The Business of Climate Change Preparedness
August 21, 2013
A recently released draft report from the UN’s Intergovernmental Panel on Climate Change (IPCC) warns that global sea levels could rise by more than three feet by the end of the century if current emissions rates continue. It also states, more strongly than in previous assessment reports, that the causes of climate change are 95 percent attributable to human actions. However, while global averages for temperatures can be predicted with a fair degree of confidence, local scale impacts are still difficult to determine. This leaves governments and businesses at a loss for preparing for these impacts.
In August 2013, government officials, business representatives, and development specialists from over 10 countries convened in Hoi An, Vietnam, for the ninth meeting of the Asian Approaches to Development Cooperation (AADC) dialogue series (jointly hosted by the Korean Development Institute, the Institute for Strategy and Policy on Natural Resources and Environment, Vietnam, and The Asia Foundation) to discuss climate change adaptation and disaster resilience approaches in the region. Asia is one of the world’s most vulnerable regions to the impacts of climate change. Many countries, including Bangladesh, China, Thailand, and Vietnam, are already experiencing the impacts from increased intensity and severity of cyclones, flooding, drought, and sea level rise. Asia is also home to some of the world’s fastest growing economies. The region’s businesses play a vital role in supporting local economies and families, and are just as vulnerable to the impacts from climate change. Recognizing this, small and medium sized enterprises, as well as international companies and their supply chains in Asia, are exploring ways to prepare for and adapt to the threats their operations face from these natural disasters – an area that was explored at the AADC meeting.
While businesses have placed a lot of focus on climate change mitigation, to date, climate change adaptation has received modest attention yet is increasingly important as businesses experience and account for the impacts of climate change. Experts affiliated with the Stanford Institute for Social Innovation including Amy Luers, previously the senior environmental program manager at Google and now director of climate change at the Skoll Global Threats Fund, are calling for a more holistic approach to address climate change that includes combining efforts on mitigation and adaptation approaches. According to Jeffrey Ying of CSR Asia, who spoke at the AADC meeting, there is a strong interest from the private sector to address climate change adaptation in the Asia Pacific, particularly in South and Southeast Asia, and primarily by large international businesses with strong Asian-based operations. The largest incentive for businesses to address climate change adaptation is through their risk management. There is also an increasing interest to explore ways to support local communities to adapt to climate change in locations where they operate. However, a lack of reliable data and guidance for businesses on climate impacts prevents many businesses from taking action.
A recent example of how businesses are being impacted by natural disasters is the 2011 extreme flooding in Thailand. Muanpong Juntopas, Integrated Water Resources Management (IWRM) advisor for The Asia Foundation, explained that 26 of 77 provinces in Thailand were affected by the flooding, and some areas for up to 60 days; approximately 800 people died; over 12 million people were left homeless; an estimated $45 billion in economic loss was incurred; six industrial estates were inundated; and 3,000 small and medium enterprises were forced to shut down.
These small and medium enterprises and industrial estates support the local Thai economy and produce many of the world’s cars, electronics, and other goods. Hitoshi Suzuki, president of the Institute for International Socio-Economic Studies, a private think tank owned by the NEC Corporation, spoke about the impact the floods had on their operations at the AADC meeting. Two of NEC’s manufacturers were forced to close – one relocated to Japan, while another relocated to a different location in Thailand. NEC Corporation has a long history of integrating corporate social responsibility practices into its business operations. This includes initiatives to incorporate natural disasters into the company’s business continuity planning. While the company had accounted for natural disasters in its Japan-based operations, as a result of the flooding in Thailand it is now exploring ways to expand its business continuity plans to is supply chains.
According to the 2012 World Risk Index, Vietnam is ranked 18th out of 73 countries in terms of vulnerability to climate change. The Asia Foundation and the Vietnam Chamber of Commerce and Industry (VCCI) are working together to enhance the awareness and capacity of Vietnamese small and medium sized enterprises on disaster risk management. At the AADC conference, Dau Anh Tuan of VCCI described the project’s efforts to strengthen public-private partnerships through disaster risk management (DRM) policy advocacy, involvement of the business community, and the promotion of corporate social responsibility (CSR) in DRM.
Preparations for the IPCC Fifth Assessment Report, which the above mentioned draft study will inform, are underway, and is expected to be finalized in October 2014. It will provide an update of knowledge on the scientific, technical, and socio-economic aspects of climate change. A study on impacts, adaptation, and vulnerability will be included, with chapters addressing information relevant to the private sector. It’s a long road ahead in preparing for climate change, and advancing research that helps governments and businesses prepare for and adapt to impacts now and, increasingly, in the future, is critical.
Lisa Hook is a senior program officer for The Asia Foundation’s Environment Programs in San Francisco. She can be reached at [email protected]. The views and opinions expressed here are those of the individual author and not those of The Asia Foundation.
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