to set the record straight. In the ski industry, outdoor apparel manufacturer Patagonia, which has an extensive “environmentalism” section on its website, has been doing this for years. By demonstrating a deep-rooted commitment to environmental stability, Patagonia has enjoyed the commercial benefits of long-term customer loyalty, and the ethical benefits of being on the right side of science.

There is a business opportunity for virtually every company to use their existing communications efforts to give their employees and customers a compass for climate change, which is shaping up to be one of history’s greatest social threats. Since people need accurate information to make good decisions, this is, for many consumer-facing businesses, the easiest and most important thing they can do.

Go Out of Bounds: Look Outside Your Company’s Operations

In many ways, it’s logical to focus efforts on reducing emissions from your company’s internal operations: Internal emissions are the easiest to measure and control, the effort yields useful information about costs and risks, and committing to operational reductions is important for  credibility.

But as the ski industry has demonstrated, there are important opportunities to look outside the scope of your company’s boundaries and consider ways you can help reduce emissions on a broader scale.

The Scientific Consensus on Climate Change
There is much debate about the details of climate change, and future-looking analyses in general bring uncertainty. Yet we confidently manage risk in all aspects of life — climate change should be no different — and the world’s most informed experts agree on the most fundamental issues that we need to understand in order to act: The climate is destabilizing, this destabilization is driven by greenhouse gas emissions (GHGs), and those GHGs are directly caused by humans. 

These are the findings of “Climate Change 2007: The Physical Science,” the most comprehensive review ever undertaken on climate science. The review, dubbed “AR4,” was conducted by the United Nations Intergovernmental Panel on Climate Change (IPCC), the world’s leading scientific body on climate. Peer-reviewed science stands in agreement: According to the last published review of scholarly literature, conducted by Naomi Oreskes in 2004, in more than 900 scholarly articles, not one disputed this consensus view. Furthermore, no major world scientific academies contradict these basic findings.

If your company does decide to pursue a climate strategy of learning and promoting the facts, looking outside internal operations for opportunities to reduce emissions, and planning for both adaptation and abatement, start with the following links for more essential information about climate science:

– Global Warming Myths and Facts (Environmental Defense Fund)
– Global Warming Fast Facts (National Geographic)
– Global Warming 101 (Union of Concerned Scientists)
– Fast Facts about Climate Change (The Nature Conservatory)
– 10 Facts on Climate Change and Health (World Health Organization)
– Global Warming Facts and Figures (Pew Center on Global Climate Change)
– Global Warming Frequently Asked Questions (National Oceanic and Atmospheric Administration)
– Facts and Trends to 2050: Energy and Climate Change (pdf) (World Business Council for Sustainable Development)
– Frequently Asked Questions (pdf) (Intergovernmental Panel on Climate Change)
– Climate Change: A Guide for the Perplexed (New Scientist)

For example, the energy bar company Clif Bar has supported the formation of the collaborative initiative Keep Winter Cool, which aims to raise public understanding of global warming. In an effort to take responsibility for their customers’ drives to the mountain, California’s Kirkwood ski resort partnered with SnowBomb, a resort information and discount portal, to develop user-friendly rideshare schemes. Enabling conservation-oriented consumer behavior is one of the most important steps companies can take to combat climate change.

At the same time, a company’s operations have less influence on the customer than the customer’s experience with the company’s products, which generally takes place among an ecosystem of complimentary goods and services from other companies — in the case of skiing, that includes the drive, lodging, gear, and more. Consumer-facing companies therefore have a great opportunity to meet the customer where they use their products, particularly by partnering with other companies that are operating in the same environment.

While the previous examples are customer-focused, you can extend the influence of your company by using whatever assets have the most reach. For instance, Colorado’s Aspen Skiing Company, which is influential in its community, has directed its resources to partner with utilities to deploy new community solar arrays. The company also has lobbied for policy change by filing federal amicus briefs and testifying before Congress about the expected effects of global warming on the ski industry.

These early initiatives by the ski industry are just the beginning; there’s a whole wilderness of opportunity for other industries to develop climate change solutions by venturing beyond the boundaries of their own operations.

Proceed with Caution: Abate, Abate, Abate

In climate change, we talk about adaptation — preparing for change — while committing to abatement — doing our best to prevent things from getting worse. There is a multi-decade lag between emissions and their effects on the climate, so we are almost certainly locked in to at least 2 degrees Celsius of warming. Some adaptation to climate change will be necessary. For the ski industry, making more snow and employing new business strategies will be the keys to survival for many resorts. Other companies will make similar plans for adaptation. At the same time, it’s critical for companies to maintain an unwavering focus on reducing emissions.

There are three reasons for this. First, adaptation is perilous. According to most predictions, climate change could easily push currently stable ecosystems across boundaries. For instance, as the climate warms over time, the thawing of ice and tundra could release huge amounts of additional emissions. Yet, no matter what the pace, climate change effects are irreversible. So while technological solutions like snowmaking may provide a quick fix to the narrow interests of some, they won’t replenish the breadth of lost ecosystems and their natural services in general.

Second, adaptation is a classic “win-lose” game, where people and companies will compete for fewer resources (especially water) and defend the most fertile real estate, while more energy will be needed to resettle and distribute goods and services. Such a process is inherently disruptive, brings about sociopolitical instability, and is likely to leave the vulnerable behind.

The last reason companies need to focus on abatement, not just adaptation, is that every incremental rise in average global temperatures is more menacing than the previous one. It is not about whether climate change will occur, but to what extent, so every abatement effort counts.

While skiing is one of the first industries forced to deal with climate change so directly and comprehensively, consumer-facing companies in other industries will face the same challenges soon enough. These lessons from the slopes will help all businesses build a stable and predictable future.

First posted at GreenBiz.