WEATHERING THE STORM: COMPANIES WILL NEED TO TAKE STEPS TO ASSESS AND MANAGE CLIMATE RISKS
Companies have always had to navigate a changing business environment. But now they face a changing physical environment, as climate change contributes to more frequent and intense heat waves, higher sea levels and more severe droughts, wildfires and downpours.
Businesses are increasingly recognising that these climate impacts are imposing real costs, here and now, in the form of damaged facilities, interrupted power and water supplies, higher insurance costs, and disrupted supply and distribution chains.
Despite the growing awareness, many businesses continue to plan using a historical picture of risks – an inaccurate picture that fails to take into account how climate change is rewriting the future. A major reason is that data about climate risks and potential damages are difficult to obtain at a scale useful for business planning. Two steps toward addressing this need in the United States are President Barack Obama’s new Climate Data Initiative and the newly released National Climate Assessment.
Recognising the impacts
According to Munich Re, about 800 major weather-related disasters worldwide in 2012 led to more than $130bn in losses, with the most costly events (Hurricane Sandy and the Midwest drought) occurring in the United States. Last year, we saw costly flooding in central Europe, a deadly typhoon in the Philippines and a crippling drought in California. These events serve as reminders of our vulnerability to extreme weather, which climate change will exacerbate.
Jul-Sep 2014 Issue
Center for Climate and Energy Solutions