Adapting for a

Green Economy:
Companies,
Communities
and Climate
Change
A Caring for Climate Report
2 name of publication

A Caring for Climate report by the United Nations Global Compact,

United Nations Environment Programme (UNEP), Oxfam, and
World Resources Institute (WRI)

UN Global Compact Contributors:

Lila Karbassi
karbassi@un.org
Jayoung Park
park10@un.org
www.unglobalcompact.org

UNEP Contributors:
Tim Kasten
tim.kasten@unep.org
Richard Munang
richard.munang@unep.org
www.unep.org

Oxfam Contributor:
Heather Coleman
hcoleman@oxfamamerica.org
www.oxfam.org

WRI Contributors:
Samantha Putt del Pino
sam@wri.org
Eliot Metzger
emetzger@wri.org
Sally Prowitt
sprowitt@wri.org
www.wri.org

Lead Consultant: Nancy Hopkins

Designer: Tannaz Fassihi

Disclaimer
The views expressed in this publication are not necessarily those of the
United Nations (including the UN Global Compact Office and the UN Environ-
ment Programme), Oxfam and the World Resources Institute. The inclusion
of company examples in this publication is intended strictly for learning pur-
poses and does not constitute an endorsement of the individual companies
by the United Nations and authors of this report. The material in this publica-
tion may be quoted and used provided there is proper attribution.

Copyright
© 2011, UN Global Compact, UN Environment Programme, Oxfam and the
World Resources Institute.
The material in this publication is copyrighted. The UN Global Compact en-
courages the dissemination of the content for educational purposes. Content
from this publication may be used freely without prior permission, provided
that clear attribution is given to UN Global Compact, UN Environment Pro-
gramme, Oxfam and World Resources Institute and that content is not used
for commercial purposes.

Creative Commons License

Copyright 2011 UN Global Compact.
This work is licensed under the Creative Commons Attribution-NonCommer-
cial-NoDerivative Works 3.0 License. To view a copy of the license,
http://creativecommons.org/licenses/by-nc-nd/3.0/
 3

Table of Contents

Foreword 4
Executive Summary 5
1.Climate Change Risk, Sustainable Development
and Implications for Business 8
Introduction 9
Impacts of Climate Change on Sustainable Development
and Economic and Social Stability 12
Climate Change Adaptation and the Private Sector 17
Climate Change Risks for Companies 19
Adaptation Solutions that Promote Sustainable Development
and Build Resilience 22
Looking Ahead 24
2.Doing Business in Our Changing Climate:
Measures for Practical Business Action 25
Introduction 26
Private Sector Strategies for Adaptation: Experience to Date 27
Insights from Caring for Climate Companies 30
Measures for Practical Business Action: Enabling Internal Champions 33
Conclusion 39
3.Catalyzing Strategic Private Sector Adaptation: Policy Measures
to Promote Effective Business Investment and Engagement 40
Introduction 41
Barriers to Private Sector Engagement in Building Climate Resilience 42
Climate Change Adaptation Policy and Business Engagement 44
Fostering an Enabling Environment for Private Sector Adaptation:
Policy Measures 46
Conclusion 54
Moving Forward 55
Endnotes 56
Bibliography 63
Key Terms and Concepts 68
Caring For Climate Company Examples 69
4

Foreword

Twenty years ago, world leaders gathered at the Earth Summit in Rio de Janeiro and signed the
first global agreement to tackle climate change. At the time, the impacts of climate change on
communities and economies were just beginning to be understood, and the role of the private
sector in responding to these challenges was only just emerging. But two decades later, climate
change is no longer a distant threat looming on the horizon; it has emerged as arguably the
greatest global challenge of our time.
And while much of the responsibility to drive climate change solutions that address the
needs of the poorest and most vulnerable rests with governments, it has become increasingly
clear that business will be an essential partner in preparing for and responding to the impacts
of a changing climate and in building a global green economy.
At the end of this year, governments will gather in Durban, South Africa, for the next round
of United Nations negotiations to advance global action on climate change. In June 2012, the
UN Conference on Sustainable Development (Rio+20) will seek to secure new and comprehen-
sive commitments to sustainable development.
This publication aims to support the efforts leading up to Rio+20, as well as the activities,
processes, commitments and partnerships that flow from it. By highlighting the nexus among
climate change risks and opportunities, sustainable development and climate change adapta-
tion, Adapting for a Green Economy provides useful guidance to business leaders and policymakers
alike.
The devastating environmental, social and economic impacts of climate change are already
being felt around the world, with the poorest nations and communities disproportionately
affected. This report offers insights on important questions surrounding the role of business in
adaptation:

●● In practice, how can businesses address risks in their own supply chains and operations
while also supporting the adaptation efforts of the communities on which they depend?
●● How can the private sector build climate resilience in partnership with communities in ways
that are mutually supportive?
●● What are the barriers that may prevent effective business engagement in adaptation?
●● How can business investment in adaptation complement necessary public policies, and how
can public policies create the context for appropriate private sector action?

Developed in collaboration with Oxfam International, the World Resources Institute and the
United Nations Environment Programme (UNEP), Adapting for a Green Economy is based on the
results of a qualitative survey of business leaders who support the Caring for Climate initiative,
a joint United Nations Global Compact-UNEP platform involving more than 400 businesses
committed to advancing climate action.
There is much that businesses of all sizes and sectors can contribute to effective climate
adaptation. This report provides actionable information that can help create effective strategies
that benefit business and communities, coupled with common-sense suggestions for supportive
government policy.

 
 
Georg Kell Manish Bapna Jeremy Hobbs Achim Steiner
Executive Director Managing Director Executive Director Executive Director
UN Global Compact World Resources Oxfam International UN Environment
Institute Programme
 5

Executive Summary

Drawing on the results of a 2010 survey of Private Sector Adaptation,

corporate signatories to the United Nations Sustainable Development and
Global Compact and the United Nations Envi- the Green Economy
ronment Programme Caring for Climate ini- The challenges that communities in devel-
tiative, as well as on existing literature, this oping countries face as a result of climate
report makes the business case for private sec- change — such as more frequent and intense
tor adaptation to climate change in ways that storms, water scarcity, declining agricultural
build the resilience of vulnerable communi- productivity and poor health — also pose
ties in developing countries. It then offers serious challenges for businesses. Community
actions that companies and policymakers can risks are business risks. Both local and global
pursue to catalyze and scale up private sec- companies depend on community members
tor action on adaptation. It is ultimately the as suppliers, customers and employees. They
responsibility of the public sector to meet the also depend on local resources, services and
critical climate change adaptation needs of infrastructure to be able to operate. It is dif-
the poor and vulnerable; thus private sector ficult to separate community well-being from
engagement cannot substitute for critically companies’ viability and, in turn, overall
needed public investment and policies. How- economic growth.
ever, private sector investment can serve as a Businesses that make these connections
pivotal part of a comprehensive government- and adapt to climate change with community
led approach to addressing climate impacts. needs in mind can gain a competitive edge.
This report is a resource for companies Businesses that respond to climate change in
with a national, regional or global reach that ways that undermine communities’ efforts to
are interested in increasing their strategic adapt may face reputational and brand risks,
focus on adaptation in developing countries and they may even lose their ability to oper-
where they have operations, supply chains, ate in certain locations. Through responsible,
employees and current or potential custom- strategic approaches to addressing climate
ers. While many companies are focused on change risks and opportunities, in consulta-
climate change mitigation — slowing the tion with people in affected communities,
rate of climate change through reduction of companies can:
greenhouse gas emissions and other strate-
gies — most have yet to develop strategies ●● Avoid costs, manage liabilities and build
for dealing with the immediate to long-term resilience to climate change impacts by
consequences of climate change. This report addressing climate risks throughout their
is also aimed at national and international operations and value chains, while at the
policymakers involved in climate change same time increasing community resil-
and sustainable development dialogues and ience.
decision-making, including those who will ●● Expand market share and create wealth in
participate in the United Nations Confer- communities by developing and deploying
ence on Sustainable Development in 2012 new products and services that help people
(Rio+20). It is hoped that the report’s findings adapt.
will be useful for a much wider range of ac- ●● Access new opportunities to collaborate
tors as well, including small, local businesses with the public sector, as developing coun-
in developing countries that are on the front try governments seek corporate partners
line of climate impacts; civil society organiza- who can effectively deliver goods and
tions seeking to strengthen their work around services that support high-priority climate
climate change and sustainable development; change adaptation efforts.
and subnational policymakers, who are in a ●● Build corporate reputation and exercise
key position to shape a productive interface good corporate citizenship by showing
among government, communities and busi- commitment to decreasing climate vulner-
nesses. ability and promoting long-term resilience
in places where it is needed most.
6

Investment or other private sector actions of what climate adaptation is and what it
taken to adapt to climate change can also means for them or for the markets they serve.
have the benefit of promoting a transition to Uncertainties about the location, magnitude,
a “green economy”, which has been identi- potential timing and consequences of climate
fied by governments as one of the anchoring change impacts make it risky for them to
themes of Rio+20. In its simplest expression, tackle adaptation on their own, and few good
a green economy is one that is low-carbon, tools exist to help businesses assess climate
resource-efficient and socially inclusive. In risks and opportunities. The survey revealed
a green economy, growth in income and that companies find it difficult to incorporate
employment can be generated by strategic scientific climate change data, which typi-
public and private investments in developed cally cover a large geographic area and span a
and developing countries that reduce green- long-term time frame, into practical business
house gas (GHG) emissions, improve resource decision-making, which tends to be shorter-
efficiency and prevent the loss of biodiversity term in nature and location-specific. Informa-
and ecosystem services (that is, the benefits of tion about the full range of adaptation costs
nature to people). Businesses can accelerate and benefits is often not available as an input
the transition to a green economy by taking to companies’ investment analyses. Compa-
advantage of the natural synergies that exist nies may see few economic and policy incen-
between green economy initiatives and cli- tives to make significant up-front investments
mate change adaptation opportunities. When that bolster long-term climate resilience, for
businesses work with communities to restore the company and for communities that will
mangrove forests as natural barriers against be most affected by climate change impacts.
storms, or develop affordable drip irrigation These factors can make it difficult for
equipment that can be used by small-scale businesses to make adaptation a strategic
farmers facing water scarcity, they are also priority. Even if key internal stakeholders
greening the economy. have prioritized adaptation, it can be hard
for them to find the capacity to consult and
Business Perspectives and communicate with a wide range of key ex-
Action on Adaptation ternal stakeholders, including suppliers and
The Caring for Climate survey revealed that customers. Few Caring for Climate signatories
83 percent of 72 responding companies are engaging with suppliers around the issue
believe that climate change impacts pose a of climate risk, and few are exploring how
risk to their products or services. A slightly their customers’ needs may change as a result
higher percentage of companies (86 percent) of climate change impacts, and what the
think that responding to climate change risks, corresponding business implications — and
or investing in adaptation solutions, poses possible missed opportunities — may be of
a business opportunity for their company. shifting demands and preferences. Compa-
Many Caring for Climate companies surveyed nies also reported challenges in analyzing the
have employees and operations in developing connection between their own adaptation
countries, which are disproportionately vul- needs and community needs; only half of the
nerable to climate change and have limited companies that responded to the Caring for
resources with which to adapt. Not only are Climate survey said that they have recognized
companies that operate in, have markets in the possible social consequences (positive or
or source in developing countries exposed to negative) of their adaptation strategies. In the
risk, but they can also play a critical role in end, very few Caring for Climate signatories
building climate resilience in these countries. have been able to design comprehensive
However, beyond planning for the most adaptation goals with corresponding business
obvious or immediate threats — increasingly indicators to track economic performance
unreliable access to key inputs like water and and progress towards those goals.
energy, for example, or damage to assets from Although business adaptation to climate
flooding — most companies are not yet tak- change is clearly at a nascent stage, ap-
ing concrete steps to address climate change proximately one-third of companies sur-
risks and to respond to new opportunities in veyed reported having a strong emphasis
a comprehensive, integrated way. on addressing climate risks, and about the
There is not yet widespread understand- same percentage reported a strong emphasis
ing among Caring for Climate signatories on responding to adaptation opportunities.
 7

The survey revealed some emerging best Practical Measures for Policymakers
practices in how companies are responding Governments have a central role to play in
to complex climate change challenges and op- catalyzing private sector provision of goods and
portunities while contributing to sustainable services that support climate change adapta-
development. This report provides several tion and in encouraging climate-resilient busi-
case studies that not only serve as models for ness practices. Some public sector efforts to in-
other companies, but also provide evidence centivize business contributions to adaptation
that private sector adaptation at the nexus of must be developed and implemented through
company needs and the needs of vulnerable agreements at the international level. Policy
communities in developing countries makes focus at the national and local level, however,
good business sense. is essential, because adaptation challenges and
Strategic private sector adaptation to solutions are specific to each locality, and busi-
climate change must be a purposeful process: ness barriers and opportunities will be country-
It will not happen by chance. Companies specific. To create a facilitating environment
must prioritize adaptation and take action for private sector investment in climate change
to address risks and pursue opportunities. adaptation, policymakers can…
Governments can assist companies to over-
come barriers to investment and harness the ●● Demonstrate policy and finance
resources and innovation of the private sector commitment to adaptation.
to contribute to the public good. ●● Engage businesses as stakeholders in
planning and implementation.
Practical Measures for Companies ●● Stimulate the market for adaptation
Companies will find that addressing the through financial and risk-reduction
impacts of climate change necessitates a incentives.
departure from business as usual; traditional ●● Develop policy and regulatory frameworks
approaches are insufficient. Adaptation cham- to guide corporate practices.
pions within the company will want to focus ●● Provide businesses with the information
their colleagues’ attention on three key ques- and tools they need to make investments
tions: 1) What does climate resilience mean that support climate resilience in vulner-
for the company? 2) What will position the able communities.
company to navigate risks and lead markets ●● Consider new forms of public-private
in a warming world? and 3) How will the partnerships to tackle the most complex
company engage partners to minimize risks challenges to sustainable development and
and seize opportunities? Effective, comprehen- climate resilience.
sive responses to these questions will require
companies to… Conclusion
Addressing the adaptation needs of vulner-
●● Connect climate “adaptation” and “re- able communities at the scale that is necessary
silience” to the company and corporate will require unprecedented levels of coopera-
culture, building on existing mitigation tion, collaboration and resource mobilization
initiatives. among governments, businesses, civil society
●● Integrate climate adaptation into core groups and communities themselves. The
strategic business planning processes. private sector has much to contribute to the
●● Align business objectives with adaptation development and implementation of climate
priorities. change adaptation solutions, including sector-
●● Build a portfolio of climate-resilient specific expertise, technology, significant levels
goods and services. of financing, efficiency and an entrepreneurial
●● Build mutually beneficial strategies with spirit. The key is to find the nexus of shared
stakeholders; build communication interest where business incentives align with
channels. communities’ adaptation needs. Companies
●● Partner with internal and external that rigorously assess climate change risks
decision-makers. and opportunities and implement creative
solutions that build long-term resilience will
create business value while making important
contributions to sustainable development and
equitable green growth.
8

1.Climate
Change Risk,
Sustainable
Development
and
Implications
for Business
 9

Introduction

Climate change is not a distant threat loom-

ing on the horizon. It is already here1, and it Adaptation and Resilience
is arguably the greatest challenge of our time.
The impacts of climate change — from rising Caring for Climate, a sub-group of the United Nations
temperatures to glacial melt and rising sea Global Compact, defines climate change adaptation as
levels — threaten global economic stabil- “initiatives and measures to reduce the vulnerability of
ity and security. Climate change also ham- natural and human systems against actual or expected
pers implementation of the United Nations climate change effects.”
sustainable development agenda, specifically Resilience is defined as “the ability of a social or ecologi-
achievement of the Millennium Development cal system to absorb disturbances while still retaining
Goals.2 the same basic structure and ways of functioning, the
To date, much emphasis has been placed capacity for self-organization, and the capacity to adapt
on the need to mitigate global warming by to stress and change.”
reducing emissions of harmful greenhouse
gases (GHGs). However, it is equally impor- A list of key climate change terms and concepts used
tant to develop comprehensive strategies that in this report is provided as Annex A at the end of the
enable people to thrive and remain resilient report.
under changing climatic conditions. While all
countries will face climate change impacts,
this imperative is particularly urgent for vul- business activities.3 In fact, businesses often
nerable communities in developing countries. face shared challenges with those in commu-
These countries — along with many others nities where they source or operate.
— are already experiencing more extreme At the same time, some communities in
weather events, increased food and water in- the developing world have begun to adapt
security, and negative health effects, and they to climate change and build their resilience
have the fewest resources with which to cope. to climate impacts, often in ways that have
It is ultimately the responsibility of the co-benefits for sustainable development. Such
public sector — through the provision of activities include conserving water, improv-
public finance and through targeted inter- ing natural and man-made barriers that pro-
national, national and local initiatives — to tect against storms, planting drought-resistant
meet the climate change adaptation needs of seed varieties, and using innovative financial
vulnerable communities. Many critical ad- tools, such as microinsurance, to manage
aptation interventions can and will be made increasing climate-related risks. Many adapta-
only through public or civil society invest- tion activities contribute to sustainable de-
ments (for example, building the capacity of velopment, and sustainable development can
communities to mitigate disaster risk, prepare also build communities’ resilience and ability
for disasters and engage with policymakers to adapt to a changing climate.4
on disaster risk reduction and management). While climate change presents a challenge
However, the private sector also has an of enormous breadth and complexity, it can
important and complementary role to play in also serve as a catalyst for positive economic
helping communities adapt. transformation. Climate change provides a
Leading companies, large and small, are “wake-up call” warning that the prevailing
turning greater attention to the implica- economic model is not sustainable.5 Climate
tions of climate change on their businesses. change solutions require a better balance
Companies are starting to recognize risks among growth, resource use and equity. This
of rising costs for inputs and raw materials, more balanced model — which many are
disruptions in their supply chains, threats to referring to as the “green economy” — is
their labour force, and changing customer de- quickly gaining traction and will serve as one
mand. They are just beginning to understand of the anchoring themes of the United Na-
the nature and potential impact of these tions Conference on Sustainable Development
climate change threats and the implications in 2012 (Rio+20).6
of community vulnerability for their own UNEP defines a green economy as one that
10

“results in improved human well-being and This chapter highlights the connections
social equity, while significantly reducing en- among climate change impacts, human
vironmental risks and ecological scarcities.”7 development, and economic and social stabil-
In its simplest expression, a green economy ity, and the resulting risks and opportunities
is one that is low-carbon, resource-efficient that climate change adaptation presents for
and socially inclusive.8 In a green economy, the private sector. Drawing on data gathered
growth in income and employment can be through a 2010 survey of Caring for Climate
generated by strategic public and private corporate signatories, as well as on existing
investments in developed and develop- literature, it makes the business case for pri-
ing countries that reduce GHG emissions, vate sector adaptation investments in two key
improve resource efficiency and prevent the areas — operations and the value chain, and
loss of biodiversity and ecosystem services new products and services — as businesses
(i.e., the benefits of nature to people).9 Recent engage with climate-vulnerable communities
analysis by UNEP shows that reallocating in the developing world. The chapter also
just 2 percent of global GDP from “brown” sets the stage for a presentation of strategic
to “green” investment can enhance long-run measures that businesses (Chapter 2) and gov-
economic performance and increase total ernments (Chapter 3) can adopt to facilitate
global wealth.10 Significantly, it does so while private sector strengthening of economic and
enhancing stocks of renewable resources for social resilience to climate change.
public benefit, reducing environmental risks There are two primary audiences for this
and rebuilding our capacity to generate pros- report: companies and policymakers. The
perity,11 especially for the world’s poor, whose report is written to assist businesses with a
livelihoods are heavily dependent on natural national, regional or global reach that are in-
resources. terested in increasing their strategic focus on
Investing early in green economic growth adaptation to build internal support, analyze
can help buffer the impact of climate change their climate risks, take action and contrib-
on vulnerable communities. Private sector ute to the green economy. It also speaks to
investments that help vulnerable people national and international policymakers
and communities adapt to climate change involved in climate change and sustainable
impacts — particularly those that facilitate development dialogues and decision-making,
improved use of increasingly scarce resources, including those who will participate in
or help to renew and restore them — are an Rio+20. It is hoped that the report’s findings
important part of the broader green economy will also be useful for a much wider range
paradigm. The inextricable linkages between of actors, including small, local businesses
human and environmental well-being, eco- in developing countries that are on the front
nomic and social stability, and the long-term line of climate impacts, and civil society
profitability of the private sector provide the organizations seeking to strengthen their
foundation for green economic growth. It work and form new alliances around climate
is in businesses’ interest to adapt to climate change and sustainable development issues.
change in ways that contribute to sustainable Many of the policy measures presented can be
development, and to ensure that their adapta- used by subnational policymakers, who are in
tion choices do not impede communities’ a key position to shape a productive interface
long-term resilience. Businesses will need to among government, communities and busi-
deploy their resources, innovative capacity nesses around the issues of climate change
and expertise to develop effective adaptation adaptation and long-term resilience.
solutions, and in so doing they must revise
their existing models and risk-management
structures. It is essential for companies to
work in direct partnership with national, re-
gional and local-level stakeholders to ensure
that these adaptation solutions address prior-
ity needs. Private sector engagement cannot
substitute for critically needed public invest-
ment and policies, but it can be a pivotal part
of a comprehensive approach to addressing
climate impacts.
 11

About Caring for Climate Signatories and the 2010 Survey

Caring for Climate signatories are a diverse group, comprising 262

large companies and 115 small and medium-sized enterprises from
65 countries across the globe. Chief executive officers endorse the
Caring for Climate Statement to demonstrate leadership in advanc-
ing practical solutions and strategies to address climate change and
to help shape the global climate change policy agenda.
A survey of Caring for Climate signatories was developed through a
partnership among the United Nations Global Compact, the World
Resources Institute (WRI), Oxfam and the United Nations Environ-
ment Programme (UNEP). The survey sought to explore the follow-
ing areas: assessment of the impacts of climate change on busi-
ness operations and investments in adaptation solutions; corporate
climate change adaptation strategies; and companies’ global climate
change policy positions and policy engagements. The 160 companies
of the Caring for Climate Working Group on Climate Change and
Development were invited to participate in the survey, which was
fielded online in November 2010.
Caring for Climate received 72 responses from companies across a
variety of industry sectors with operations in developed and develop-
ing countries. Survey analysis was conducted by the UN Global Com-
pact in collaboration with master’s degree students from the Earth
Institute, Columbia University. Survey responses were reported in ag-
gregate form only and were not attributed to individual respondents.
Because Caring for Climate signatories are, by definition, among the
businesses that are the most interested in and engaged on climate
change, their perspectives and actions in the area of climate change
adaptation may not be representative of the private sector as a
whole. However, the survey provides a useful “snapshot” of where a
set of leading companies currently stands on this issue.
Notes: By endorsing the Caring for Climate Statement, signatories commit to un-
dertake serious efforts to address climate change and to report progress in the spirit of
continuous improvement. The full statement can be found at www.unglobalcompact.org.
The Caring for Climate Working Group on Climate Change and Development comprises
senior corporate executives from Caring for Climate signatories as well as representa-
tives from the UN Global Compact, UNEP, WRI and Oxfam. The outcomes of the Working
Group will feed into important United Nations processes, and in particular into the
Secretary-General’s High-Level Panel on Global Sustainability and the UN Conference on
Sustainable Development in 2012 (Rio+20).
12

Impacts of Climate Change on

Sustainable Development and Economic
and Social Stability

Global temperatures are rising, with serious ●● More frequent and intense storms and
implications for other physical and biological weather-related disasters.
systems.12 Most climate change science has fo- ●● Decreased agricultural productivity and ris-
cused on these long-term physical effects. The ing food insecurity.
human impact of climate change has received ●● Public health problems.
much less attention.13
People in every country in the world While there is some uncertainty about the
will be affected in some fashion by climate exact nature, timing, location and magnitude
change, but it disproportionately impacts of climate impacts, many of them are already
poor communities in developing countries. materializing, and they will be worsened and
By virtue of their geography, greater reliance accompanied by new threats. The section
on natural resources, and lack of infrastruc- that follows explores these climate change
ture, developing countries have greater expo- impacts and their effect on human well-
sure to environmental risks. At least 70 per- being and sustainable development in more
cent of the world’s poor live in rural areas,14 detail.
and many smallholders are already struggling
to survive on marginal rural land. They are Water shortages and droughts.
thus highly vulnerable to water-, tempera- Water is the lifeblood of communities and
ture- and weather-related crises. Further, poor a driver of economic health and well-being,
communities lack access to crucial assets and and in 2010, the UN General Assembly
financial savings that provide a necessary buf- adopted a resolution on the human right
fer when faced with these shocks. to water.17 With glaciers and snow in rapid
Men and women are not equally affected retreat, those that depend on snowmelt from
by climate change. While in many societies major mountain regions like the Hindu-Kush,
women supply most of the labour needed to Himalaya and Andes will face severe threats
produce food crops, women typically have to their water security. Changing rainfall pat-
restricted access to markets, land and credit. terns will lead to periods of extreme drought
Therefore, while they are heavily dependent in some regions. Drought reduces agricultural
on the natural resources most threatened by and livestock productivity, increases fire haz-
climate change, they have limited resources ard and reduces the amount of water avail-
with which to cope.15 Women (and children) able for human health and economic activity.
are more likely than men to die in disasters, Climate change stymies current efforts to
which are becoming more frequent and ensure equitable access to water across the
intense due to climate change, and in post- globe to the one billion people who already
disaster areas women are at risk of gender- lack access to safe water.18
based violence, trafficking and other forms of
exploitation.16 ●● A recent study of 60 years of data from 925
rivers that provide nearly three-fourths of
Threats posed by climate change the world’s water supply found that one-
to human development third of the rivers are significantly affected
The physical effects of climate change have by climate change, mainly in terms of
serious consequences for people across the diminished flow. The Ganges, Niger, Colo-
world, particularly those who are already rado and Yellow Rivers are among those
poor and vulnerable. Anticipated climate affected.
change impacts include: ●● The Intergovernmental Panel on Climate
Change (IPCC) reports that by 2020, up
●● Water shortages and droughts. to 250 million people across Africa are
●● Increased frequency and severity of floods. expected to face increasingly severe water
●● More unpredictable weather patterns. shortages.
 13

●● The IPCC projects that by 2080, Africa will More unpredictable weather
see an increase of 5 to 8 percent of arid and patterns. A 2009 Oxfam study highlights
semi-arid land under a range of climate a number of consistent observations from
scenarios. farmers in the developing world, including:
●● Since the 1970s, rainfall has decreased by shrinking of temperate “transitional” seasons;
an average of 2.4 percent per decade in higher overall temperatures, particularly in
tropical rainforest regions. winter; more erratic rainfall and increasingly
●● A climate model produced by the United unpredictable starts to the rainy seasons;
Kingdom Meteorological Office predicts an increase in unusual and “unseasonable”
that by 2080, 30 percent of the earth’s weather events; heavier rains and longer dry
surface will be subject to extreme drought, spells; and stronger, shifting winds.20 Less
compared with 3 percent at the beginning predictable weather patterns make it difficult
of the twenty-first century. for small-scale farmers, who are already liv-
ing on the edge, to decide when to cultivate,
Sources: Renton, 2009. Suffering the Science: Climate change, sow and harvest.
people, and poverty; IPCC, 2007. Climate Change 2007: Synthesis
Report; Global Humanitarian Forum, 2009. Human Impact
Report: Climate Change – The Anatomy of a Silent Crisis. ●● Communities in Nepal are concerned about
warmer and drier winters, with declining
rain and snow that normally falls in hilly
Increased frequency and districts from December to January.
severity of floods. Rising sea levels and ●● In Uganda, farmers report increasingly un-
more frequent heavy precipitation events in reliable precipitation during the long rains
some regions will lead to more frequent and from March to June.
damaging floods. People in the heavily popu- ●● In Vietnam, communities say that storms
lated, low-lying deltas of Asia and Africa and are increasingly tracking south into areas
those living on small islands are particularly that had never experienced them before.
vulnerable, and they are some of the poorest
communities in the world.19 Flooding causes Source: Jennings and Magrath, 2009. What Happened to the
Seasons?
severe economic damage, erodes natural
and human-constructed storm barriers, and
results in loss of life. It also leads to loss of More frequent and intense storms
agricultural land. Increased salinization of and weather-related disasters.21
coastal areas can have a detrimental impact While no individual extreme weather event
on agriculture. can be attributed to climate change, the
trend line is striking: Climate-related storms
●● Under current sea-level rise projections of are increasing in frequency22 and intensity.23
around 40 centimeters by the end of this According to the Intergovernmental Panel
century, the number of coastal dwellers at on Climate Change (IPCC), it is likely that
risk from flooding could increase from 13 “future tropical cyclones (typhoons and
million to 94 million during this period. hurricanes) will become more intense, with
●● A sea-level rise of 1 meter could affect 17 larger peak wind speeds and more heavy pre-
percent of Bangladesh’s land area, destroy- cipitation associated with ongoing increases
ing the homes and livelihoods of 25 million of tropical sea-surface temperatures.”24 When
people. a severe weather event outstrips a commu-
●● In 2010, flooding in Pakistan due to heavy nity’s coping capacity, disaster occurs. As
rains affected more than 20 million liveli- a result of weather-related disasters, each
hoods and caused $9.5 billion in economic year nearly 90 million people require urgent
damages. assistance due to injury, loss of property,
exposure to disease, or shortages of food and
Sources: Asian Development Bank, 2009. The Economics of Climate fresh water.25
Change in Southeast Asia: A Regional Review; Renton, 2009.
Suffering the Science: Climate change, people, and poverty; Oxfam
America, 2010. Fact Sheet: Pakistan Floods; Ahmed, 2010. “Paki- ●● Ninety-eight percent of those seriously
stan flood damage at $9.5 billion.” affected by weather-related disasters live
in the developing world, and develop-
ing countries experience 99 percent of all
deaths and over 90 percent of economic
14

losses from weather-related disasters. areas will be hard-hit by disease due to their
●● From 2004 to 2009, the annual cost of concentrated populations and vulnerability
weather-related disasters in developing to extreme weather events. In addition to dis-
countries ranged between $50 and $230 ease, climate change-driven heat waves pose a
billion per year. serious threat to human productivity and can
result in increased health-related problems
Source: Global Humanitarian Forum, 2009. Human Impact and mortality, particularly for farmers, la-
Report: Climate Change – The Anatomy of a Silent Crisis.
bourers and others who work outdoors.

Decreased agricultural productiv- ●● The World Health Organization calculates

ity and rising food insecurity. that each year the health of 235 million
At lower latitudes, crop productivity is pro- people is affected by climate change, par-
jected to decrease for even small local tem- ticularly due to malaria, diarrheal disease
perature increases, especially in seasonally and malnutrition.
dry and tropical regions, which will increase ●● Climate change-triggered malaria outbreaks
the risk of hunger.26 Smallholders will face are currently estimated to affect over 10
a particularly difficult struggle to maintain million people and kill approximately
food security in the face of declining yields 55,000.
and loss of crops. The Food and Agricultural ●● Schistosomiasis is spreading to new areas of
Organization recently said that global food China, where a predicted 210 million more
production must increase by 70 percent — people will be threatened by the disease by
and double in the developing world — to 2030.
adequately feed a population expected to ●● In Delhi, India, mortality rates rise by up
reach 9.1 billion in 2050.27 Climate change’s to 4 percent with every 1ºC of temperature
devastating effect on existing food shortages rise above the heat range that is considered
and price spikes is particularly worrisome, tolerable. The figure is nearly 6 percent in
given that nearly 1 billion people are already Bangkok, Thailand.
hungry today.28
Sources: Global Humanitarian Forum, 2009. Human Impact
Report: Climate Change — The Anatomy of a Silent Crisis; Renton,
●● In some African countries, by 2020 yields
2009. Suffering the Science: Climate change, people, and poverty.
from rain-fed agriculture could decrease by
up to 50 percent, severely compromising While each of these climate change impacts
agricultural production and access to food. poses a serious threat to human develop-
●● Within 20 years, climate change-induced ment, it is striking to consider the cumulative
declines in global food production could effect of multiple climate impacts on existing
force global food prices up by 20 percent. conditions of poverty. A poor community or
●● Today, climate change is projected to be at family might be able to recover from an occa-
the root of hunger and malnutrition for sional flood. However, if a flood is concurrent
about 45 million people. That number is with a malaria outbreak, and the family loses
projected to climb to 75 million within 20 its crops and faces rapidly mounting medi-
years. cal costs, its economic or physical survival
may be at risk. Together, climate impacts and
Sources: IPCC, 2007. Climate Change 2007: Synthesis Report; existing social and economic conditions can
Global Humanitarian Forum, 2009. Human Impact Report:
push people across critical thresholds or “tip-
Climate Change — The Anatomy of a Silent Crisis.
ping points”32 that far exceed their ability to
Public health problems. Climate cope. Should these climate and social tipping
change will alter the spatial distribution points occur, businesses operating in these re-
of some infectious diseases.29 Insect-borne gions would feel the impacts across all related
diseases like malaria and dengue fever and areas of their operations and value chains.33
water-borne diseases like schistosomiasis30 are It is precisely due to the complex connections
shifting geographically with rising tempera- between climate impacts and poverty that
tures and floods, expanding to regions with building long-term resilience in vulnerable
public health systems and populations that communities requires such a comprehensive,
are ill-equipped to cope.31 Flooding greatly multipronged response.
increases the risk of diarrheal disease due
to poor sanitation. Mega-cities in tropical
 15

Economic and security The true economic impact of climate

implications of climate change change includes more indirect, “hidden”
In the age of globalization, countries’ econo- economic costs, like reduced workdays and
mies are linked through a complex inflow productivity, re-routing traffic, provision of
and outflow of goods, services, technology, emergency shelter and supplies, potential
capital, information and labour. The intercon- relocation and retraining, and more compli-
nectedness of today’s global markets makes cated government and corporate planning
all economies vulnerable to climate change, processes due to increased risk and uncer-
no matter where it occurs. Severe flooding in tainty.41 “Non-market impacts,” such as the
the Philippines, drought in Zimbabwe or fires geographic expansion of diseases and degra-
in Russia can have a reverberating impact on dation of important global ecosystems, also
economies around the globe. As Kofi An- have a considerable economic cost. However,
nan noted in his 2001 Nobel Prize speech, these variables are difficult to adequately
“Scientists tell us that the world of nature is predict and measure. Government budgets
so small and interdependent that a butterfly will be stretched as the public sector tries to
flapping its wings in the Amazon rainforest respond to these multipronged challenges.
can generate a violent storm on the other side An International Monetary Fund analysis
of the earth. This principle is known as the shows that climate change-related economic
‘Butterfly Effect’. Today, we realize, perhaps losses will fall most heavily on developing
more than ever, that the world of human ac- and emerging economies, at least in terms of
tivity also has its own ‘Butterfly Effect’ — for the size of their economies.42 Many of these
better or for worse.”34 countries already rely heavily on foreign aid
If unaddressed, climate change will wreak and loans to support their social and econom-
considerable direct economic damage. It will ic development processes, and climate change
disrupt global agricultural markets, destroy threatens to undo progress they are making
critical infrastructure and transportation, on both fronts. Further, many developed
and hamper the flow of goods and services. It countries and global companies count on de-
will also make energy markets more volatile veloping and emerging economies as current
and unpredictable35 due to the challenges and future growth markets; climate change
of meeting new peak demand, storm dam- can thus have a damaging economic “ripple
age to energy installations,36 and the impact effect”. Countries hard-hit by climate change
of water scarcity on energy sources, such as will face challenges in their efforts to be
nuclear power and hydropower.37 dynamic international trade and investment
It is difficult to put an aggregate price on partners, with follow-on impacts on overall
this economic damage, given uncertainties global economic growth and stability.
and varying methodologies. The Stern Review, The United States 2010 Quadrennial
a study commissioned by the British govern- Defense Review warns that effects of climate
ment that analyzed the economics of climate change such as droughts, floods and disease,
change, estimated that the overall costs and among others, could further weaken fragile
risks of inaction on climate change would be governments around the world.43 Climate
equivalent to losing 5 to 20 percent of GDP change has been referred to as a “threat
each year.38 An eight-country study by the Eco- multiplier”44 to national and international
nomics of Climate Adaptation Working Group security by worsening existing problems
determined that current climate impacts cost of poverty, social tension, environmental
the locations studied from 1 to 12 percent of degradation, ineffective leadership and weak
GDP each year, and that within the next 20 institutions. Weather extremes, food and wa-
years climate change could more than double ter scarcity, and climate-related public health
those percentage losses.39 A recent report by threats are projected to displace between
the Asian Development Bank found that if the 150 million and 1 billion people as climate
world continues “business-as-usual” emissions change unfolds.45 Climate change may also
trends and fails to adapt, the economic cost of lead to increased conflict over resources,
climate change to Indonesia, the Philippines, including across borders. For example, a long-
Thailand and Vietnam alone could equal a loss standing treaty governs India and Pakistan’s
of 6.7 percent of their combined gross domes- shared use of the Indus River. The glaciers
tic product by 2100, in contrast to a projected that feed this river are melting fast, and its
global average of 2.6 percent.40 flow will eventually become seasonal, with
16

serious implications for agricultural produc- planting project designed to protect coastal
tion in Pakistan, in particular. Treaty renego- populations from storm surges in Vietnam
tiations may be difficult, due to existing tense estimated economic benefits that were 52
relations between the two countries, and any times higher than costs.51 In Brazil, a flood re-
major delays in securing Pakistan’s water construction and prevention project designed
source that significantly affect its popula- to break the cycle of periodic flooding in 2005
tion could lead to social unrest.46 One report resulted in a return on investment of greater
estimates that 46 countries will face a “high than 50 percent by reducing residential prop-
risk of violent conflict” when climate change erty damages.52 In its eight-country study,
exacerbates traditional security threats.47 which included developing and developed
countries, the Economics of Climate Adapta-
Adaptation: a cost-effective tion Working Group found that between 40
approach for addressing and 68 percent of expected losses through
climate change 2030 under high climate change scenarios
The World Bank estimates that between 2010 could be averted through adaptation mea-
and 2050 it will cost developing countries $70 sures whose economic benefits outweighed
billion to $100 billion per year on average to their costs.53 In short, financing adaptation
meet their climate change adaptation needs.48 and resilience is a cost-effective investment
Unfortunately, current flows of finance for that can pay for itself many times over.
adaptation to vulnerable countries are much
less than needed. Of the major public funding
dedicated to climate change, less than 10 per-
cent of approved funding has been allocated
to adaptation, compared to 82 percent for
climate change mitigation.49
The evidence, however, is clear: It is much
smarter to anticipate and address climate
change impacts and build resilience up front
than to simply respond to the human and
economic costs after impacts occur. One main
conclusion of the Stern Review was that the
cost of taking action now would likely be sev-
eral orders of magnitude less than the costs
of inaction. The following examples illustrate
this point for public sector investments, but
the principle would equally apply to private
sector investments. According to an analysis
by the US Geological Survey and the World
Bank, an investment of $40 billion to reduce
disaster risk could prevent disaster losses of
$280 billion. 50 Evidence from a mangrove-
 17

Climate Change Adaptation and

the Private Sector

Adapting to climate change at the neces- Community risks are business risks
sary scale and scope requires a coordinated, Local and global companies rely on commu-
multisectoral, global effort. To date, govern- nity members as employees, suppliers and
ments and civil society organizations have led customers. They depend on local services and
this effort. They have advocated for increased infrastructure to run their businesses. If farm-
public, grant-based funding for adaptation; ers are not able to meet production targets, or
stressed the need for good governance of a local port is destroyed by a storm, or a com-
global adaptation funds; prepared national munity is ravaged by malaria, then businesses
and local climate change adaptation plans; suffer as well. There is also a growing recogni-
and begun to experiment with adaptation ap- tion within the private sector — underscored
proaches to determine what works. It is now by the findings of the survey of Caring for
timely to consider opportunities to create Climate signatories — that while climate
and build on synergies among strategies that change poses significant risks to operations
allow for a transition to a green economy and and value chains, it also brings new opportu-
measures required to adapt to climate change. nities to improve business practices, and to
The private sector will be a pivotal player in create business value while helping people
this process. adapt. Well-designed business responses to
The private sector is a relative newcomer climate change can help build strong, healthy
to climate change adaptation, although many communities in which people and companies
companies have a long-standing focus on can thrive.
and commitment to environmental sustain-
ability more broadly. To date, most businesses The risk of maladaptation
concerned about climate change have been Before turning to a discussion of the business
more focused on reducing their GHG emis- risks and opportunities that climate change
sions to mitigate climate change than on presents for companies, it is essential to point
responding to current and evolving climate out that some business actions in response to
change risks and impacts. The many reasons climate change have the potential to exac-
for this — including risk and uncertainty, erbate local vulnerability to climate change
lack of information and modelling tools, dif- impacts. For example, if a company aggres-
ficulty in communicating and championing sively increases the size of a plantation to
adaptation inside the company, challenges of compensate for declining agricultural yields
mainstreaming climate risk and opportunity on the existing site, pushing smallholders to
analysis into core business processes, and lack marginal and degraded land in the process,
of incentives to act today — are explored in local livelihoods are put at risk. This type of
detail in Chapters 2 and 3 of this report. private sector adaptation measure actually
While most companies have not yet begun decreases, rather than increases, community
to understand how climate change will affect resilience.
them, it will affect all companies — large and Climate change adds importance and ur- What is Maladaptation?
small — and some will be affected more than gency to businesses’ environmental and social Caring for Climate defines
others. It is thus squarely in companies’ busi- accountability commitments, due to the addi- maladaptation as “an action or
ness interest to engage on the issue of climate tional stress that it places on shared resources. process that increases vulnera-
change adaptation. Companies are beginning Companies often have significant leverage over bility to climate change-related
to recognize that the physical, economic and the way natural resources like water, forests hazards. Maladaptive actions
social impacts of climate change translate and mangroves are managed and used, and and processes often include
into concrete business risks that must be as- over how local communities are engaged and planned development poli-
sessed and managed through targeted adapta- compensated. In the context of climate change cies and measures that deliver
tion measures. Further, there are inextricable adaptation, it will be increasingly important short-term gains or economic
links between healthy, resilient communities that companies align their natural resource benefits but lead to exacerbated
and vibrant, profitable businesses. management practices with the needs of vulnerability in the medium to
vulnerable people within the local community. long-term.”
18

impacts, lack of good information and lack of

incentives for action.
Challenges Associated with Adaptation
However, the private sector is also keenly
Identified by Caring for Climate Signatories
aware that risk and opportunity tend to go
“Adaptation is a longer-term process and highly specu- hand in hand. Climate change adaptation
lative in terms of what specific changes will take place is no exception. As shown in Figure 1, 86
and where, so it can be hard to develop business plans to percent of Caring for Climate companies
address adaptation.” surveyed said that responding to climate
“We can’t respond to what we don’t know.” change risks, or investing in adaptation solu-
tions, poses a business opportunity for their
“Mitigation has been the sole driving force globally,
company.
with little discussion around adaptation. Most grading
Thirty-six percent reported that their cli-
systems look only at mitigation and do not give scores or
mate change strategy has a “strong empha-
benefit to having adaptation strategies. There is a need
sis” on responding to opportunities. These
for scoring systems to incorporate adaptation and also
findings echo one of the main findings of the
for the broader discussion to be more focused on it.”
Carbon Disclosure Project’s 2010 Global 500
report, which notes that relative to compa-
nies’ responses in previous years, “there has
Companies can avoid contributing to climate been a shift in emphasis from an approach
vulnerability by consulting with communities dominated by risk, to one that now also
and designing their adaptation responses with embraces opportunity.”54 The sections that
communities’ climate change impacts and follow dig deeper into the climate change
needs in mind. As is described in more detail risks that companies face, and make the case
in Chapter 3, integrating environmental and for opportunities for companies to adapt in
social safeguards into national laws, policies ways that contribute to sustainable develop-
and regulations, and government contracts can ment and community resilience.
also make important contributions to incentiv-
izing business behaviour, averting maladapta-
tion and improving community vitality and Figure 1. Climate Change Adaptation
resilience to climate change. as a Business Opportunity

Perspectives from Caring for “Does responding to climate change risks, or

Climate companies on adaptation investing in adaptation solutions, pose a busi-
Among the 72 companies that responded to ness opportunity for your company?”
the Caring for Climate survey, 83 percent be-
lieve that climate change impacts pose a risk
to their products or services. Seventy percent NO
of the companies with climate change strate- 14%
gies in place reported that their strategy has
some level of adaptation focus.
However, companies find it challenging to
fully incorporate climate risks into their op-
erations and value chains. Only around one-
third of the companies reported that their cli- YES
mate change strategy has a “strong emphasis” 86%
on the issue of climate change risks. About
one quarter have not yet been able to deter-
mine — or were not able to provide concrete
information on — the percentage of their
operating sites that are vulnerable to climate
change. Qualitative responses from the sur-
vey confirmed a number of factors that make
it difficult for companies to operationalize a
focus on climate risks, including the long-
term nature of climate change, the overall
uncertainty inherent in projections of climate
 19

Climate Change Risks for Companies

Rising temperatures, floods, extreme weather rise. As Figure 2 illustrates, Caring for Climate
events and water scarcity take their toll on signatories recognize these physical and op-
communities and the economy. These climate erational risks. In many cases, these risks will
change impacts also present numerous risks be of high priority to vulnerable communities
for companies’ operations and value chains. as well.
Companies will experience climate change
risks and impacts in different ways and to Regulatory and legal risks: As countries
different degrees, depending in large part on adapt to climate change, they will likely use
their business sector and the geographic loca- a range of regulatory tools to better manage
tion of their operations, suppliers and current their natural resources and reduce their di-
and future customers. saster risk. For example, they may enact new
land use or zoning regulations, or new build-
A typology of climate change risks ing codes. They may put more stringent limits
facing the private sector on water use and irrigation. While developed
Categories of risk confronting companies in countries are farther ahead on enactment
the face of climate change include: physical and enforcement of these types of regulatory
and operational, regulatory and legal, financ- frameworks, many developing countries are
ing, market, political, and reputational.55 Spe- following suit.56 Such regulations will force
cific examples of these risks were highlighted some companies to undergo operational
by Caring for Climate signatories in the survey. changes in response, making some activities
While all businesses face these risks, they are and processes more expensive or even un-
compounded for businesses with operations, feasible. Corporate decisions that fail to take
employees, suppliers, and current or antici- climate change impacts into account could be
pated customers in developing countries. The subject to a range of legal challenges. Govern-
survey data show that 53 percent operate in ments may also begin to require companies
South America, 50 percent in Southeast Asia, to disclose their climate risks and adaptation
40 percent in South Central Asia, and 43 per-
cent in Southern Africa. These companies are
Figure 2. Companies’ Concerns About Climate Change Risks
particularly at risk because, as noted earlier in
this chapter, developing countries are dispro-
Percentage of companies that consider risks as having “high” or “very
portionately vulnerable to climate change and
high” impact on operations and strategy
have limited resources with which to adapt.
Companies can play a critical role in building Increasing costs for natural
and not undermining climate resilience in resources, raw materials
these markets. Water scarcity

Physical and operational risks: Changing Energy security

temperatures and precipitation patterns may Threats to human health
lead to decreased availability and increased
Greater exposure to natural
price of critical raw materials in the supply disasters, changing weather patterns
chain, especially agricultural commodities.
Transportation risks
Access to other core inputs, including water
and energy, will become increasingly unreli- Deterioration of water quality
able. Storms and floods may damage build- Decreased agricultural productivity
ings, equipment and other physical assets, or
Risk of flood, drought, impacts
create costly disruptions in production and on coastal resources
transport due to damage to railroads, ports,
Food security
bridges, power plants and other infrastruc-
ture. Companies may see increased employee Threats to ecosystems and biodiversity
absenteeism and decreased productivity due
to the impact of more severe weather events 0 10 20 30 40 50 60
and declining health. Insurance costs may
20

Political risks: As developing countries

Investor Interest in Businesses’ Climate Risks struggle with natural resource, food security,
In early 2010, the US Securities and Exchange Com- health and economic challenges associated
mission issued guidance for publicly held companies with climate change, they may face increased
regarding disclosure of material climate risks. By July domestic conflict and instability. These types
2010 leading US investors had filed a record 101 climate of disruptions are simply bad for business.
change shareholder resolutions with 88 US and Canadi- While local companies based in climate-
an companies that face far-reaching business challenges vulnerable countries will be most affected,
from climate change, nearly a 50 percent increase in political instability also poses significant
resolutions filed over the previous year. While some threats for globalized companies operating in
resolutions were mitigation-related, others focused those countries, particularly companies with
on adaptation and management of climate risk. For significant on-the-ground physical invest-
example, a resolution filed by Calvert Investments with ments or sizeable market share.
Kroger, a retail food chain, asked Kroger to report on
how the company will assess and manage the impacts Reputational risks: Among some consum-
of climate change on the corporation, specifically with ers, particularly those in North American and
regard to its supply chain.  European markets, companies seen as major
Source: Investor Network on Climate Risk (www.incr.com) emitters of GHGs — or those that are not tak-
ing adequate measures to reduce their emis-
sions — are viewed unfavourably. As consum-
efforts, as the Securities and Exchange Com- ers across the globe become increasingly aware
mission has done in the United States (see of and impacted by climate change, they may
text box above). turn their attention to companies’ adaptation
strategies. A company may receive negative
Financing risks: Climate change may also media coverage, be subject to civil society
affect companies’ access to capital, as investors advocacy efforts, or even lose its ability to oper-
become more aware of climate change impacts ate in a given location if it is perceived to be
and the need for adaptation. Debt financing exacerbating climate vulnerability in develop-
may be harder to attract or more expensive ing countries through maladaptation, or not
for companies that are seen as “high risk” to taking appropriate action to address risks. In
climate change impacts (as businesses with op- this age of instant digital communications and
erations, employees and supply chains in de- widespread use of social media, it has become
veloping countries will certainly be). Investors much less possible for companies to employ a
will likely have lower confidence in companies double standard between their environmental
that are failing to analyze climate risks and and social accountability policies and their
to take proactive action to adapt and manage day-to-day actions on the ground in poor com-
such risks, and may increase their demands or munities. Condemnation for bad practices can
Select Climate Change expectations for full disclosure in this area. spread quickly, with considerable damage to a
Risks Identified by Car- business’s reputation.
ing for Climate Signato- Market risks: In the face of climate change,
ries in the Survey certain products and services will become Impacts of climate change on
• More stringent legisla- less relevant or ineffective. As some regions individual business sectors
tion related to climate become hotter, wetter or drier, companies Companies’ physical and operational risks, in
risk management, and a may find that their customer bases undergo particular, are likely to be sector-specific. Table
greater number of lawsuits dramatic geographic shifts. Among custom- 1 provides illustrative examples of specific risks
in cases of infringement. ers with higher awareness of climate change, that companies in select industry sectors may
• Brand and reputational demand could decrease for products and face, confirmed by perspectives from companies
damage, if there is a real services that make inefficient use of scarce participating in the Caring for Climate survey.
or perceived inadequate resources like energy and water or that Businesses will find that climate change
response by companies exacerbate climate risks. As consumers in the exacerbates existing operational and supply
to the impacts of climate developing world are forced to grapple with chain risks. It can also yield entirely new risks,
change. climate change, they may also have reduced and dangerous interrelationships among risks.
• Reduced consumer spend- spending power (particularly with respect to As noted earlier in this chapter, climate change
ing power due to economic nonessential goods and services), thus impact- is a “threat multiplier.” For example, food secu-
impacts of climate change. ing some companies’ profitability. rity and energy security are highly dependent
on the availability and predictability of water
 21

resources. Water scarcity can lead to stress and develop a comprehensive strategy
throughout the entire food and energy system, to address them. Using a climate change
and can generate economic collapse and social adaptation lens for risk analysis will enable
unrest. These types of interconnected risks will businesses to draw on a broader range of
be particularly difficult for businesses to assess international best practices, tapping into
and manage. businesses, policy and civil society exper-
As a result of climate change, traditional tise worldwide to more effectively respond
ways that businesses approach risk need to these risks. Furthermore, if businesses
to change. Integrated challenges require design their adaptation strategies with the
integrated solutions. If businesses look at needs of vulnerable people in mind, they
these risks holistically from a climate change will see greater coherence between their
adaptation perspective, they will be able to own strategies and public sector approach-
better identify trends and emerging risks es to adaptation and resilience-building.

Table 1. Climate Change Risks by Business Sector

Business Illustrative risks Concerns expressed in the survey by Caring for Climate
sector signatories in these business sectors

Agriculture, Water scarcity; crop damage due to weather • Water scarcity is our primary vulnerability.
food and extremes; increased exposure to new pests • The impact of climate change on agricultural products is increasing.
beverage and disease; transportation problems

Energy and Reputational risk; physical risk due to extreme • Our climate change risk includes potential physical damage to personnel and
utilities weather events; peak demand could outstrip equipment, and potential disruption of the production activities of our offshore
capacity; hot weather may reduce efficiency of installations.
extraction • Significant climate changes (mainly in terms of temperature, but also wind and
water conditions) from one year to another can cause substantial variations in the
balance of supply and demand for electricity and gas.
• Water shortages can reduce hydroelectric power production.

Manufacturing Higher prices of raw materials; higher energy • Dramatically rising energy prices will have a negative impact on the
and consumer prices; unanticipated changes in customer operating costs of the company.
goods preferences; supply chain disruptions • Reduced availability, supply and quality of raw materials is a concern.
• We could face a production bottleneck due to a functional failure in our
supply chain.

Banking and Macroeconomic downturn hurts volume; • Certain agricultural products might be affected by the intensification of
finance customer defaults in retail sector; uninsured droughts…it is necessary to put climate impacts into monetary terms to “wake
damage to project assets; exposure to indirect up” the banking system.
risks through investment portfolio • Climate change changes our risk profile for certain sectors that we lend to and
thus our lending “appetite” within those sectors.

Construction Changes in building codes and regulations; • Legal risks take on considerable significance in the context of adaptation.
and building reduced worker productivity due to heat; Tougher legislation may give rise to a greater number of lawsuits due to cases
materials disruptions in delivery of materials; disruptions of infringement.
due to extreme weather events • Many of our plants are vulnerable because they are located in coastal areas
worldwide.

Health care and Changing disease vectors; increased water- • Potential and actual drought situations present a risk for us.
pharmaceuti- borne illness; higher health insurance costs • Water availability in several manufacturing regions is a concern.
cals

Mining and Regulatory risk; vulnerable to energy and • Increasing regulatory pressure will impact the steel industry in terms of impacts
industrial met- water shortages due to intensity of use; rainfall on the process, location of facilities and availability of raw materials.
als and flooding creates risk of overflow of storage • Our main concerns are energy security (because much of our power comes from
reservoirs containing contaminants large hydroelectric plants via national power companies) and water security.

Insurance Increased volume of claims; historical loss • We conducted research on the expected impacts of climate change on insurance
information less reliable; risk modelling and portfolios with regards to northern European winter storms.
product pricing more complex; some risks may • We are seeing changing weather patterns and an increase in insured losses in
be uninsurable some geographical areas.

Note: Illustrative risks have been drawn from a table found in Nitkin et al. that compiles existing literature on projected business risks, by sector. Nitkin et al., 2009. A Systematic Review of the
Literature on Business Adaptation to Climate Change: Case studies and tools (3 of 4).
22

Adaptation Solutions that Promote

Sustainable Development and Build
Resilience

As companies ramp up and refine their Avoid costs, manage liabilities and build
analysis of what climate change means for resilience to climate change impacts: In
them in real and practical terms, they should today’s globally integrated economy, many
seek to identify “win-win” opportunities to companies rely on suppliers or have on-the-
adapt in ways that simultaneously contribute ground operations in developing countries
to efforts identified by communities that will and emerging economies. By analyzing
be hardest hit and most affected by climate climate risks throughout the value chain and
change. The key is to find the nexus of shared mitigating risks through concrete changes
interest where business incentives align with in such areas as production processes, im-
the adaptation needs of vulnerable popula- proved management of ecosystem services,
tions in developing countries. This nexus — infrastructure and asset siting, supply chain
shown in Figure 3 — bears exciting potential communications and management, commu-
to advance sustainable development goals nity outreach, and employee education and
and stimulate economic growth, thus hasten- benefits, companies can better manage their
ing the transition to a green economy. liabilities and avoid significant costs and dis-
ruptions, while simultaneously reducing risks
The business case for action faced by vulnerable populations within the
There is a strong business case for companies value chain. Businesses’ profitability depends
to identify and implement climate change on strong, resilient suppliers, employees and
adaptation measures that simultaneously surrounding communities. It is important to
address the needs of vulnerable communities note that if done well, these changes can cre-
in developing countries and their own bot- ate short-term value for businesses and their
tom lines.57 Sustainable development-focused stakeholders, regardless of whether or when
adaptation can help companies: anticipated climate impacts happen.

Expand market share and create wealth

Figure 3. The Strategic Nexus for Private Sector Adaptation Efforts in communities: Effective adaptation to
climate change will require the development
and deployment of a wide range of new and
innovative products, strategies and services to
help vulnerable people in developing coun-
tries manage climate risks and impacts. Many
of these are also part of a green economy.
Climate change presents an opportunity for
Strategic companies to diversify and expand their
Companies’ opportunities Vulnerable
critical communities’ market share while simultaneously address-
to promote ing the consequences of climate change. As
climate sustainable critical
global companies invest in new adaptation
change climate
development markets in the developing world, it will
adaptation change
through be essential for them to partner with local
interests adaptation companies and communities to ensure that
adaptation
interests technologies are appropriate and affordable,
and that market expansion is accompanied by
important knowledge and skill transfer. New
markets can also be tapped by small-scale
local entrepreneurs who are grounded in the
needs of their communities and, through
credit and other public incentives, can seize
new opportunities to expand their businesses.
 23

Access new financing streams: Under inter- by their suppliers, employees and assets locat-
national climate change agreements, there ed in vulnerable regions, as well as the risks
will be increased public funding available for faced by communities in the areas in which
adaptation efforts in vulnerable communities they operate. They can then develop a range
in developing countries, and governments of measures to address climate risks and
will look for corporate partners who can increase long-term climate resilience. Actions
deliver the requisite goods and services. Not will be sector- and company-specific, but
only does an effective response to climate could include using more resource-efficient
change require financing for development of production techniques, conserving natural
low-carbon technologies, it may also result resources upon which they and communities
in research and development funding for depend, sourcing from local businesses to
products and services that address critical strengthen the economic base, and build-
adaptation needs. Local and global companies ing capacity throughout their value chain to
that take early action to develop expertise manage climate risk.
in climate change adaptation and green
economy solutions will have a competitive Developing and deploying new products
edge in these contracting opportunities with and services: Successful adaptation to cli-
government partners. mate change will require improvements in
water and energy management, new strate-
Build corporate reputation and exercise gies for flood control, improved farming
good corporate citizenship: Many compa- techniques and better early-warning systems
nies have a long-standing commitment and for disasters. If companies factor climate risks
track record in the areas of environmental into their market analysis, they can become
sustainability and corporate social responsi- part of what Oxfam is calling “the new adap-
bility (CSR). Climate change adaptation needs tation marketplace”58 by identifying, develop-
provide companies with an opportunity to ing and deploying new products and services
solidify the linkages between their business that will help weather the impacts of climate
activities and CSR strategies in developing change. It will be important for companies to
countries and to add urgency to existing ef- consult with affected communities and build
forts. Productive engagement with vulnerable new products and services from the bottom
communities on climate change adaptation up to ensure that they meet priority adapta-
and resilience-building and ensuring that tion needs.
business activities do not exacerbate climate Chapter 2 of this report, the case study
vulnerability can be viewed as new com- provided in this chapter and in Chapter 2,
ponents of the evolving definitions of good and Annex B provide additional insights on
corporate citizenship and social and environ- what it means for companies to invest in
mental accountability. Proactive, purposeful, these areas. There are a few existing examples
well-documented, well-publicized adaptation and models of private sector investments in
measures may provide reputational benefits adaptation, but investments must increase
among key stakeholders — including custom- exponentially to address future adaptation
ers, investors and potential employees across needs at scale. Companies’ efforts in these
the globe — similar to the benefits currently two areas will require active and sustained
associated with companies’ reduction of GHG engagement with national, regional and
emissions. local stakeholders in vulnerable countries,
particularly in Small Island Developing States
Strategic opportunities for private and Least Developed Countries, to provide re-
sector investment in adaptation sources that people most affected by climate
The most promising opportunities for compa- change want and need. Working with vulner-
nies to complement public sector initiatives able communities to build their resilience
and investments in climate change adapta- and help them adapt to the consequences of
tion lie in two key areas: climate change can enable them to become
more economically, socially and politically
Building resilience within company opera- resilient in the broadest sense, with positive
tions and the value chain: Companies can benefits for the local and the global economy.
conduct a comprehensive assessment of the
climate risks they face, including risks faced
24

Company Case Study: Swiss Re

Swiss Re, one of the largest reinsurance companies in the world, has worked for 20 years to promote better
understanding and management of climate risk. The company has pioneered the development and deploy-
ment of tailored insurance products, including weather risk insurance, to protect the rural poor in developing
countries. A pioneering effort in India in 2004 reached more than 350,000 smallholders. In 2008, partnering
with the World Bank and the government of Malawi, Swiss Re developed a derivative product to help protect
Malawi against drought-related shortfalls in maize production. Swiss Re is currently collaborating with Oxfam,
the Ethiopian government, a local non-governmental organization, and other partners through the Horn of
Africa Risk Transfer for Adaptation (HARITA) project, which provides weather index insurance for smallholder
rain-fed farmers in Ethiopia.

Around 85 percent of all Ethiopians depend on agriculture for their livelihoods, and they are some of the
poorest farmers in the world. Their harvests and incomes are already threatened by drought, which will be
exacerbated by climate change. To address this problem, Swiss Re and its partners developed a risk manage-
ment package that enables farmers participating in a government social safety net scheme to pay for weather
risk insurance premiums by contributing their own labour to community projects that reduce risk, including
irrigation, soil improvement and composting. In the event of a seasonal drought, insurance payouts triggered
automatically by low rainfall enable HARITA farmers to afford the seeds and inputs necessary to plant in
the following season, without having to sell off productive assets to survive. Since the launch of the project in
2008, participation in the insurance scheme has rapidly increased, from an initial 200 households in the first
year to 1,300 households in 2010. Many of these rural households are led by women.

In Ethiopia, Swiss Re has pursued an opportunity to create business value in the long term while assisting
those most vulnerable to climate change. Only about 0.4 percent of Ethiopia’s population of around 90 million
has insurance, so the HARITA project also serves as an important step toward developing Ethiopia’s nascent
insurance market. The goal for 2010/11 is to provide insurance for up to 13,000 households.

Looking Ahead

Climate change is a challenge of tremen- long-term resilience will create business value
dous complexity due to its scale, scope and while bolstering people’s efforts to adapt.
urgency. There are robust linkages between Those that practice maladaptation, or oth-
climate change and sustainable development; erwise undermine the efforts of vulnerable
thus climate change can serve as a powerful communities to adapt, may face increasing
catalyst for transforming the way we pursue reputational and brand risks.
economic growth and poverty alleviation. The chapters that follow offer options for
Effective climate change mitigation and adap- companies and governments that will galva-
tation requires an unprecedented marshalling nize private sector adaptation investments at
of global commitment, resources, innova- the critical nexus of companies’ needs and
tion and expertise. While public investment communities’ needs. These investments can
and policies are fundamental to success- serve as a crucial complement to public sec-
fully tackling climate change adaptation in tor efforts. This must be a purposeful process:
vulnerable communities, the private sector It will not happen by chance. If governments,
is a pivotal complementary player in this companies, civil society and communities
process. Climate change adaptation presents work together, we can transform climate risks
considerable risks and exciting opportunities and impacts rather than allowing them to
for the private sector. Companies that rigor- transform us.
ously assess these risks and opportunities
and implement creative solutions that build
 25

2.Doing
Business in
Our Changing
Climate:
Measures for
Practical
Business
Action
26

Introduction

The new uncertainties and market volatil- a warmer world, and in so doing protect and
ity resulting from climate change will affect promote their own competitive advantage in
how companies do business. Companies with a thriving green economy that is low-carbon,
strategies for reducing their GHG emissions resource-efficient and socially inclusive.
still must adapt to current and projected Companies need internal champions who
disruptions in the climate system for the can advance, guide, implement and commu-
coming decades.59 The communities in which nicate effective climate change adaptation
companies operate and sell their goods and strategies. To that end, this chapter presents
services are facing these challenges today a review of recent literature to set the con-
as our changing climate complicates eco- text for private sector strategies that address
nomic development and exacerbates societal climate change and development challenges.
stresses. Many companies’ long-term growth It also provides a summary of key insights
trajectories are linked to growing markets in from the survey of Caring for Climate signa-
developing and emerging countries that are tories. It then presents a set of priorities and
among the most vulnerable to climate change practical recommendations for how internal
impacts. Proactive companies will comple- champions within companies can advance
ment public sector-led adaptation efforts. By comprehensive plans to position themselves
managing new risks and seizing new oppor- for long-term success in a changing climate.
tunities, they will help communities adapt to

This chapter provides insights from Caring for Climate

companies and ideas for how to:

Determine what climate • Connect climate “adaptation” and “resilience” to your

adaptation means for your company and corporate culture, building on existing
company: mitigation initiatives
• Integrate climate adaptation into core strategic business
planning processes

Identify critical climate risks, • Align business objectives with adaptation priorities
find opportunities: • Build portfolio of climate-resilient goods and services

Develop partnerships with • Build mutually beneficial strategies with local communities,
shared value: suppliers, investors and other stakeholders, build
communication channels
• Partner with internal and external decision-makers
 27

Private Sector Strategies for Adaptation:

Experience to Date

Private sector knowledge, resources and inno- On the opportunities side, companies may
vation — essential to meeting climate change not have the insights or tools they need to
challenges for development — have largely assess demand for new and existing prod-
focused on reducing GHG emissions (see text ucts and services that will arise as a result of
box) despite a growing acknowledgement of climate change. A business’s competitiveness
the importance of adapting to climate change will be determined by its ability to adapt to
impacts.60 Many businesses are already con- climate change as companies identify new
fronting the costs of impacts like water scarcity,
flooding and extreme weather events,61 yet
strategic responses are lacking,62 with many Building Climate Capacity: Ten Years of Progress
appearing to take a “wait-and-see” approach to on GHG Management
adaptation, and “adapters being the exception Global business leaders, many of whom 10 years ago were disengaged
rather than the rule”.63 Even for companies for from climate change issues, have made significant efforts to assess and
which there is a strong, immediate business reduce their GHG emissions. Companies have taken proactive steps to
case for taking action, implementation of measure, manage and report their emissions to meet commitments to
climate adaptation strategies is not common environmental sustainability, as well as in anticipation of more stringent
practice.64 emissions regulations and in response to growing stakeholder expecta-
The current lack of focus on adaptation is tions.
especially significant given that most compa-
nies acknowledge that they are facing some In 2001, WRI and the World Business Council for Sustainable Devel-
level of exposure to climate change, whether it opment published the first edition of a corporate GHG accounting and
relates to physical impacts (such as constraints reporting standard — the result of a stakeholder process to establish
on resources or disruptions to the supply common standards and protocols for measuring and reporting GHG
chain) or other impacts like financial uncer- emissions. In 2003, the Carbon Disclosure Project (CDP) began survey-
tainty or fuel-price shocks.65 Some companies’ ing companies, asking them to self-report on progress they have made
vulnerability may be more imminent than they in GHG management and emissions reductions. Initially, about half of
anticipate, and the choice will not be whether the world’s 500 largest companies responded to the survey. By 2010, an
to respond, but rather when to do so, and in impressive 82 percent of Global 500 companies reported to CDP. CDP
what manner.66 subsequently identified 48 Global 500 companies as “Carbon Perfor-
To date, the primary example of private mance Leaders,” and many are now taking advantage of new business
sector engagement in adaptation is the opportunities driven by demand for low-carbon technologies. The CDP
insurance industry. The sector as a whole survey and reporting platform has expanded in recent years to collect in-
has recognized the need for action on adapta- formation on supply chain emissions, companies in emerging economies,
tion, and for good reason: An Allianz report and water resource risks.
estimates that from 2010-2019 the insurance (Source: PricewaterhouseCoopers, 2010. Carbon Disclosure Project 2010, Global 500 Report.)
industry’s average worldwide losses associated It is essential that a comparable level of progress and ingenuity for
with climate change could total $41 billion a corporate adaptation measures be achieved within the next several years.
year.67 (See Munich Re case study in Chapter General experiences building comprehensive mitigation strategies may
3 for an example of an insurance company’s allow companies to make even faster progress as they begin to develop
adaptation strategy.) However, even insurance adaptation strategies for climate change impacts.
industry responses have been primarily limited
Notes:
to European-based companies.68 The CDP Carbon Performance Leadership Index (CPLI) includes all the companies in the
Although some leaders in other sectors Global 500 that made their CDP responses public and achieved a Carbon Performance Score
are taking action, corporate action in ag- in Band A. Companies in this band excel for overall performance — relative to those in other
gregate is not proportional to the scale of bands — indicating both higher degrees of maturity in their climate change initiatives and
achievement of their objectives.
the problem,69 nor to the scope of the risks
and opportunities involved.70 Companies,
for example, may be ignoring indirect risks
to their supply chain or risks related to the
vulnerabilities of local communities.
28

market risks and opportunities, navigate ness sector-specific information about climate
changing regulatory landscapes, and face impacts.73 Companies that are taking action
increasingly significant costs.71c typically focus on resource constraints already
being felt — for example, water scarcity — and
Building resilience within are thinking about the implications for opera-
operations and the supply chain tions and supply chains.74
Companies will need to assess how vulner- Uncertainty about long-term climate change
ability to climate change impacts their own impacts need not prevent companies from
operations, and to develop different types of taking action. Many actions that companies
adaptation strategies for different types of can take based on their climate change plan-
risks accordingly — whether they represent an ning process — improved natural resource
extension of existing conditions (for example, management, for example — will benefit the
more extreme drought in drought-prone areas) company and climate-vulnerable communities
or brand-new threats (for example, flooding and ecosystems regardless of climate impacts.75
due to rising sea levels). A high level of un- In the field of climate change, such mutually
certainty regarding climate impacts and time beneficial actions are often called “low-regret”76
frames can make the business case for action adaptation measures.
difficult to justify to internal and external To build adaptive capacity and resilience,
stakeholders, such as employees, investors and companies can ensure that new buildings,
consumers.72 Companies face difficulties deal- or assets and infrastructure installations, do
ing with information about large-scale, longer- not contribute to climate vulnerability in the
term trends and incorporating this information surrounding area. They can support research
into shorter-term financial planning models. on climate impacts and disseminate infor-
This highlights a need for site-specific, busi- mation and tools to help members of their
supply chain — particularly the small-scale
producers — manage risk. They can facilitate
Figure 4. Climate Adaptation and Corporate Strategy: supply chain members’ access to informa-
Cost or Opportunity? tion, equipment and technology that helps
them withstand climate shocks. If companies
create shared value77 by sourcing from small
and medium-sized enterprises, thus creat-
business environment How are you doing business business environment ing local jobs, the community will have a
increasingly volatile in a changing climate? increasingly resilient
stronger overall economic base and be more
resilient to crises.
OPERATIONS
higher resource costs Resources, materials sustainable resources
Developing new markets and deploy-
productivity losses Labour force stable labour pools
ing new products and services
physical damage, Fixed assets, infrastructure resilient structures,
Numerous reports have highlighted the poten-
excessive losses accessible insurance tial for “green-collar” jobs — jobs that seek to
reduce harmful GHG pollution, such as those
MARKET STRATEGY in the clean energy and building industries.
supply chain Supply chain, distribution new logistics models Much less attention has been given to jobs
disruptions that also build resilience to the existing and
obsolete products Products, services customers new markets, inevitable impacts of climate change. By devel-
emerging demand
oping new products and services that address
these pressing adaptation needs, the private
STAKEHOLDER ENGAGEMENT sector can create business value while helping
inefficiency Policymakers partnerships communities to adapt. Building preparedness
suspicion Investors transparency for climate change through investments in
conflict Communities license to operate adaptation can incentivize new and expanded
economic activity, supporting both new and
existing green jobs in key sectors. Fostering
economic growth in a manner that simultane-
Proactive companies can develop strategies to address climate change risks in their operations
and supply chains, as well as strategies to capture new market opportunities and engage ously creates value for communities through
customers and communities to meet needs amid changing climate conditions. meeting needs for goods and services is central
to creating a resilient green economy.
 29

An analysis conducted for Oxfam us-

ing United States Bureau of Labor Statistics Avoiding “Maladaptation” Risks
industry data identified approximately 2 Failing to take community needs into account can unin-
million jobs in the US alone across seven tentionally cause “maladaptation,” as noted in the first
economic sectors that contribute to build­ing chapter of this report. This introduces reputational risks
climate resilience in the US and abroad,78 for a company.
including in developing countries. These sec- (Source: United Kingdom Department for International Development,
tors are: agriculture, climate change infor- 2010. The Private Sector in Adaptation: The Case for Action.)
mation and consulting, coastal and natural
resource management, disaster preparedness For example, if a company depends on water availability
and response, insurance, water management, and takes a reactive approach to adaptation, it will try to
and health.79 If private and public sector procure future water rights in water-scarce regions where
actors around the world commit to taking it has water dependent operations. This would be detri-
action on climate change adaptation, rapid mental to the communities in those localities, and could
growth in these sectors is likely. result in sociopolitical tension and damage the
There are a growing number of real-world company’s brand, even if it is not the major user of water.
cases of companies expanding their businesses If, on the other hand, the same company planned for cli-
and creating jobs — at various skill levels mate change adaptation strategically, it could invest now
and in diverse sectors — while partnering in more cost-effective, integrated water management — in
with vulnerable communities to build their conjunction with the community — in advance of climate
resilience. Examples of affordable, adaptation- change impacts, and thus increase the chances for the
relevant technologies and services that are long-term vitality of the community and the company’s
being developed and deployed include mobile installations.
water treatment plants and water filtration
kiosks; drip (or precision) irrigation systems;
text message-based flood warning systems; and vulnerabilities, including potential resource
weather-indexed insurance for crops.80 conflicts, reputational damage and loss of
their social licence to operate, decreased
Engaging communities, consum- health quality and productivity of workers,
ers and other stakeholders to build and disruptions to operations and supply
competitiveness and resilience chains (due to climatic and societal factors).83
As companies begin to take action to increase From a practical standpoint, companies can
their climate resilience, it is crucial to do so protect their operations and markets (especially
in a manner that takes into account their in regions vulnerable to climate impacts) by en-
interdependence with the communities in couraging adaptation efforts and increasing cli-
which they operate. A thriving business mate resilience in communities in which they
requires “a stable and productive workforce, operate, and from which they hire staff, source
reliable infrastructure for energy delivery, supplies and sell goods and services.84 Both risk
and adequate networks for the transport of management and business development should
goods and raw materials to market. Healthy incorporate the adaptation needs of local com-
and functioning communities near business munities.85 Strategic climate change adaptation
operations and suppliers are critical to the investments can increase a company’s and a
well-being of employees and, by association, community’s capacity to respond to climate
the ability of facilities and supply chains change obstacles and opportunities.86 Compa-
to operate. It is imperative therefore that nies can partner with local communities to
surrounding communities also be able to conserve natural resources on which they both
withstand severe weather events and recover depend. They can also work with local gov-
quickly in their aftermath, as well as adapt to ernments, civil society and citizens to design cli-
physical effects and long-term impacts such mate-resilient development and infrastructure
as sea-level rise.”81 New strategic models will plans and to prepare for emergencies. Proactive,
be needed to address resource constraints, or positive relationships with the full range of
regional instability,82 in a world where find- local private and public sector actors — includ-
ing multiple suppliers for certain commodi- ing entrepreneurs, civil society groups, citizens
ties is increasingly difficult, and where relo- and local government officials — form a strong
cating proves more costly and controversial. foundation for effective corporate engagement
Otherwise businesses face many additional on climate change adaptation.
30

Insights from Caring for Climate

Companies

“The most difficult Experiences among Caring for Climate corpo- the chemicals sector observed, the speculative
quantitative assess- rate signatories offer several useful insights, nature of long-term climate change makes a
ments are related to but perhaps the most important one is that strategic business response difficult. Some-
agriculture, particularly though many companies have well-estab- times the highest priority components of an
on smallholder farms, lished strategies for reducing greenhouse gas adaptation strategy can also be the most chal-
and particularly in emissions, relatively few have comprehen- lenging to assess and manage.
developing economies. sively tackled the challenge of adapting to Some companies are actively seeking to
Ironically, this poses the changing climate conditions. Best practices better understand these uncertainties and
greatest opportunity for are still emerging, and examples from the develop appropriate strategic responses. In
our business, for climate Caring for Climate companies are described order to remain competitive, companies will
mitigation, and for help- in this chapter (and in Annex B). need to incorporate climate change adapta-
ing the communities we Companies can focus on several aspects tion priorities into their business strategies
serve adapt.” of adaptation, including: building internal in a way that considers a range of possible
— Caring for Climate awareness about climate adaptation and impacts on the vulnerability of both their
corporate signatory from the how it differs from mitigation; incorporat- own operations and the communities in
consumer-goods sector ing climate impact exposure into existing which they operate. This involves not only
risk management systems; building business monitoring changing climate impacts, but
value by providing climate-resilient goods also creating flexible and iterative adaptation
and services; and finding mutual benefit in plans that can be updated as necessary. The
helping communities, customers and suppli- following are a few examples of emerging
ers adapt to the impacts of climate change. best practices, drawn from responses to the
The following discussion highlights chal- Caring for Climate survey.
lenges companies are encountering, as well as
examples of emerging best practices. Emerging best practices among Caring
for Climate companies
Survey Insight No. 1: There is a ●● Communicating adaptation imperatives as core
strong need to understand “adapta- business priorities. For example, at one global
tion” in the corporate context. beverage company, “climate adaptation”
There is not yet widespread understanding translates into “water security” priorities.
among Caring for Climate companies of what Since water is a key input in this compa-
climate adaptation is and what it means for ny’s products, the translation links adapta-
them, their suppliers or the markets they tion directly to the business implications
serve. Many companies do recognize certain of water scarcity and enables an integrated
climate risks — particularly related to energy strategic business response.
and water — but other risks and opportuni- ●● Recognizing diverse climate impacts on their

ties have yet to be fully explored and inter- operations, labour force, customers, suppliers
preted in business terms. Those companies and host communities. For example, a mining
that have built adaptation strategies often and metals company reports that climate
develop them in parallel to mitigation op- change impacts on communities where
tions, understanding that some opportunities it operates also directly impact the com-
can have dual benefits. pany itself, particularly with respect to the
Although uncertainty does not justify inac- health and availability of their local labour
tion,87 the uncertainties about the magnitude force. Some companies that responded to
and potential timescale of climate change the survey, including those outside the
impacts make it difficult for many companies insurance and financial sector, are even
to effectively tackle adaptation on their own. starting to quantify climate risks and as-
For example, most businesses plan in the sessing them in terms of financial loss and
relative short-term, whereas some climate reputational damage.
change impacts are expected to occur over ●● Integrating adaptation needs into core business

long time-horizons. As one company from planning processes. Some companies use ex-
 31

isting risk management frameworks as tuted formal processes for evaluating and
a first step for institutionalizing adaptation developing solutions for customers facing
priorities for their operations, while others changing climate conditions.
are focused on product development, sup- ●● Developing business strategies with mutual ben-
ply chain management, and new market efits to the company and community resilience. In
strategies. For example, an electric power some cases, companies are anticipating and
sector company conducts climate impact preparing for water scarcity or flooding and
modelling and assessments of how those responding with strategies that also help
impacts affect their entire business value communities adapt to these conditions.
chain. This helps to inform a comprehen- In other cases, companies are protecting
sive response. against rising food prices (and building
competitive advantages) by helping sup-
Survey Insight No. 2: New risks and pliers and communities adapt agricultural
opportunities to navigate production to new climate conditions.88
Adaptation to a changing climate is expected
to introduce both economic risks and oppor- Survey Insight No. 3:
tunities. Caring for Climate signatories agree. Opportunities and challenges in
Fifty-six percent of companies surveyed see engaging key people and partners
accessing new markets for climate adapta- Businesses must overcome some key con-
tion-related products and services as an op- straints to designing and implementing com-
portunity of “high” or “very high” importance prehensive adaptation measures. A primary
to their company. Few companies, however, challenge is often limited awareness of the
have thus far been able to design compre- need to adapt, which in turn limits interest
hensive adaptation goals with correspond- and engagement as well as external incen-
ing business indicators to track economic tives for action.89
performance and progress toward those The survey of Caring for Climate signato-
goals. While some companies understand the ries indicated that levels of awareness about
potential risks that climate change impacts climate change impacts varied within orga-
may have for their operations, few compa- nizations. Reports have suggested that many
nies have explored how consumer needs companies (and a majority of key decision-
may change and what the corresponding makers within those companies) consider
business implications — and possible missed climate change to be a strategically important
opportunities — may be of shifting demands issue, but they often do not translate this
and preferences. Similarly, companies can awareness into concrete action. Climate
easily overlook risks related to maladapta- change impacts may not be fully considered
tion if they do not recognize community and or integrated into corporate strategies.90 As
customer needs and impacts. one financial services company noted, it has
been very difficult — especially amid the
Emerging best practices among Caring global financial turmoil — to prioritize the
for Climate companies development and implementation of new
●● Identifying new risks or new market opportuni- climate adaptation strategies. The Caring for
ties relating impacts of climate change. Compa- Climate companies surveyed cite a num-
nies are observing and anticipating specific ber of important steps to pursue, including
challenges, such as floods or droughts, in engaging and educating their employees,
certain regions or sectors. The insurance integrating their adaptation strategy into
industry, as mentioned earlier, is taking core business processes, building capacity
proactive measures to prepare for climate and resources, and working with their supply
risks. Some companies are seeing climate chain partners.
risks upstream among their raw-material Limited engagement among other audiences
suppliers and taking steps to increase can also be a barrier to effective adaptation
resilience in their supply chains. Some strategies. Investors are expressing interest in
companies are also identifying new market corporate adaptation but are not always in the
opportunities with water-, energy- and communication loop. Middle managers and
resource-efficient products. However, few subsidiaries, as well as suppliers and customers,
companies (only 31 percent of Caring for are facing direct climate impacts but are often
Climate companies surveyed) have insti- unengaged in corporate climate adaptation
32

strategies. Partnerships with communities

and civil society are an important element
of effective adaptation, but only half of the
companies that responded to the Caring
for Climate survey reported that they have
recognized the possible social consequences
of their adaptation strategies.
Various obstacles prevent these important
communications. As with approaches to
climate mitigation, engaging a large number
of suppliers can be challenging, and many
companies have few personnel allocated
specifically to climate change issues. Simi-
larly, companies can have difficulty finding
the capacity to communicate with the wide
variety of audiences that are interested in the
companies’ actions.

Emerging best practices among Caring for

Climate companies
●● Engaging multiple audiences with climate change

communication strategies. Some companies

are finding ways to communicate with
multiple interested stakeholders, includ-
ing governments, investors and customers.
Companies are primarily using existing
communication channels, such as sustain-
ability reports, stakeholder dialogues and
civil society partnerships, to share informa-
tion about climate change strategies.

In general, there are limited examples of

companies proactively engaging stakeholders
as partners in climate adaptation strategies. It
represents an area where there are many op-
portunities to find valuable partners.91
 33

Measures for Practical Business Action:

Enabling Internal Champions

As the previous section notes, companies face What does climate resilience mean
new strategic challenges in a changing climate. for your company?
As markets and communities adapt to climate
change, they can also help the transition to Priority: Understand key differences and
a green economy where innovative compa- alignments between mitigation and adapta-
nies can stake out competitive advantage in tion risks and opportunities.
determining ways to meet emerging com-
munity needs. Companies should be assessing Connect climate adaptation needs to your com-
adaptation needs for their internal operations pany and corporate culture, building on existing
and their interactions with the communities efforts to mitigate GHG emissions. As with any
in which they operate. The physical, social and new factor impacting your business, there
economic impacts of climate change are of im- is a need to internalize and understand how
mediate commercial concern.92 climate change will directly and indirectly
Internal champions will be needed to affect your company. To build awareness and
develop and communicate adaptation risks educate colleagues, communicate adapta-
and opportunities. Champions can come from tion terminology in more familiar terms (for
anywhere within an organization, including example, market trend analysis). Finding
environment and sustainability departments or what resonates with your corporate culture
business units and executive leadership. They will be critical. If your corporate culture is
must lead and inspire efforts to identify and ad- characterized by engineering perspectives, for
dress new uncertainties, engaging a variety of example, you might choose to communicate
stakeholders inside and outside the company. adaptation in terms of fundamental problem
In order to be successful in integrating adapta- and solution decisions. Or if you are reaching
tion priorities across all areas of business opera- out to finance-oriented colleagues, you may
tions and strategy, they also must have access wish to highlight quantitative impacts to the
to executive decision-making processes. Their company’s bottom line.
common objective: finding the means and the There may be opportunities to leverage
partners to build climate resilience into their existing initiatives that are aimed at reducing
companies and in support of the communi- your company’s impact on the climate. Many
ties in which they operate or sell goods and internal and external initiatives related to
services. The recommendations offered in this mitigation of GHG emissions may be oppor-
section are not intended to be comprehensive tunities to incorporate adaptation strategies.
or prescriptive, but are offered to help guide Companies may find it useful, for example,
these internal champions. to utilize existing cross-functional climate
Companies across all sectors and markets strategy working groups. These groups draw
— even today’s leaders on climate change on individuals with varying responsibilities,
issues — face a steep learning curve regard- including operations, finance, marketing,
ing adaptation, but important lessons can be business unit management, research and
drawn from the emerging best practices dis- development, and government affairs, among
cussed in the previous section. Those insights others. Such a group can understand climate
can help champions develop answers to three change impacts from a variety of perspectives
primary questions: and develop options for communicating “ad-
aptation” in terms the company understands
●● What does climate resilience mean for and can support.
your company? If your company already assesses and
●● What will position your company to navi- reports GHG emissions regularly for mitiga-
gate risks and lead markets in a warming tion purposes, you can build in complemen-
world? tary adaptation risk and opportunity reviews.
●● How will your company engage partners This can help you identify potential points
to minimize risks and seize opportunities? of conflict among climate mitigation and
34

adaptation priorities, as well as opportuni- Understanding the relative strengths and

ties to simultaneously reduce emissions and weaknesses of your knowledge can help de-
enhance resilience (see text box for examples fine priorities or pinpoint areas where expert
of resources and tools). input would be beneficial to improve knowl-
edge and help manage uncertainties. These
Priority: Integrate climate change adap- may include issue area experts, universities,
tation into core strategic business plan- non-governmental organizations, industry
ning and management processes (such as groups and others. Your company can lever-
operations, supply chain management, and age these existing knowledge bases and peer
market strategies). and industry expertise to define and progress
toward your adaptation strategies.
Identify where your company has existing strate-
gic management frameworks that can help build What will position your company
climate change resilience, and incorporate climate to navigate risks and lead markets
adaptation risks and opportunities into existing in a warming world?
management frameworks. Depending on your
sector and company, the appropriate strategy Priority: Align business goals and perfor-
to respond to climate adaptation risks and mance indicators to reflect climate-resil-
opportunities can take many different forms. ient priorities, risks and opportunities.
Corporate climate strategies can seek to
secure a strong level of commitment from ex- Review current goals and indicators to identify
ecutive management to ensure they become opportunities to integrate climate adaptation
systemic and fully integrated in all aspects of priorities. Some existing metrics, such as
business operations. You can encourage this operational goals, can help your company
by highlighting business implications for cli- enhance climate resilience with gains in
mate-driven changes across various resource resource conservation, efficiency, diversifica-
inputs, such as water, energy and timber. If tion, reputational benefits and sustainable
your operations, supply chain or customers sourcing. Enterprise goals, such as revenue
depend on ecosystems, completing an eco- targets and market share indicators, can im-
system service review, for example, can help prove your company’s competitive position-
identify the risks and opportunities associated ing in markets for climate-resilient goods and
with climate-driven ecosystem change.93 services. Reviewing these goals with a view to
In terms of other tools and frameworks, creating climate-resilient operations, markets
your company can also assess general strate- and communities may suggest opportunities
gic climate risks and impacts that incorporate to integrate adaptation priorities into existing
climate change considerations into existing goals or develop new complementary goals.
management approaches, such as Enterprise Companies may also wish to develop “stress
Risk Management (ERM) frameworks, an Envi- tests” — assessments of how business opera-
ronmental Management System (EMS), or sup- tions and strategies would work under certain
ply chain and logistics management frame- conditions — to evaluate exposure to climate
works. For companies that utilize scenario impacts and opportunities to meet new com-
planning as part of their business strategy, munity needs.
climate change vulnerabilities can be factored
into the scenarios explored, and the adapta- Priority: Build a portfolio of climate-
tion lessons learned from these exercises can resilient goods and services.
be built into strategic planning.
Identify market needs and opportunities to build busi-
Identify where a relatively weak understanding or ness value while helping customers and communities
critical uncertainties about climate change adapta- adapt. Climate change can have far-reaching
tion risks and opportunities exist, and reach out impacts on consumers and communities.
to partners who can assist. Various tools and Periodic assessments and research on buyers’
resources can help highlight priority areas for needs can reveal new business opportunities.
your company’s climate change strategy and For example, climate resilience can be built
clarify areas of uncertainty. These provide a into a strategic process for meeting the needs
useful starting point for developing an adap- of vulnerable communities and the emerging
tation strategy. market demands from at-risk consumers.
 35

Resources for Corporate Climate Change Adaptation Strategies

Understanding where and how climate shifts A Fresh Look at the Green Economy. Oxfam
can directly and indirectly affect your com- America: 2010. www.oxfamamerica.org
pany can reveal important strategic insights.
Climate Risks and Business: Practical Meth-
Tools, resources and internal and external
ods for Assessing Risk. International Finance
experts can help complete comprehensive
Corporation: 2010. www.ifc.org
risk assessments, as well as innovation and
opportunities assessments. Companies can Business Leadership on Climate Change
engage nonprofits, government and intergov- Adaptation. PricewaterhouseCoopers: 2010.
ernmental agencies, academics and consul- www.pwc.co.uk
tants, among others, to access this expertise. The Business of Adaptation (briefing paper).
Below are some examples of resources that AccountAbility and International Institute
may be helpful: for Environment and Development: 2009.
Tools www.iied.org
United Kingdom Climate Impacts Pro- Breaking Ground: Engaging Communities in
gramme (www.ukcip.org.uk/business/) offers Extractive and Infrastructure Projects. World
a number of methodologies intended to help Resources Institute: 2009. www.wri.org
organizations understand and prepare for
potential climate change impacts. Making Climate Your Business: Private
Sector Adaptation in Southeast Asia. World
Climate and Development Knowledge Net- Resources Institute, SIDA, and CSR Asia:
work (www.cdkn.org) combines research, 2009. www.wri.org
advisory services and knowledge manage-
ment around climate change adaptation and The New Adaptation Marketplace. Oxfam
development issues. America: 2009. www.oxfamamerica.org

Corporate Ecosystem Services Review (www. Shaping Climate Resilient Development: a

wri.org/project/ecosystem-services-review) framework for decision making. Economics
helps corporate managers proactively de- of Climate Adaptation Working Group: 2009.
velop strategies for managing business risks www.mckinsey.com
and opportunities arising from their compa- Adaptation: An Issue Brief for Business.
ny’s dependence and impact on ecosystems. World Business Council for Sustainable
Publications Development: 2008. www.wbcsd.org
Adapting to Climate Change: A Guide for Adapting to Climate Change: A Business
Food, Beverage and Agriculture Companies. Approach. Pew Center on Global Climate
Business for Social Responsibility: 2011. Change: 2008. www.pewclimate.org
www.bsr.org Climate Changes Your Business. KPMG:
World Resources Report: Key Question 2008. www.kpmg.com
Eight. “How can national-level governments Scenarios: An Explorer’s Guide. Shell
learn from the private sector and encourage International: 2008. www.shell.com
investment and decision making to promote
the public good in a changing climate?” Stakeholder Engagement: A Good Practice
World Resources Institute, UNEP, UNDP, Handbook for Companies Doing Business in
World Bank: 2011. www.worldresources Emerging Markets. International Finance
report.org Corporation: 2007. www.ifc.org
36

Companies that can meet these needs will How will your company engage
build new revenue streams while building partners to minimize risks and
community resilience to climate change. seize opportunities?
Some markets, such as those for water-effi-
cient technologies, are likely to grow as com- Priority: Develop climate information
munities confront water scarcity challenges. platforms and communication channels.
There are also other basic community needs,
such as access to sanitation, transportation Provide regular updates and accessible information on
or even education, which can represent new company efforts. Transparency and accountabil-
opportunities to create goods and services ity are essential components of any corporate
tailored to address these needs in the context strategy. Caring for Climate signatories are
of changing climate conditions. In addition, encouraged to report on progress made on
as consumer demand in developed markets their climate strategy on an annual basis in
shifts toward more climate-safe goods and their Communication on Progress. It can be
services, companies that are prepared to important to provide access to information
meet this demand will capture more of the on climate adaptation strategies for multiple
market share. stakeholders so they can understand how your
company — and your markets and connections
Insert climate change criteria into standard product with vulnerable communities — can be best
design processes. Companies that design prod- prepared to manage climate change impacts.
ucts and services without an eye on tomor- Proactively providing information to local
row’s adaptation needs can miss important communities, including those most vulner-
new opportunities. Your company may face able to climate change impacts, may help your
the risk of becoming obsolete if other innova- company build support for climate strategies
tors step in with solutions to meet customer and solutions.
needs in a changing climate. By incorporating
climate adaptation perspectives early in re- Utilize new and existing communication channels to
search and development and product design share and gather information about evolving climate
processes, your company can help ensure fu- impacts. Companies can use existing compliance and
ture goods and services meet customer needs. outreach activities, such as financial and sustain-
ability reports, to share information on climate
strategies. A business can also leverage already
Figure 5. Layers of Partnerships for Resilience existing business networks — such as its board
of directors, or industry group coalitions — to
coordinate and share information and re-
communities sponsibilities related to corporate adaptation
measures. Web-based platforms and other
innovative communication strategies can help
broaden the audiences engaged in adaptation
strategies and keep your company aligned with
evolving trends and needs. These platforms can
executive internal business also help reach vulnerable communities that
leadership champions units
may have access to communication tools, such
as mobile networks, helping your company fill
information gaps about customer needs.
investors customers
industry groups suppliers Priority: Actively engage, draw insights
from, and encourage action among
internal and external partners.
policymakers civil society
Internal champions often have to build their
own capacity to understand climate impacts,
while also engaging internal and external
stakeholders. Figure 5 outlines some com-
corporate decisions industry influence public engagement mon, critical categories of partners in climate
change adaptation efforts.
 37

Inform and advance corporate decisions: …industry groups and best practice
Sustainability or environmental health and networks: highlight key obstacles, shared
safety personnel are usually the most engaged interests and experiences to create tools, case
in corporate climate change strategies and are studies and partnerships that can enhance
likely to be a receptive audience, if not the your company’s climate adaptation strategy.
champions within the organization. Other au- Businesses in the same sector will often con-
diences, however, need to be engaged to help front similar challenges in building climate
lead or support your efforts to mainstream resilience. Your company may find support
resilience within your company. Developing or collaboration opportunities with industry
adaptation messages that make sense within partners, for example, to engage suppliers
the context of your company will help engage or develop sector-specific adaptation perfor-
some of these key decision-makers. mance metrics. There may be opportunities to
share insights and build resilience across sec-
How to engage… tors through business networking and sharing
experiences and best practices in adaptation.
…executives and directors: build and high-
light the business case for your company’s …suppliers: approach with technical as-
resilience strategy. Describe the risks and op- sistance and collaborative opportunities,
portunities with quantitative information or highlighting shared interests in building resil-
illustrative market examples where possible. ience. Use existing initiatives94 (for example,
Note growing interests and opportunities to supplier meetings, training and toolkits) to
collaborate with other industries or stake- help communicate and encourage adaptation
holders, such as the insurance and financial efforts within the supply chain. More active
industries. partnerships with large or particularly vulner-
able suppliers can also open new opportuni-
…business units, middle managers and ties for joint strategies to manage climate
subsidiaries: communicate adaptation risks impact risks in supply chains. If your com-
and opportunities in terms most relevant to pany depends on agricultural supplies, for
their day-to-day priorities. Utilize goals and example, you can work to limit future price
key performance indicators where possible. shocks and resource scarcity by proactively
engaging vulnerable producers and helping
Leverage industry influence: them adapt to climate change.
Stakeholders in your sector, whether they are
investors, suppliers or even competitors, can …customers: understand interests and
also help shape and achieve your company’s impacts among key customer segments; com-
climate adaptation strategies. Some of these municate “adaptation” in terms that provide
audiences (particularly investors) are demand- direct links to buyers’ needs. Customers may
ing more information on your company’s re- not express interest in “climate-resilient”
sponse to climate change impacts. Others are products, but as they confront a changing cli-
critical sources of information and support. mate there will be growing demand for goods
and services designed to help them adapt
How to engage… to such conditions. Companies can engage
communities through dialogues, surveys and
…investors: improve reporting processes to other market studies to find the means of pro-
proactively engage investors with information viding locally appropriate climate solutions in
and updates on climate adaptation progress vulnerable countries. Even companies dealing
and challenges. One of the most active voices primarily in business-to-business markets can
calling for information about adaptation find opportunities to meet climate adaptation
strategies, investors are likely to demand even needs among their customers and the down-
more information as climate change impacts stream markets they serve.
are felt more strongly over the coming years.
Existing platforms, such as periodic financial Proactively engage public partners:
reports or Carbon Disclosure Project surveys, Decision-makers outside your industry will
are opportunities to highlight adaptation also have influence on your climate adap-
strategies. tation strategies. Civil society groups and
governments that are advancing adaptation
38

and companies may also find it beneficial to

Engaging with Civil Society engage at the municipal, state or provincial,
One important approach for integrating private sector and national levels. Urgent action is needed
growth with the adaptation needs of companies and to create effective public-private partnerships
communities is forming partnerships with civil society and lay the foundation for an adaptation
entities. Key organizations to partner with might include infrastructure that can enable systemic, orga-
research institutions or non-governmental organiza- nized adaptation efforts.95
tions with expertise in a particular area — such as
ecosystems services, or emerging market adaptation …communities: identify the social and
needs — or even local colleges and universities that are public impact of your company’s climate
educating people from the communities your company adaptation strategy; understand where
is interested in serving. Companies can also engage your company’s efforts can help build local
with local, state, national and international bodies (such resilience and where your company’s actions
as city planning agencies, or UNEP) on a variety of lev- may conflict with local adaptation needs.
els, including sponsoring on-the-ground research that Inviting community participation and input
can benefit both people and business, helping stream- through stakeholder dialogues will help your
line local planning and zoning processes, or supporting company gain new insights about local needs
the development of international climate policies that while building positive relationships and
incentivize low-carbon growth and adaptation-focused resilient local labour markets. Community
products and services. engagement will also help mitigate the risk of
developing climate change responses in con-
flict with or directly harmful to local commu-
nities’ interests or livelihoods. Developing a
new model of engagement, one that challeng-
policies can be valuable partners. Together, es and goes beyond the traditional ways that
private and public sector groups can analyze businesses have worked with communities in
and provide information about climate risks, the past, can help ensure climate-compatible
create adaptation plans for their jurisdictions, outcomes that create shared value.
and provide public resources to meet the
adaptation needs of vulnerable communi- …civil society: build relationships with
ties. Climate-vulnerable communities and organizations, including universities and
civil society groups can provide first-hand research institutions, with insights for the
information about local adaptation needs and public good and representing local perspec-
help ensure that corporate adaptation efforts tives. Strategic relationships with groups that
contribute to, rather than undermine, com- are doing research or advocating on behalf
munity resilience. of public interests are another means of
aligning corporate climate change adaptation
How to engage… goals with local development priorities. It
can be important to understand early (before
…policymakers: inform and encourage conflicts arise) where your company and
policy frameworks that build resilience in civil society have either mutual interests or
local markets; highlight information gaps and potential disagreements in how to adapt in a
other obstacles that public policy can help changing climate.
to address. Engaging policymakers, either
directly or through industry coalitions, can
help communicate the need for common
frameworks and broader support for adapta-
tion measures. Your company can be piv-
otal in highlighting the economic risks and
opportunities you observe in your markets.
Informing governments and dialogues, such
as Rio+20 and national Low Emissions Devel-
opment Strategies, can help create effective
policy and financing platforms for climate-
resilient economies (see Chapter 3). However,
adaptation priorities will be highly localized,
 39

Conclusion

Designing an effective corporate adaptation markets. Companies that identify opportuni-

response requires innovative, holistic ap- ties to enhance resilience in their operations
proaches. Business-as-usual approaches are can also develop new strategies for products
insufficient. Companies typically develop oper- and services that meet needs in markets
ational and investment strategies that respond adapting to a changing climate. They can
to perceived near-term consumer and business engage actors across the company such as
needs and that are projected to accrue returns executives, product developers, financial
on investment in the short term. Meanwhile, decision-makers and business unit managers.
climate change impacts are expected over the Companies that develop strong relationships
long term, and as previously discussed, they with customers and the local communities
can impact every facet of a business and the in which they operate can better respond to
communities on which they rely. changing consumer needs and become more
Companies can develop new approaches effective partners in building resilient
to connect today’s strategies with tomorrow’s communities.

Company Case Study: SEKEM

SEKEM Holdings Group — an Egyptian company offering performance indicators, and is an effective way of tracking
products such as pharmaceuticals, organic foods and textiles progress through comparisons to previous assessments and
— is incorporating adaptation priorities into a comprehensive communicating progress (as well as areas for improvement)
sustainability strategy in order to reduce its vulnerability to to internal and external stakeholders.
climate change risks, while also working to provide products
For its internal stakeholders, SEKEM discusses adaptation
and services that increase resilience in local communities.
goals and progress indicators with groups of employees
SEKEM has identified climate change adaptation as a key (most notably its Sustainability Units) in each SEKEM sub-
long-term business strategy, and has developed adapta- sidiary. In addition, SEKEM’s management team discusses
tion-oriented quality standards for products, services and and evaluates its annual sustainability report and invites
solutions that also meet consumers’ current and emerging the company’s shareholders to quarterly board meetings to
needs. The company partners with farmers, producers, ven- discuss issues relevant to sustainability, climate change and
dors and consumers to market and distribute products in the adaptation.
context of a changing climate. SEKEM has identified practi-
For its external stakeholders, SEKEM engages in strategic
cal methods of incorporating adaptation into its enterprise
cooperation with key partners and consumers, and regularly
management model, including employing organic methods
discusses climate change goals and metrics with various
of agricultural production and updating its water manage-
media platforms. The company has established an extensive
ment practices with more efficient drip irrigation methods.
network of communications nationally and internationally —
Such methods help integrate climate change mitigation and
through proactive engagements on conferences, workshops,
adaptation priorities into core business practices, with impor-
trade shows and other events — in order to ensure that
tant benefits for enhancing efficiency as well as increasing
climate change issues are highlighted on the national policy
institutional climate change resilience.
agenda.
SEKEM is integrating climate change risks and opportuni-
SEKEM has also recognized that engaging with local com-
ties into each of its business units and key decision-making
munities is a central adaptation priority, and in conjunction
processes, with particular emphasis on addressing energy,
with the SEKEM Development Foundation (which maintains
food and water security issues. Its Sustainability Unit makes
a variety of programmes in social development, research,
recommendations to key decision-makers across all busi-
health care, education and vocational training) has developed
ness units and levels of management. In order to track the
various methods of communication and consultation with
progress of climate-related strategies, SEKEM devised a set
local stakeholders. For SEKEM, participation in these events
of indicators related to adaptation priorities and communi-
and having consistent interactions with external partners are
cates those indicators through its Sustainability Balanced
crucial to developing new ideas and methods for innovation.
Scorecard system. The Scorecard tracks adaptation-focused
40

3. Catalyzing
Strategic
Private Sector
Adaptation:
policy Measures
to Promote
Effective
Business
Investment and
Engagement
 41

Introduction

Governments have a central role to play in tivized through targeted public commitment,
catalyzing private sector provision of goods expenditure, policies and regulations.96 It is
and services that support climate change also hoped that this chapter will prove useful
adaptation and encourage climate-resilient for participants in key intergovernmental
business practices. Even those businesses, processes — including members of the UN
large and small, that already recognize the Secretary-General’s High-Level Panel on
importance of adaptation face considerable Global Sustainability and those involved in
obstacles — including information gaps, preparations for Rio+20 — as they develop
risk and uncertainty — that prevent them blueprints for and facilitate international
from adapting in ways that support sustain- agreements on how to achieve green, resil-
able development and long-term community ient, equitable growth. While this chapter is
resilience. Governments must take the lead to focused on creating an enabling environment
create an enabling environment for strategic for private sector investment in adaptation, it
private sector engagement. They can do this may also provide policymakers with insights
by sending strong signals to encourage busi- on challenges to stimulating green economic
nesses to take up the adaptation challenge. investment more broadly, as well as possible
The policy options presented in this chap- solutions.
ter are designed to help government decision- This chapter provides an overview of the
makers at the national level — and in some main adaptation-related barriers compa-
cases, the subnational level — stimulate nies face that can be reasonably addressed
private sector investment in adaptation in through public policy. It describes the current
ways that contribute to sustainable develop- policy environment for business engagement
ment and the green economy. A public sector in adaptation, and then offers a range of
focus on climate change adaptation within policy measures — in the spirit of inspiring
the broader framework of a green economy discussion and debate — that may prove ef-
can help companies make important connec- fective in catalyzing private sector adaptation
tions among long-term profitability, sustain- efforts for the public good. Policymakers at all
able resource use and equitable development, levels must engage in in-depth consultation
and thus make required shifts in practices to with the private sector and conduct further
support private sector and community vital- analysis to identify those policy instruments
ity. As is the case for other green economy that will most effectively engage the private
investments, climate change adaptation sector in building climate resilience and pro-
investments need to be catalyzed and incen- moting sustainable economic development.

This chapter highlights policy measures for governments to:

Build a foundation • Demonstrate policy and finance commitment to adaptation

for private sector • Engage businesses as stakeholders in planning and implementation
investments and
action:

Align public and • Stimulate the market for adaptation through financial and risk
private adaptation reduction incentives
interests: • Develop policy and regulatory frameworks to guide corporate practices

Promote best • Provide businesses with information and tools they need to make
practices and investments that support climate resilience in vulnerable communities
collaboration: • Consider new forms of public-private partnerships (PPPs) to tackle the most
complex challenges to sustainable development and climate resilience
42

Barriers to Private Sector Engagement

in Building Climate Resilience

In some cases, companies will respond to years out. For many businesses — particularly
climate variability and weather extremes smaller ones — short-term costs and impacts
autonomously due to their need to manage on cash flows may be more important consid-
risk, minimize costs and maximize profits. erations than long-term benefits.98
For example, companies will take action to
reduce immediate, recognizable risks to their Access to financing. Risk and uncertainty
operations and supply chains. However, for about climate impacts may hamper compa-
a number of reasons, most businesses are nies’ ability to secure financing for adapta-
unlikely to make investments with an eye to- tion investments that have a longer return
ward increased medium-to-long-term climate horizon, or that involve pre-emptive risk
resilience, particularly within vulnerable management measures. Some of the most
communities. It is worth noting that many of important adaptation investments must take
these barriers are not specific to action on cli- place in vulnerable communities in devel-
mate change adaptation; they also represent oping countries, which may increase the
challenges that companies face in addressing perceived risk and make financing less afford-
broader sustainability issues. able. Smaller-scale businesses, which already
lack access to credit and collateral, may face
Information gaps. Many businesses — global particular challenges in securing financing
and local, small and large — are just begin- for adaptation investments. Not only does
ning to understand what climate change climate change adaptation require companies
means for them, much less what it means to change how they do business, it requires
for the communities linked to their opera- banks and other financing institutions to
tions and supply chains. Even if a company rethink the criteria for a smart business loan
is aware of climate risks, it is difficult to or investment over the long term.
integrate scientific information on long-
term regional trends, aggregated at a high Private cost versus public benefit. A central
geographic level, into site-specific business challenge in trying to stimulate private sector
decision-making in the short term.97 adaptation investments that promote sustain-
able development (for example, investments
Risk and uncertainty. Lack of information in a healthy watershed, or a storm-resilient
and the inherent uncertainty surrounding coastline) is that much of the benefit may
the nature, timing and variability of climate accrue to other actors, including individuals
change impacts make it risky for companies and other firms, instead of rewarding only
to take action. Companies make invest- the party that made the investment. Compa-
ments that bear the greatest potential for nies do not yet have the tools to calculate the
return on those investments. Lacking solid direct benefit they receive from operating in a
information about the full scope of costs and more resilient community.
benefits, companies may see climate change
adaptation as a case of up-front financial Undervaluing natural resource use and
outlays with uncertain payoff. In addition, conservation. Ecosystem services are often
insofar as adapting to climate change means referred to as the “life support systems” that
a departure from business as usual and the enable all forms of economic activity,99 but
implementation of new business models, new not all are accounted for within national
elements of risk are introduced that deter economies and measures of a nation’s wealth,
investment. nor accounted for by the private sector, even
though this type of economic valuation
Short-term versus long-term time horizons. information is becoming more prevalent and
A related challenge is that many adaptation sophisticated. Companies are not accustomed
measures require investment now, but the to quantifying the contribution that ecosys-
benefits may not be realized until 20 or 30 tems make to their businesses, or properly
 43

accounting for the value or cost of preserv-

ing or degrading natural resources like rivers
or mangrove forests as they make business
decisions. This leads businesses to undervalue
these resources and the ecosystem services
they depend on and underinvest in their
sustainable use, or extract and commodify
natural capital for short-term economic gain
that would have provided far greater public
value if used more sustainably.

Policy and regulatory weaknesses. Pri-

vate sector adaptation may be difficult if
local-level regulations do not facilitate the
implementation of projects designed to
help people adapt, or if differing national
policies across regions hamper replication of
successful adaptation approaches from one
country to another. Adaptation can also be
hindered by policies that do not correctly
allocate natural resources like water (a key
input to many industrial processes) to ensure
adequate access for all end-users, or do not
incentivize companies to internalize the costs
of their impacts on the environment. In the
absence of appropriate policies and regula-
tions governing resource use, companies
may adapt to climate change by securing
increasingly scarce resources for themselves,
which directly contributes to local change
vulnerability when communities also rely
on these resources. More broadly, the quality
of the overall investment environment will
also affect adaptation. Private investment in
adaptation will be limited in countries where
companies are already facing significant
operating constraints (for example, delays in
licensing and registration, weak contract en-
forcement, lack of dispute resolution services,
and murky regulations).

The latter half of this chapter offers public

policy options geared toward addressing these
challenges and gaps and creating an enabling
environment for private sector contributions
to long-term climate resilience.
Public policy is an essential tool for steer-
ing companies toward adopting adaptation
strategies, and helping them to avoid malad-
aptation.
 44

Climate Change Adaptation Policy

and Business Engagement

The Importance of Caring for Climate corporate signatories rec- have started to integrate consideration of
Public Policy ognize the importance of engaging with poli- climate risks into their ongoing development
Eighty-two percent of cymakers on the issue of climate change, and and disaster risk reduction and risk manage-
Caring for Climate corporate they are fully aware of the central role that ment planning processes. Under the UNFCCC,
signatories surveyed believe public policy plays in fostering a supportive nearly all of the Least Developed Country
that public policy is of “high” environment for climate change adaptation. Parties have developed National Adaptation
or “very high” importance The private sector is just beginning to engage Programmes of Action (NAPAs) that analyze
to their company’s ability to in public policymaking and planning around urgent, immediate climate risks and iden-
adapt to climate change. the issue of adaptation, but such efforts will tify the most pressing adaptation needs.102
likely increase over time, since adaptation has Some countries that have gone through
become a clear priority at the international, decentralization processes have also begun
national and, increasingly, local levels. to encourage or require local government
bodies to integrate climate risks into local
The international and national development and disaster risk reduction and
Outcome from Cancun policy environment for adaptation management plans.103 Several United Nations
The Conference of Parties New policies to encourage and incentivize agencies, including UNEP and the United
“invites relevant multilat- private sector investment in climate change Nations Development Programme (UNDP),
eral, international, regional adaptation and resilience must build upon have provided technical assistance at the
and national organizations, existing and evolving policy frameworks to national and subnational levels for climate
the public and private support adaptation in vulnerable countries, change and adaptation planning, and built
sectors, civil society, and which form the broad context for private sec- developing countries’ capacity to assess vul-
other relevant stakeholders tor engagement. nerabilities, access adaptation funding, and
to undertake and support Adaptation has emerged as a priority with- implement adaptation measures.104 National
enhanced action on adapta- in international climate change dialogues, and local-level adaptation plans in developing
tion at all levels…” with emphasis on ensuring that the most countries provide a valuable starting point for
vulnerable countries have the financial and discussions about how the private sector can
Source: UNFCCC, 2010. The Cancun
Agreements: Outcome of the work of technical resources they need to adapt and best contribute to sustainable development
the Ad Hoc Working Group on long-term increase their resilience.100 At the sixteenth through adaptation and resilience building.
Cooperative Action Under the Convention.
meeting of the United Nations Framework
Convention on Climate Change (UNFCCC) Private sector engagement in adap-
Conference of Parties (COP 16) in 2010 in tation policymaking and planning
Cancun, Mexico, the Parties (through the The private sector has had a consistent and
Outcome of the Work of the Ad Hoc Work- growing presence at UNFCCC sessions since
ing Group on Long-Term Cooperative Action) the first Conference of Parties (COP) in 1995 in
reaffirmed that adaptation must be given the Berlin.105 Private sector interests are aggregated
same priority as mitigation.101 and represented through numerous observer
As shown by the examples in Table 2, sev- organizations, including the International
eral multilateral and bilateral public financ- Chamber of Commerce and World Business
ing mechanisms have been established to Council for Sustainable Development. Business
support adaptation in vulnerable countries. organizations and associations also issue policy
However, as noted in Chapter 1, current flows position papers and organize side meetings
of adaptation financing fall far short of needs. for their members during and around the COP
Not only does this have a detrimental impact proceedings. To date, businesses engagement
on communities’ ability to manage risk and at the UNFCCC has been primarily, but not
withstand climate impacts, it sends a weak exclusively, focused on issues related to mitiga-
signal to the private sector about the overall tion (for example, agreements on reductions
importance of adaptation. in GHG emissions, energy policy, technology
At the national level, many developing transfer for low-carbon growth) and the overall
countries have established plans and strate- international framework and financing for
gies to address climate change, and some climate change, rather than on adaptation.106
 45

Table 2. Examples of Funds for Adaptation

Name of Fund or Mechanism Type Administrative Body Year Operational

To be determined (established under the
Green Climate Fund Multilateral To be determined
UNFCCC Cancun Outcome in late 2010)
Least Developed Countries Fund Multilateral Global Environment Facility (GEF) 2002
Adaptation Fund Board, with support from
Adaptation Fund Multilateral 2009
Global Environment Facility (GEF)
Pilot Program for Climate Resilience Multilateral World Bank 2008
Global Climate Change Alliance Multilateral European Commission 2008
Hatoyama Initiative Bilateral Government of Japan 2008
International Climate Initiative Bilateral Government of Germany 2008
Indonesia Climate Change Trust Fund Multilateral Government of Indonesia 2010
Bangladesh Climate Change
Multilateral Government of Bangladesh 2010
Resilience Fund

Sources: Climate Funds Update (www.climatefundsupdate.org); The Daily Star, 2010. “Bangladesh gets $110m climate fund.”

This likely reflects the fact that while adapta- policymaking and planning. There are some
tion has recently emerged front and center in good existing efforts that can be built on. How-
COP discussions, the private sector is only just ever, new avenues must also be created.
now beginning to consider adaptation-related
risks and opportunities and the associated
policy implications. Productive Engagement on Adaptation Policy
Private sector engagement in NAPA
Over the past several years, various businesses have raised their voices
development has been limited. The NAPA
to shape US and international public policies related to climate change
preparation guidelines recommend that
adaptation.  Key partners in this endeavour include many members of
national governments include the private
Business for Innovative Climate & Energy Policy (BICEP), the United
sector as a key stakeholder in NAPA creation,
States Climate Action Partnership (USCAP), and other major companies
review, education and awareness-raising, and
and investors.
implementation.107 A 2010 review of the 45
existing NAPAs found at least one reference In the international arena, multiple members of USCAP, all BICEP mem-
to the private sector in 38 of them,108 which bers, and a dozen other major US companies signed a letter to President
would seem promising. In practice, the par- Obama at the global climate negotiations in Copenhagen in late 2009,
ticipation and envisioned role of the private calling for progress in the area of international climate finance. That letter
sector in NAPA consultation, formulation and helped prompt the breakthrough commitment by the United States and
implementation has been uneven. An evalu- other developed countries on long-term finance to support both adaptation
ation by UNEP of their technical assistance and mitigation in developing countries. More recently, in December 2010, 13
efforts for NAPA preparation in 13 countries businesses signed a letter to President Obama calling on the US to demon-
concluded, “While countries succeeded in strate leadership in establishing a global Climate Fund at the international
gathering the main stakeholders around the climate negotiations in Cancun. A Green Climate Fund was ultimately estab-
NAPA objectives and process, the private sec- lished in the Cancun decision text with support from the US.  
tor continues to remain a secondary partici-
In 2009 and 2010, a number of businesses participated in two high-level
pant in projects of this type. Many countries
round tables organized by Oxfam in Washington, DC, which included
would benefit from the development of a
Members of Congress, including those with jurisdiction over international
private-sector engagement strategy around
climate change adaptation funding, and key Congressional staff.  Both
adaptation and risk management.”109
round tables featured new reports on adaptation and business, generated
If the private sector is expected to contribute
press articles on the subject, and engaged Members of Congress in the
to resilience-building and adaptation innova-
policy debate.
tion in the countries that need it most, there
needs to be increased business engagement in Source: Oxfam.
international and national-level adaptation
46

Fostering an Enabling Environment for

Private Sector Adaptation: Policy Measures

There are a number of ways through which communities. Governments can demonstrate
governments can create an enabling environ- long-term commitment in a number of ways,
ment for private sector investment in adapta- including through climate change legislation,
tion, which can then complement crucial budget allocations for adaptation, creating cli-
government-led, government-funded adapta- mate change commissions or bodies (whether
tion efforts. Some efforts to stimulate private executive or legislative), and formulating and
sector contributions to adaptation must be implementing climate change action plans.
developed and implemented through coordi- Public sector commitment sends an impor-
nation and agreements at the international tant market signal to the private sector about
level. Engagement at the national and local climate change risks and opportunities, and
levels, however, remains essential because ad- provides businesses with some measure of
aptation challenges and solutions are specific reduced uncertainty and reassurance about
to regions and subregions, and business barri- the long-term level of return they can expect
ers and opportunities are country-specific. on certain types of adaptation investments.
The public policy mechanisms outlined
here are offered in response to the challenges Generate and allocate public funding and plan
companies face regarding climate change for adaptation at all levels. The Green Climate
adaptation, as described at the beginning of Fund must be made operational and capital-
this chapter. They bear high potential to help ized without delay and at the level necessary
companies engage in smart, effective adapta- to support priority adaptation needs in the
tion solutions, and will also help drive the most vulnerable countries, with a clearly
transition to a green economy. This is new balanced allocation between adaptation and
and exciting territory, and it will require both mitigation funding. Other multilateral and
creativity and experimentation. To catalyze bilateral donor funds must retain a strong
private sector adaptation, policymakers will focus on adaptation as well. Agreements on
need to: adaptation emerging from UNFCCC COP 16 in
Cancun must be fully implemented, and with
●● Build a foundation for private sector assistance from the international community,
investments and action. developing countries can stimulate private in-
●● Align public and private adaptation vestment by rigorously assessing climate risks
interests. and vulnerabilities at the national and subna-
●● Promote best practices and collaboration. tional levels; assessing adaptation costs; and
developing and implementing comprehensive
Build a foundation for private climate change plans that involve the private
sector investments and action sector in adaptation and resilience- building.
National governments can also consider ways
Priority: Demonstrate policy and finance that public funding might be used to incen-
commitment to adaptation. tivize private sector engagement on adapta-
tion, which has potential to increase total
Show long-term policy commitment. To secure financial flows into adaptation by at least an
private sector support, adaptation policy and order of magnitude.
implementation needs to remain a top policy
priority within the UNFCCC process and other Priority: Engage businesses as stakehold-
multilateral, bilateral and national-level pro- ers in planning and implementation.
cesses, particularly as it relates to sustainable
development. Strong public sector commit- Develop a strategy for mobilizing private sector
ment to adaptation, in the form of public fi- strengths and assets. Multi-stakeholder consulta-
nancing and planning, is a fundamental pre- tion on adaptation is important at all levels.
requisite to address the needs of vulnerable Policymakers should convene broad-based,
 47

inclusive, participatory consultation pro-

cesses. Alongside civil society and vulnerable Caring for Climate Survey Respondents See Numerous
communities, the private sector should be Benefits from Policy Engagement on Adaptation
included as a key partner. The private sec-
• Better mutual understanding of climate change adaptation issues
tor has much to contribute; private sector
and challenges
engagement can increase the likelihood of
achieving successful, sustainable approaches • An opportunity to develop a clearer and more integrated strategic
to addressing climate change,110 and will direction
give businesses a higher stake and buy-in to
• The confidence to plan ahead
the approach. Effective adaptation requires
engagement of all types of businesses, from • The ability to shape thinking and policy developments around
global to local companies, including small adaptation
and medium-sized enterprises and social • New business opportunities
entrepreneurs.111 While on certain issues a
sector-by-sector consultation approach will • New opportunities to develop public-private partnerships
be appropriate because adaptation needs and • The ability to create value and maintain positive, respectful relation-
solutions can be sector-specific, it will also be ships with local communities in areas where the company operates
important to stimulate cross-sector discus- or may operate in the future
sions to identify broader adaptation needs
and linkages between different parts of the
economy and society.112
Technology Mechanism described under the
Because the private sector has had limited en- UNFCCC Cancun agreements.115 The private
gagement in adaptation discussions to date, sector could provide insights on barriers to
the UNFCCC and national governments may adaptation technology deployment and dif-
need to develop specific business engagement fusion and appropriate technology options,
strategies that enable them to assess private and share expertise.116 Consultations can help
sector needs and gain valuable inputs, and determine the appropriate modalities for
consult companies on practical implementa- engagement — that is, whether private sector
tion issues that directly affect them. Within input is best sought through a more active
multi-stakeholder processes, governments can observer role, an advisory role, or some other
bring businesses and communities together to type of role.
identify shared adaptation challenges and so-
lutions. Governments can help communities Tap into private sector expertise in plans and
and civil society increase their understanding projects for building climate resilience. In devel-
of the valuable role the private sector can oping countries, at the national level and,
play in advancing these shared goals, while increasingly, at the subnational level, climate
building their capacity to participate in cli- change adaptation and disaster risk reduc-
mate change dialogues and ensuring a “level tion and management planning processes
playing field” so that community and civil are particularly important venues for private
society voices and views are not crowded out sector engagement. Businesses can contribute
by their private sector counterparts. data and information on risks, exposure, and
adaptation solutions and advise on policy
Include private sector representation in key UNFCCC and regulatory frameworks.117 Governments
forums. Along with civil society, the private should seek to identify those business sectors
sector can be included in the Adaptation or companies that can best support their cli-
Committee that was created through the mate change adaptation objectives, whether
UNFCCC agreement at Cancun.113 The Adapta- they are multinational companies with
tion Committee will have a broad role in expertise in needed goods or services or local
providing technical support and guidance on businesses that are well-positioned to serve
adaptation, sharing of information and best their communities.118 This will require a full
practices, networking with outside institu- understanding of the needs and characteris-
tions to enhance adaptation implementation, tics of the business sector in any given juris-
and advising on incentives for adaptation, diction.119 National and local-level adaptation
among other functions.114 It may also be and disaster risk reduction and management
possible to involve the private sector in the plans can specify areas where private sector
48

Company Case Study: Munich Re Insurance Group

In 2005 Munich Re, a leading global reinsurance company, launched the Munich Climate
Insurance Initiative (MCII) to support developing countries in adapting to climate change
through innovative insurance-related risk management tools. MCII comprises insurers,
climate change and adaptation experts, civil society groups and policy researchers intent
on finding solutions to climate risks. Since its inception, MCII has been an active player in
international policy dialogues around climate change.
As a contribution to the UNFCCC COP 16 meeting in Cancun in 2010, MCII, ClimateWise,
the Geneva Association and the UNEP Finance Initiative launched a global insurance
industry statement on adaptation to climate change in developing countries. The state-
ment highlights the contributions the insurance industry can make to adaptation, including
expertise in risk management, prioritizing adaptation measures, incentivizing loss reduc-
tion, developing new insurance products, and raising awareness among the many stake-
holders of the insurance industry. It calls on governments to 1) implement risk reduction
measures already agreed to at the 2005 World Conference on Disaster Reduction, 2)
provide a suitable enabling environment, including economic and regulatory frameworks,
for risk management and insurance to function at all levels of society, 3) invest in reliable
risk exposure data and make it freely available to the public, and 4) act on lessons learned
about the benefits of regional public-private partnerships and microinsurance schemes
that reduce losses for climatic risks.
Building on agreements reached in Cancun, in 2011 MCII submitted a proposal to the
UNFCCC Subsidiary Body for Implementation (SBI) that outlines the major possible
elements and timing for an SBI work programme on loss and damage associated with
climate change, including from extreme weather events and slow-onset events. MCII has
offered to lend its expertise to the SBI through co-sponsoring thematic meetings and tech-
nical training workshops for delegates as part of this loss and damage workstream.
Munich Re also focuses on generating and disseminating high-quality data on climate
trends and impacts. For example, the company has collaborated with the London School
of Economics Centre for Climate Change Economics and Policy to review the current state
of climate modelling and improve the production and extraction of valuable, relevant infor-
mation from various models given inherent uncertainties.
Through policy-focused cooperation with MCII and other actors, Munich Re is operational-
izing its corporate climate change strategy and helping the insurance industry and vulner-
able societies better prepare for the consequences of climate change.
 49

innovation is essential, and identify a clear ●● Tax credits for strategic adaptation invest-
role for the private sector in contributing to ments in operations and supply chains, or
the building of a climate-resilient society and for investments in development of adapta-
economy. It will also be fruitful for national tion technologies.
and subnational governments to engage the ●● “Green bonds” to raise socially and environ-
private sector in discussions about adapta- mentally responsible capital for private sec-
tion financing. The private sector can provide tor (or public-private) adaptation projects.
insights into barriers to investment in adapta- ●● Grants or subsidies for research and
tion, ideas on public-private financing struc- development of adaptation products and
tures, and recommendations on how to create services.
an enabling policy environment.120 ●● Extension of credit lines to commercial fi-
nancial institutions and loan or credit guar-
Align public and private antees to help businesses secure financing
adaptation interests for investments in adaptation.
●● Seed capital for adaptation-focused enter-
Priority: Stimulate the market for adap- prises or venture capital/equity funds to
tation through financial and risk reduction support adaptation.
incentives. ●● Innovation competitions and prizes for
development of new, adaptation-relevant
Recognize and address market failures in building technologies.
climate resilience. If current markets are not ●● Pricing guarantees or purchase agreements
attracting significant private sector adaptation for infrastructure or services.
investments, governments can intervene to
address these market failures, 121 in recogni- It is not possible to determine up front which
tion of the public value of adaptation and of these tools will be the most effective in a
resilience building. To stimulate business particular country context, nor which types
engagement in these areas, which are new
and thus may be subject to additional costs
and risks, it may be necessary to alter projects’
risk-reward profile and to introduce schemes Policy Dialogues on Adaptation Financing
designed to “pay the innovator.”122 Incentives There is an important international policy dialogue under way about the
that help demonstrate and build the com- sources and scale of international climate finance for developing coun-
mercial viability of private sector adaptation tries and the degree to which international financial commitments must
efforts can catalyze the inflow of such invest- be met through public finance. A 2010 report by the UN Secretary-Gener-
ments. Over the long term, such incentives al’s High-Level Advisory Group on Climate Change Financing concluded
may be phased out because perceived risks that meeting the $100 billion commitment agreed to in the Copenhagen
will be reduced and resilient businesses will Accord to support developing countries’ needs is feasible but will require
be more profitable. However, to foster initial funds from a wide range of sources, including public funds, bilateral and
change, incentives can provide a relatively multilateral funds, alternative sources of financing (including the carbon
cost-effective means to reduce initial costs and markets) and increased private flows.
encourage businesses to enter the market.
However, many civil society organizations, including Oxfam, believe that
Use appropriate policy tools to fit country contexts all international commitments by developed countries to provide adapta-
and business sector needs. Financial and risk tion finance should be fulfilled through public, grant-based finance. Public
mitigation incentives have been used suc- finance is critical because it can be channelled to address the needs of
cessfully by governments to stimulate private those most vulnerable to climate change impacts, needs that the private
sector investments in other priority areas, in- sector is not guaranteed to invest in. Oxfam and others believe that
cluding low-carbon technologies and sustain- investments by the private sector should therefore not be counted against
able development. The same level of creative developed country commitments to support adaptation in developing
thinking must now be applied to the issue countries, and should be additional to such commitments. Also, private
of climate change adaptation. Some tools to sector lending and similar mechanisms offered by developed country
consider include:123 governments — while recognized as useful tools for stimulating adapta-
tion — should not count toward these commitments.
●● Concessional loans or matching funds for Source: UN Secretary-General’s High-Level Advisory Group on Climate Change Financing, 2010. Final Report;
and Oxfam.
companies to incentivize adaptation invest-
ments.
50

Priority: Develop policy and regulatory

Using Risk Mitigation Incentives to Promote Investment
frameworks to guide corporate practices.
in Sustainable Development
The United States Agency for International Development (USAID) Devel- Provide a level playing field and decrease risk and
opment Credit Authority (DCA), while not specifically related to climate uncertainty. Policy and regulatory “carrots”
change adaptation financing, is an example of how government incentives and “sticks” can be powerful tools to stimu-
can be used to stimulate private sector investment in sustainable devel- late private sector adaptation investments
opment more broadly. Small businesses in many developing countries are that contribute to sustainable development.
often not able to secure a bank loan, or face high collateral requirements Clear and coherent regulatory frameworks
for such loans, because banks view them as high risk. However, these create a level playing field, on which com-
businesses have great potential to contribute to development priorities in panies must all play by the same rules and
their countries. Through the DCA, USAID offers risk-sharing guarantees know what is expected of them, thus helping
that generally cover up to 50 percent of loss on loans made by financial to reduce risk and uncertainty for those con-
institutions and investors. In 2010 DCA guarantees were used to encour- sidering different types of adaptation invest-
age lending for a range of business ventures, including poultry farming in ments. Regulations can also stimulate private
Ethiopia, health-care provision in Nigeria, and microcredit and agricultural sector innovation to develop new products
lending in multiple countries. and services that facilitate compliance (for
Source: USAID, 2010. Credit Guarantees: Promoting Private Investment in Development. 2010 Year in Review. example, limits on water usage can stimulate
development of technologies that help farm-
ers irrigate their crops more efficiently). Thus
far, there has been a gap in the development
of businesses124 and adaptation investments of market and regulatory mechanisms that
will need them most. To design appropriate serve to scale up or enhance the efficiency of
incentives to leverage private financing, na- adaptation efforts.126
tional governments will need to have detailed
information about the specific impediments Incentivize business decision-making that promotes
to private sector investment in adaptation the public good. Policy and regulatory mecha-
in their country. This underscores the need nisms can catalyze the kind of long-term
for in-depth, sustained engagement with the thinking — about costs and benefits of adap-
private sector as a key stakeholder. tation — that is required to meet the chal-
lenges of climate change. Effective policy and
Focus on targeting and selection criteria. Careful regulatory frameworks to promote private
consideration must be given to the criteria sector engagement in adaptation and discour-
for the types of private sector adaptation age maladaptation will necessarily differ
projects and ventures targeted for public sup- country-by-country, but policymakers might
Information and port. Governments can use public funding consider the following:
Technical Assistance to leverage private investment in projects
Needs of Caring for that have been identified as high priorities ●● Integrating explicit recognition of climate
Climate Companies in national or local-level adaptation plans risks into government decision-making and
Caring for Climate corporate and that respond to vulnerable communi- existing processes, including project ap-
signatories that responded to ties’ needs. Incentives should be used to praisal, environmental impact assessments,
the survey are seeking tools catalyze critically important private sector public procurement and government
for quantifying climate change investments in adaptation that would not be contracts.
risks and information on how made otherwise; the objective is to “crowd ●● Mainstreaming analysis of climate risks and
to mitigate those risks. They in” rather than “crowd out” private invest- risk mitigation measures across sectoral
would like more granular-lev- ment. Financial and risk mitigation incen- policies, including water, forestry and
el detail on projected climate tives are most effective if complemented by coastal management; disaster preparedness;
change impacts in the areas supportive policy and regulatory frameworks land use planning; industrial policy; build-
where they and their supply designed to further stimulate corporate ac- ing codes; and infrastructure development.
chain partners are operating. tion on adaptation.125 ●● Reviewing and revising policies that may
They also face challenges as encourage maladaptive economic behav-
they try to assess the real- iours (for example, certain types of subsi-
world business and market dies).
implications of scientific ●● Developing technology policies that sup-
climate change data. port innovation in climate change adapta-
 51

tion, including promoting fluid technology already investing in their own climate change Gaps Identified by Caring
transfer and diffusion (both within and data generation to gain a competitive edge, and for Climate Signatories
across borders, including among devel- this type of information will understandably be in the Survey
oping countries themselves); building proprietary.127 However, not all businesses will Caring for Climate corporate
knowledge-sharing platforms; and build- have the resources to make such investments. signatories expressed concern
ing absorptive capacity within developing Due to the far-reaching economic and social about insufficient and unclear
countries to ensure technology uptake. impacts of climate change and the uncertainty regulations and legislation
●● Requiring companies to account for eco- surrounding their timing and intensity, the related to climate change
system degradation within their operations development of climate change knowledge risk and adaptation, and the
and supply chains and to internalize these and awareness-raising should be viewed as a absence of incentives for in-
costs, particularly in the context of climate public task, serving both the public and private vestment in new technologies
change-induced stresses; setting the “rules interest.128 An example of such an intergov- relevant to adaptation.
of the game” through which payments for ernmental effort is the World Meteorological
ecosystem services can occur (for example, Organization-led programme to disseminate
whereby a company might pay a commu- climate information through the Global Frame-
nity to conserve an important watershed work for Climate Services.129 Governments
upon which they both depend). can help close information gaps that lead to
●● Ensuring a supportive policy and regulatory private sector underinvestment in sustainable
environment for the development of finan- development-focused adaptation. Businesses
cial services such as microinsurance and need to be aware of the “state of knowledge”
microfinance, which can be deployed to sup- about climate change to be able to understand
port pro-poor climate resilience; using public their exposure and address climate risks,130
sector financial commitments and conducive and also to be able to avoid maladaptation and
tax regimes as necessary and appropriate. instead adapt in ways that support community
●● Encouraging companies to disclose climate resilience.
risks (that is, the risks climate change poses
to their operations and supply chains, Fill priority information gaps using business-
as well as the risks their business activi- friendly formats. Governments can play an
ties may have on the climate resilience of important role in generating, aggregating and
vulnerable communities) in a standardized, disseminating climate change information
comparable, disaggregated format to their to the private sector. This may involve close
stakeholders; and report on actions being collaboration with research institutes that un-
taken to address those risks. dertake climate modelling and have the nec-
essary data. Information should be tailored
These types of policies and regulations can to the specific needs of businesses. Different
be enacted not only at the national level, but types of companies may need data at varying
also by provincial governments and munici- levels of sophistication and scales. All busi-
palities to reach smaller business that operate nesses will need information at a sufficiently
at the subnational level. Small and medium- small geographic scale and short enough
sized enterprises can be critical partners in time horizon to be relevant to their decision-
the provision of goods and services needed making processes, and at larger special and
by poor communities and in contributing to temporal scales to enable them to place their
local-level climate resilience. local situation in regional and global perspec-
tive. Information needs may include:
Promote best practices and
collaboration ●● Anticipated magnitude, frequency and
range of variability of climate change
Priority: Provide businesses with infor- impacts.
mation and tools they need to make invest- ●● Risks that climate change poses to com-
ments that support climate resilience in panies’ operations and supply chains in
vulnerable communities. various sectors, and potential effective
solutions.131
Consider climate risk information and awareness- ●● The adaptation needs of vulnerable com-
raising a public good. Some corporations — for munities, as articulated in national and
example, those in climate-vulnerable or adap- local adaptation plans.
tation-relevant industries, like insurance — are ●● The types of private sector adaptation solu-
52

“We would like to tions that will benefit sustainable develop- ments that did not pay off as expected may
accelerate the scaling ment. be even more useful. Rewarding excellence in
of non-traditional models ●● Maladaptation, and how companies can this area with incentives (for example, prizes
— for example, public- avoid it. or competitions) may be an effective way to
private partnerships to ●● Public financing options available to galvanize additional private sector interest
catalyze long-term companies to support and leverage their and recognition.
supply resilience.” strategic adaptation-related investments.
— Caring for Climate Build private sector capacity to engage and act.
corporate signatory from the Invest in analytical work on costs and benefits Even if companies have more and better
food and beverage sector of adaptation and value of ecosystem services.132 information about climate impacts and adap-
Governments should also consider supporting tation, skill and capacity constraints can limit
further analysis on the economics of climate their ability to engage and act.137 This may be
change adaptation, particularly the costs and especially true for smaller businesses. Busi-
benefits of different adaptation options133 ness associations will play an important role
(including co-benefits for the green economy) in building the climate change adaptation
in specific locales at the subnational level, capacity of their members. However, govern-
with full accounting for environmental costs ments may also need to provide businesses
and benefits. Ultimately, companies will use — particularly small and medium-sized
cost-benefit analysis to determine the return enterprises and those in developing countries
on their adaptation investments. Concur- — with tools to enable them to participate
rently, it will be important to refine method- effectively in climate change dialogues and
ologies for identifying and valuing ecosystem planning, and to use climate change impact
services, which is an essential step in assess- information to make business decisions.
ing the complete range of costs and benefits Businesses can be reached through a number
of adaptation measures. “Ecosystem-based of vehicles, including training, extension
adaption” — investing in natural systems to services, web-based resources, climate risk
build resilience (for example, wetlands and assessment and adaptation planning tools,
forests to store and naturally filter water) — and other resources. Successful models can be
is often cheaper and offers higher and more replicated.
permanent rates of return than hard infra-
structure solutions.134 Valuation of ecosystem Priority: Consider new forms of public-
services will be required for governments to private partnerships (PPPs) to tackle the
introduce incentives for businesses to make most complex challenges to sustainable
decisions that reflect the environmental costs development and climate resilience.
and benefits of their actions. Work is already
under way in this area, but climate change Redefine PPPs for adaptation. Enhanced adapta-
adds urgency to these efforts. tion to climate change will require unprec-
edented levels of collaborative action to
Provide real-world evidence that adaptation can be a achieve the best outcomes.138 In some cases,
viable commercial investment. A process of social adaptation measures taken independently
learning is required to help inform businesses by individual actors (whether governments,
about what works and what doesn’t. To date, companies or communities) may incur higher
the limited but growing on-the-ground expe- costs than would result from taking a collec-
rience of the private sector in climate change tive approach, and crucial interdependencies
adaptation has not been consistently docu- may be missed.139 Certain adaptation efforts
mented or articulated.135 To support market will therefore require new, creative forms of
development, governments can identify and partnership among public institutions, the
make widely available case studies of private private sector, and civil society. In other cases,
sector adaptation, perhaps through an online it may also be possible to strengthen and
database or clearinghouse. “Success stories” build off existing PPPs to incorporate a strong
that highlight how companies have adapted focus on climate change adaptation. Those
in ways that promote the public good and si- sectors in which the private sector is already
multaneously gained public esteem and com- heavily engaged — including microinsur-
munity support will inspire other companies ance and microfinance, both of which can be
and underscore the fact that adapters have a powerful tools for building resilience in poor
competitive advantage.136 Examples of invest- communities — may provide fertile ground
 53

for experimentation and experience-building. Use PPPs for a demonstration effect and to build ca-
(See the Swiss Re case study in Chapter 1 for pacity for further success. Public-private partner-
an example of a microinsurance PPP). ships can be a valuable mechanism through
The types of partnerships required to ad- which innovative approaches to addressing
dress climate change adaptation needs go far adaptation needs of vulnerable communi-
beyond a traditional, narrow definition of ties can be piloted, proven and scaled up.
“public-private partnerships,” a term often PPPs can demonstrate to both the public and
used to describe government outsourcing or private sectors that adaptation can be cost-
contracting of public functions, services or effective and profitable. A positive by-product
infrastructure development to private enti- of effective public-private partnerships for
ties. What is envisioned is something more climate change adaptation will be increased
collaborative and transformative, in which skills and capacity among all participants to
government, business, civil society and com- engage in further pro-poor adaptation efforts.
munity members jointly identify and develop
a means to address a critical development
challenge resulting from, or exacerbated by, a
changing climate. PPPs can complement pub-
lic sector-led and community-led adaptation
initiatives aimed at addressing the priority
needs of the poorest and most vulnerable.

Draw on assets of all parties, and carefully structure

PPPs to advance shared goals. Public-private
partnerships for climate change adaptation
can combine the power, authority, social re-
sponsibility and accountability of the public
sector, with the finance, technology, manage-
rial efficiency and entrepreneurial abilities
of the private sector and the informed voice,
energy, drive and oversight responsibilities
of civil society organizations.140 Partners
share project risks, but also the benefits.
Ingredients for an effective public-private
partnership include careful partner selec-
tion; a high level of political commitment
and a solid statutory foundation; a detailed
business plan that articulates the responsi-
bilities of all parties; a guaranteed revenue
stream; active engagement and monitoring
by the public sector; and strong stakeholder
support.141 Partnerships must be grounded in
shared principles, including trust, transpar-
ency, equity and inclusivity.142 They must be
built and implemented through participatory
processes that include affected communities
and the most vulnerable people within those
communities — including women —
as central stakeholders.
54

Conclusion

The private sector has much to contribute to the development and implemen-
tation of adaptation solutions, including technical and sector-specific exper-
tise, greater levels of financing, efficiency, and an entrepreneurial spirit. When
a commitment to social and environmental responsibility is added to this
mix, the private sector becomes an indispensible ally in efforts to address the
risks and challenges posed by a changing climate. Public sector action must
be at the core of adaptation and resilience building for the poorest and most
vulnerable communities, where needs may not necessarily align with private
sector interests. However, effective adaptation in many sectors requires deep
and wide engagement of businesses, from smaller-scale entrepreneurs to large
corporations. Private sector adaptation efforts will be a crucial complement to
public finance in support of developing countries’ adaptation needs.
Governments need to consider how best to promote, catalyze and channel
private sector innovation and expertise to support green economy solutions to
long-term climate resilience in the communities most vulnerable to climate
impacts. The foundation for private sector engagement is a supportive public
policy environment, from the international to local levels. By drawing on their
respective strengths and collaborating in new ways, governments, the private
sector and civil society will be able to help communities meet the challenges
of a changing climate as they pursue sustainable development and growth.
 55

Moving Forward

Drawing in large part on insights gained from Caring for Climate signatories,
this report has provided a first look at the nexus among private sector adapta-
tion to climate change, sustainable development, and the transition to a green
economy. The effects of climate change are already being felt across the globe,
and poor communities in developing countries are affected the most. Prosper-
ity in communities around the world is linked to how quickly we reduce GHG
emissions and adapt to current impacts and emerging risks.
While governments must take the lead, businesses have an important
and complementary role to play. Companies that adapt in ways that support
sustainable development can gain a competitive edge and become important
players in the green economy. Most businesses — even those that are leaders
on climate change — have only just begun to understand and integrate adapta-
tion challenges. The time has come to accelerate and amplify these business
responses.
This report encourages climate change champions to link adaptation to
their company’s core business, mobilizing colleagues inside and outside their
company. In doing so, these champions can build internal support, highlight
emerging risks and opportunities, and advance adaptation strategies and
partnerships with shared value for the company and the community. It also
calls on governments to demonstrate a financial commitment to adaptation,
engage the private sector and civil society, use policy tools and incentives to
align public and private adaptation interests, and promote best practices and
collaboration.
There are clear examples — several of which are highlighted in this report
— of ways that companies of all sizes are making strategic climate change
adaptation investments that simultaneously build resilience in vulnerable
communities. But this is just the beginning.
Businesses representing a diverse range of sectors have a unique opportu-
nity to stand at the forefront of this urgent global imperative and to make ad-
aptation a central element of a new, green economic model. As governments
consider how best to stimulate green economic growth and invest in sustain-
able development in the run-up to Rio+20, companies must demonstrate that
managing climate change risks and building resilience are core business priori-
ties to ensure their long-term viability. The measures highlighted in this report
provide a series of first steps for galvanizing business action on adaptation.
Public and private sector leaders will take up this charge as climate change
adaptation enhances business profitability while building stronger, more resil-
ient communities.
56

Endnotes

1. In its Fourth Assessment Report, the Intergov- 10. Ibid.

ernmental Panel on Climate Change (IPCC)
11. Ibid.
concluded, “Warming of the climate system is
unequivocal, as is now evident from observations 12. For example, global average sea level rose at an
in increases in global average air and ocean tem- average rate of 1.8 mm per year from 1961 to
peratures, widespread melting of snow and ice 2003, with a faster average rate of about 3.1 mm
and rising global average sea level.” Intergovern- per year from 1993 to 2003. Mountain glaciers
mental Panel on Climate Change, 2007. Climate and snow cover are declining, and Arctic sea ice
Change 2007: Synthesis Report. extent has shrunk by 2.7 percent per decade since
1978, with larger decreases in summer of 7.4
2. The eight Millennium Development Goals (MDGs)
percent per decade. Evidence points to increases
flow from the United Nations Millennium Dec-
in intense tropical cyclone activity in the North
laration, which was adopted at the 2000 Millen-
Atlantic and some other regions since 1970. Ap-
nium Summit. Originally set to be achieved by
proximately 20 to 30 percent of plant and animal
2015, the MDGs are designed to tackle extreme
species assessed to date are likely facing increased
poverty in its many dimensions. The MDGs in-
risk of extinction if global temperature increases
clude: (1) Eradicate extreme poverty and hunger;
exceed 1.5 to 2.5°C. Intergovernmental Panel on
(2) Achieve universal primary education; (3)
Climate Change, 2007. Climate Change 2007:
Promote gender equality and empower women;
Synthesis Report.
(4) Reduce child mortality; (5) Improve maternal
health; (6) Combat HIV/AIDS, malaria, and other 13. Working Group II of the Intergovernmental Panel
diseases; (7) Ensure environmental stability; and on Climate Change has done some work on the
(8) Develop a Global Partnership for Develop- impacts of climate change on the human popula-
ment. The MDGs break down into 21 quantifiable tion. See Parry et al., eds., 2007. Climate Change
targets that are measured by 60 indicators. United 2007: Impacts, Adaptation, and Vulnerability.
Nations Development Programme. http://www.
undp.org/mdg/basics.shtml. 14. International Fund for Agricultural Development,
2011. Rural Poverty Report 2011. New realities,
3. PricewaterhouseCoopers, 2010.Business Leader- new challenges: new opportunities for tomor-
ship on Climate Change Adaptation: Encouraging row’s generation.
engagement and action.
15. World Bank et al., 2009. Gender in Agriculture
4. The World Resources Institute has put forward a Sourcebook.
continuum of adaptation options that shows the
relationship between adaptation and sustainable 16. Oxfam America, 2008/2009. Fact Sheet: Climate
development. See McGray et al., 2007. Weather- Change and Women.
ing the Storm. Options for Framing Adaptation 17. United Nations General Assembly, 2010. Resolu-
and Development. tion adopted by the General Assembly. The hu-
5. United Nations Environment Programme, 2011. man right to water and sanitation.
Towards a Green Economy: Pathways to Sustain- 18. Renton, 2009. Suffering the Science: Climate
able Development and Poverty Eradication – A change, people, and poverty.
Synthesis for Policymakers.
19. According to the United Nations, 38 percent of
6. Rio + 20, United Nations Conference on Sustain- people in Timor-Leste, 50 percent of people in
able Development. http://www.uncsd2012.org/ Bangladesh, 68 percent of people in Madagascar,
index.php?option=com_content&view=category&l and 75 percent of people in Mozambique are
ayout=blog&id=35&Itemid=53. living off less than $1.25 per day. United Nations
7. United Nations Environment Programme, 2011. Development Programme, 2010. Human Develop-
Towards a Green Economy: Pathways to Sustain- ment Report 2010. The Real Wealth of Nations:
able Development and Poverty Eradication – A Pathways to Human Development.
Synthesis for Policymakers. 20. Jennings and Magrath, 2009. What Happened to
8. Ibid. the Seasons?

9. Ibid. 21. For a good overview of current trends in disaster

 57

risk by region, see the United Nations Global As- Key Issues for Energy Sector Adaptation.
sessment Report on Disaster Risk Reduction 2011.
38. Stern, 2007. The Economics of Climate Change:
Available online at http://www.preventionweb.
The Stern Review.
net/english/hyogo/gar/2011/en/home/index.html.
39. Economics of Climate Adaptation Working
22. The average rate of increase from countries that
Group, 2009. Shaping Climate-Resilient Develop-
first reported a disaster in 1990 is 4.9 percent per
ment: a framework for decision making.
year, due in most part to weather-related disas-
ters. Jennings, 2011. Time’s Bitter Flood: Trends 40. Asian Development Bank, 2009. The Economics
in the number of reported disasters. of Climate Change in Southeast Asia: A Regional
Review. For consistency with the Stern Review,
23. Intergovernmental Panel on Climate Change,
this study used the PAGE2002 integrated assess-
2007. Climate Change 2007: Synthesis Report.
ment model to determine economy-wide impacts.
24. Ibid.
41. Center for Integrative Environmental Research,
25. Global Humanitarian Forum, 2009. Human Im- University of Maryland, 2007. The U.S. Economic
pact Report: Climate Change – The Anatomy of a Impacts of Climate Change and the Costs of Inac-
Silent Crisis. tion.
26. Intergovernmental Panel on Climate Change, 42. Tamirisa, 2008. “Climate Change and the Econo-
2007. Climate Change 2007: Synthesis Report. my.”
27. Food and Agricultural Organization. http://www. 43. United States Department of Defense, 2010. Qua-
fao.org/getinvolved/worldfoodday/worldfoodday- drennial Defense Review Report.
dgsmessage/en/
44. The CNA Corporation, 2007. National Security
28. Ibid. and the Threat of Climate Change.
29. Intergovernmental Panel on Climate Change, 45. Waskow, 2009. Testimony before the Subcommit-
2007. Climate Change 2007: Synthesis Report. tee on Energy and Environment, House Energy
and Commerce Committee, United States House
30. Schistosomiasis is a severe parasitic disease
of Representatives.
caused when freshwater snail-borne worms
penetrate the skin, leading to inflammation and 46. Dyer, 2009. Climate Change and Security: Risks
long-term damage of vital organs. and Opportunities for Business.This report also
highlights three additional risk scenarios: food
31. Renton, 2009. Suffering the Science: Climate
security-related conflict between China and Rus-
change, people, and poverty.
sia, multi-country confrontations over energy
32. Lynn et.al., 2009. “Introducing a ‘Hot System’ Ap- exploitation in the Arctic, and an increase in “cli-
proach to Tipping Points in Humanitarian Crisis.” mate migrants” from Mexico to the United States.

33. Prowitt, 2010. Climate change conflict and migra- 47. Schuemer-Cross and Heaven Taylor, 2009. The
tion: second order impacts of climate change on Right to Survive: The humanitarian challenge for
business. the twenty-first century.

34. Annan, 2001. Nobel Lecture. 48. World Bank, 2010. The Economics of Adaptation
to Climate Change. Figures are stated in 2005
35. Dyer, 2009. Climate Change and Security: Risks prices.
and Opportunities for Business.
49. Climate Funds Update posted these figures in
36. A recent study that examined the vulnerability December 2010 and updates them on a regular
of the United States Gulf Coast to climate risks basis.http://www.climatefundsupdate.org/graphs-
found that oil and gas assets (particularly offshore statistics.
installations) are particularly vulnerable to dam-
age, with a replacement value of $499 billion in 50. Waskow, 2009. Testimony before the Subcommit-
2010 dollars. Entergy Corporation, 2010. Building tee on Energy and Environment, House Energy
a Resilient Energy Gulf Coast: Executive Report. and Commerce Committee, United States House
of Representatives.
37. For additional insights on the impact of climate
change on the energy sector, see Ebinger and Ver- 51. Ibid.
gara, 2011, Climate Impacts on Energy Systems:
52. Ibid.
58

53. Economics of Climate Adaptation Working 61. PricewaterhouseCoopers, 2010. Business Leader-
Group, 2009. Shaping Climate-Resilient Develop- ship on Climate Change Adaptation: Encouraging
ment: a framework for decision making. engagement and action.
54. PricewaterhouseCoopers 2009.Carbon Disclosure 62. Forstater et al., 2009. The Business of Adaptation.
Project 2010, Global 500 Report. Briefing paper.
55. The World Resources Institute has developed a 63. Nitkin et al., 2009. A Systematic Review of the
useful typology of climate change-related risks Literature on Business Adaptation to Climate
facing businesses, drawing on an existing tool Change, Case studies and tools (3 of 4). This com-
they developed in partnership with the Merid- prehensive review found only 39 examples where
ian Institute and the World Business Council case studies, lessons learned, and best practices
for Social Development that enables companies in business adaptation to climate change were
to analyze their dependence and influence on described or mentioned. On further inspection,
ecosystems. The risk typology used in this section, the researchers found that most of the examples
as well as the examples for each category of risk, exemplified business responses to climate change
draws heavily on Withey et al., 2009. Making Cli- through GHG mitigation and reduction of compa-
mate Your Business: Private Sector Adaptation in nies’ carbon footprints.
Southeast Asia. It has also been informed by good
64. PricewaterhouseCoopers, 2010. Business Leader-
discussions of climate risks in two additional pub-
ship on Climate Change Adaptation: Encouraging
lications: Sussman and Freed, 2008. Adapting to
engagement and action.
Climate Change: A Business Approach; and World
Business Council for Sustainable Development, 65. Ibid.
2008. Adaptation: An Issue Brief for Business.
66. Withey, et al., 2009. Making Climate Your Busi-
56. In April 2011, GLOBE International released a ness: Private Sector Adaptation in Southeast Asia.
study of climate legislation in 16 countries. The
study shows that several developing countries 67. Field, 2009. “Perils of Climate Change.”
with sizeable economies — including Brazil, 68. Ibid.
China, India, Indonesia, Mexico, and South Africa
— have passed “flagship” (i.e., key) pieces of legis- 69. Forstater et al., 2009. The Business of Adaptation.
lation on climate change in recent years, as well Briefing paper.
as other forms of supportive legislation. While 70. United Kingdom Department for International
mitigation features prominently, adaptation is Development, 2010. The Private Sector in Adapta-
also a focus. Townshend et al., 2011. GLOBE Cli- tion: The Case for Action.
mate Legislation Study.
71. United Nations Global Compact and Goldman
57. This section draws in part on a comprehensive Sachs, 2009. Change is Coming: A Framework for
articulation of the case for new business partner- Climate Change—a Defining Issue of the 21stCen-
ships on climate change adaptation in developing tury.
countries by Jane Nelson, Director of the Harvard
Kennedy School’s Corporate Social Responsibil- 72. Stenek, et al., 2010. Climate Risk and Business:
ity Initiative. Nelson, 2009, “Corporate Action on Practical Methods for Assessing Risk.
Climate Adaptation and Development: Mobiliz- 73. Ibid.
ing New Partnerships to Build Climate Change
Resilience in Developing Countries and Commu- 74. Ibid.
nities.”
75. Withey et al., 2009. Making Climate Your Busi-
58. Oxfam America, 2009. The New Adaptation Mar- ness: Private Sector Adaptation in Southeast Asia.
ketplace: Climate change and opportunities for
76. The World Bank. http://climatechange.world-
green economic growth.
bank.org/climatechange/content/adaptation-guid-
59. Soloman, et al., 2009. “Irreversible climate ance-notes-key-words-and-definitions
change due to carbon dioxide emissions.”
77. Porter, M, & Kramer, M, 2011. “Creating Shared
60. United Nations Global Compact & Goldman Value.” Harvard Business Review.
Sachs, 2009. Change is Coming: A Framework for
78. Oxfam America, 2010. A Fresh Look at the Green
Climate Change — a Defining Issue of the 21st
Economy. Jobs that Build Resilience to Climate
Century.
Change.
 59

79. Ibid. corporate ecosystem services review can be found

on the WRI website. World Resources Institute.
80. Ibid.
http://www.wri.org/project/ecosystem-services-
81. World Business Council for Sustainable Devel- review/tools.
opment, 2008. Adaptation: An Issue Brief for
94. See UNEP’s Sustainable Buildings and Climate
Business.
Initiative (UNEP-SBCI), a partnership between the
82. Wong and Schuchard, 2011. Adapting to Climate United Nations and stakeholders in the buildings
Change: A guide for food, beverage and agricul- sector worldwide. http://www.unep.org/sbci/.
ture companies.
95. Withey, et al., 2009. Making Climate Your Busi-
83. Acclimatise and Synergy, 2008. Climate Finance, ness: Private Sector Adaptation in Southeast Asia.
Business and Community: The Benefits of Co-
96. United Nations Environment Programme, 2011.
operation on Adaptation.
Towards a Green Economy: Pathways to Sustain-
84. United Kingdom Department for International able Development and Poverty Eradication – A
Development, 2010. The Private Sector in Adapta- Synthesis for Policymakers.
tion: The Case for Action.
97. For example, a 2010 survey conducted by UNEP
85. PricewaterhouseCoopers, 2010. Business Leader- and the Sustainable Business Institute of 60
ship on Climate Change and Adaptation: Encour- financial service providers — including insurers,
aging engagement and action. reinsurers, lenders, and asset managers — found
that more than half felt that current information
86. Ibid. on historical weather data and climate change
87. Committee on America’s Climate Choices, Na- predictions is insufficient. Only one-third of
tional Research Council, 2011. America’s Climate survey respondents felt “sufficiently informed”
Choices. on climate change. Respondents expressed
particularly strong interest in more “interpreta-
88. Coca-Cola, for example, has invested in a tion and evaluation of the quality and confidence
partnership with over 50,000 small farmers in of statements and predictions” and “concrete
Uganda and Kenya in order to create a network statements about expected changes for a certain
of local suppliers for their fruit juices. This grants location and a defined 5-10 year time horizon.”
communities access to market opportunities and These findings dovetail with a multisector study
diversified incomes, while at the same time creat- of over 40 companies by PricewaterhouseCoopers,
ing a more robust and productive local supply in collaboration with the UNFCCC. Businesses
chain for Coca-Cola. Butler, 2010. “Kenya, Uganda interviewed for that study “expressed a critical
fruit farmers to supply Coca-Cola.” http://www.af- need to improve knowledge andinformation shar-
ricanagricultureblog.com/2010/01/kenya-uganda- ing processes. This includes climate impacts and
fruit-farmers-to-supply.html vulnerabilities as aminimum, but also mecha-
89. Forstater et al., 2009. The Business of Adaptation. nisms and processes to incorporate this informa-
Briefing paper. tion intodecision-making processes, and potential
adaptation options and solutions.” Clements-
90. McKinsey Quarterly (McKinsey and Company), Hunt et al., 2011. Advancing adaptation through
2007. How Companies Think about Climate climate information services. Results of a global
Change: A McKinsey Global Survey. survey on the information requirements of the
91. For an example of a successful community and financial sector. PricewaterhouseCoopers, 2010.
stakeholder engagement strategy, see BC Hydro’s Business Leadership and Climate Change Adapta-
ecosystems services case study in World Resources tion: Encouraging engagement and action.
Institute, et al., 2008. The Corporate Ecosystem 98. PricewaterhouseCoopers, 2010.Business Leader-
Services Review. Guidelines for Identifying ship and Climate Change Adaptation: Encourag-
Business Risks and Opportunities Arising from ing engagement and action.
Ecoystem Change.
99. Examples of ecosystem services include their
92. World Business Council for Sustainable Devel- supporting roles that enable the provision of
opment, 2008. Adaptation: An Issue Brief for food, supplying and filtering freshwater, climate
Business. regulation (i.e., storing carbon, oceanic heat
93. Useful tools and resources for conducting a sinks, and circulation), preventing erosion, reduc-
ing floods, and offering places for recreation. See
60

World Resources Institute, http://www.wri.org/ account existing coping strategies at the grass-
project/mainstreaming-ecosystem-services; The roots level, and builds upon that to identify prior-
Economics of Ecoystems and Biodiversity, http:// ity activities, rather than focusing on scenario-
www.teebweb.org/; and United Nations Environ- based modelling to assess future vulnerability
ment Programme, http://www.unep.org/ecosys- and long-term policy at state level.” NAPAs are
temmanagement/. prepared through a multi-stakeholder consulta-
tion process, and they result in a set of priority ac-
100. Adaptation is identified as a priority in the origi-
tivities that respond to urgent and immediate ad-
nal text of the United Nations Framework Con-
aptation needs (i.e., those for which further delay
vention on Climate Change, and several Articles
could increase vulnerability or lead to increased
(including 4.4, 4.8, and 4.9) recognize the need
costs at a later stage.) Once submitted, NAPAs
to assist developing countries to adapt through
enable LDC Parties to start the process of imple-
funding, technology transfer, and capacity build-
mentation through the Least-Developed Countries
ing. In 2005, the Parties adopted the five-year
Fund. United Nations Framework Convention
“Nairobi work programme on impacts, vulner-
on Climate Change. http://unfccc.int/coopera-
ability, and adaptation to climate change” (NWP).
tion_support/least_developed_countries_portal/
The objective of the NWP is to assist all Parties,
ldc_work_programme_and_napa/items/4722.php
in particular developing countries, including the
least developed countries and small island devel- 103. For example, the Philippine province of Albay
oping States to: improve their understanding and is highly vulnerable to typhoons. The Albay pro-
assessment of impacts, vulnerability and adapta- vincial government has established a provincial
tion to climate change; and make informed deci- Disaster Coordinating Council, Disaster Manage-
sions on practical adaptation actions and mea- ment Office, and Disaster Operations Center,
sures to respond to climate change on a sound along with Local Disaster Coordinating Councils
scientific, technical and socio-economic basis, throughout the province. Provincial officials
taking into account current and future climate are implementing a prototype for local climate
change and variability. The NWP second phase change adaptation called “Albay in Action on
ended in December 2010 and its work is currently Climate Change” (A2C2) that covers the 720 ba-
under review, after which a decision will be made rangays (lowest-level government administrative
regarding a possible extension. United Nations units) in Albay. The provincial legislative board
Framework Convention on Climate Change, 2010. has passed resolutions and ordinances to main-
Action on the Ground: a synthesis of activities in stream climate change into all local government
the areas of education, training and awareness- decision-making processes (including land use
raising for adaptation. See also United Nations planning), and A2C2 receives a budget allocation.
Framework Convention on Climate Change, Albay province has launched a climate change in-
http://unfccc.int/essential_background/conven- formation, education, and communication effort
tion/background/items/1362.php. in schools, colleges and universities in the prov-
ince. The provincial government also established
101. The Long-term Cooperative Action (LCA) Cancun
the Center for Research and Initiatives on Climate
Outcome is the result of three years of negotia-
Adaptation to support knowledge generation and
tion on the issue of adaptation that followed the
project implementation in sustainable agricul-
adoption of the Bali Action Plan, agreed to by the
ture, forestry, fisheries, energy and eco-cultural
Parties at COP 13 in Bali, Indonesia. According to
tourism in the context of climate change in Albay
the UNFCCC, the objective of the Outcome is “to
province. Lasco et al., undated. The Role of Local
enhance action on adaptation, including through
Government Units in Mainstreaming Climate
international cooperation and coherent consider-
Change Adaptation in the Philippines.
ation of matters relating to adaptation under the
Convention. Ultimately enhanced action on ad- 104. United Nations System Chief Executives Board
aptation seeks to reduce vulnerability and build for Coordination, 2008. Acting on Climate
resilience in developing country Parties, taking Change: The UN System Delivering as One.
into account the urgent and immediate needs of
105. World Business Council for Sustainable Develop-
those developing countries that are particularly
ment et al., 2010. Private Sector and the UNFCCC:
vulnerable.”
Options for Institutional Engagement.
http://unfccc.int/adaptation/cancun_adaptation_
framework/items/5852.php 106. For example, out of the full list of 34 “Environ-
ment and Energy” position statements and papers
102. According to the UNFCCC, “The NAPA takes into
on the ICC website, only two are focused on
 61

adaptation, two on agriculture, and one on water. 122. Ibid.

International Chamber of Commerce. http://www.
123. There is a growing body of experience using pub-
iccwbo.org/policy/environment/display7/folder42/
lic finance mechanisms and incentives to catalyze
index.html
private sector investment in climate change miti-
107. United Nations Framework Convention on gation. Some of these same mechanisms may also
Climate Change Least Developed Countries Ex- be useful to stimulate investments in adaptation.
pert Group, 2002. Annotated guidelines for the For an in-depth discussion of various tools to in-
preparation of national adaptation programmes centivize investments in low-carbon technologies,
of action. see Maclean, 2008. Public Finance Mechanisms
to Mobilize Private Investment in Mitigation. An
108. PricewaterhouseCoopers, 2010. Business Leader-
overview of mechanisms being used today to
ship on Climate Change Adaptation: Encouraging
scale up the climate mitigation markets, with a
engagement and action.
particular focus on the clean energy sector.
109. United Nations Environment Programme, 2008.
124. For example, a 2010 report by Asian Tiger Capital
Terminal Evaluation of the UNEP GEF Projects
Partners, a Bangladesh-based financial services
“Enabling Activities for the Preparation of Na-
and consulting firm, to advise the International
tional Adaptation Programme of Action (NAPA)”.
Finance Corporation on how best to engage the
110. World Business Council for Sustainable Develop- private sector in climate change adaptation found
ment et al., 2010.Private Sector and the UNFCCC: strong interest among Bangladeshi business
Options for Institutional Engagement. owners in concessional loans, grants and shared
research and development expenditures. Asian
111. PricewaterhouseCoopers, 2010. Business Leader- Tiger Capital Partners, 2010. A Strategy to Engage
ship on Climate Change Adaptation: Encouraging the Private Sector in Climate Change Adaptation
engagement and action. in Bangladesh.
112. Ibid. 125. UNEP makes this point regarding the use of pub-
113. Article 20 of the agreement establishes the lic finance for mitigation, and it is equally true in
Adaptation Committee. United Nations Frame- the context of adaptation. Maclean, 2008.Public
work Convention, on Climate Change, 2010. The Finance Mechanisms to Mobilize Private Invest-
Cancun Agreements: Outcome of the work of the ment in Mitigation. An overview of mechanisms
Ad-Hoc Working Group on long-term Cooperative being used today to scale up the climate mitiga-
Action under the Convention. tion markets, with a particular focus on the clean
energy sector.
114. Ibid.
126. Organization for Economic Co-operation and
115. Ibid. Article 117 of the agreement establishes the Development, 2008. Economic Aspects of Adap-
Technology Mechanism. tation to Climate Change. Costs, Benefits, and
116. World Business Council for Sustainable Devel- Policy Instruments.
opment et al. 2010. Options for private sector 127. Clements-Hunt, 2011. Advancing adaptation
engagement: illustrative examples. through climate information services. Results of a
117. PricewaterhouseCoopers, 2010. Business Leader- global survey on the information requirements of
ship on Climate Change Adaptation: Encouraging the financial sector.
engagement and action. 128. Ibid.
118. Putt del Pino et al., 2011. “Making Climate Com- 129. World Meteorological Organization, 2009. Work-
panies’ Business.” ing Together towards a Global Framework for
119. Ibid. Climate Service.

120. World Business Council for Sustainable Devel- 130. Business and Industry Advisory Committee to
opment et al., 2010. Options for private sector the Organization for Economic Co-operation
engagement: illustrative examples. and Development, 2009. Adaptation to Climate
Change. Key Considerations for Business.
121. United Nations Framework Convention on Cli-
mate Change, 2009. Fact Sheet: Financing Climate 131. The private sector is not always willing to share
Change Action. Investment and financial flows information, particularly if it is commercially
for a strengthened response to climate change. sensitive. It could be useful (and more acceptable
62

to companies) to aggregate information from 138. Ibid.

value chain mapping into an international data-
139. Ibid.
base of companies facing similar climate change
impacts. This would build a “bigger picture” and 140. United Nations Development Programme. http://
could encourage partnerships and collaborative www.undp.org/pppsd/whatareppps.html.
action to address impacts through adaptation, as
well as the creation of networks for additional 141. National Council for Public-Private Partner-
information sharing. PricewaterhouseCoopers, ships. http://www.ncppp.org/howpart/index.
2010. Business Leadership on Climate Change shtml#define.
Adaptation: Encouraging engagement and action. 142. USAID’s Global Development Alliance, an initia-
132. This is an essential component of the UNEP tive to promote public-private partnerships for
Green Economy Initiative (GEI), which seeks to development, has identified seven key principles
engage with the private and public sectors to for effective alliances: trust, equity, building
facilitate a low-carbon economy, poverty alle- on partners’ respective competencies, inclusiv-
viation, and sustainability. A key aspect of the ity, partners’ alignment around shared interests
GEI is to conduct robust economic research and and agendas, mutual benefit, and transparency.
poverty analysis. United Nations Environment United States Agency for International Develop-
Programme, 2011. Towards a Green Economy: ment. http://www.usaid.gov/our_work/global_part-
Pathways to Sustainable Development and Pov- nerships/gda/faq.html.
erty Eradication — A Synthesis for Policymakers.
133. The importance of cost benefit analysis and the
need for adaptation investments to rest on a
sound economic basis were underscored by the
Business and Industry Advisory Committee to the
Organization for Economic Co-operation and De-
velopment, 2009. Adaptation to Climate Change.
Key Considerations for Business.
134. Nellemann and Corcoran, eds., 2010. Dead
Planet, Living Planet — Biodiversity and Ecosys-
tem Restoration for Sustainable Development. A
rapid response assessment.; Sukhdev et. al., 2010.
The Economics of Ecosystems and Biodiversity:
Mainstreaming the Economics of Nature: A Syn-
thesis of the approach, Conclusions, and Recom-
mendations of TEEB.
135. PricewaterhouseCoopers, 2010. Business Leader-
ship on Climate Change Adaptation: Encouraging
engagement and action.
136. For example, conversations with Bangladeshi
business owners revealed the value of regional
and global success stories about commercially
viable private sector adaptation as a tool to moti-
vate the private sector. Information about how In-
dian corporations are adapting to climate change
could give greater confidence to Bangladeshi
companies and provide a template or business
model for moving forward in Bangladesh. Asian
Tiger Capital Partners, 2010. A Strategy to Engage
the Private Sector in Climate Change Adaptation
in Bangladesh.
137. PricewaterhouseCoopers, 2010. Business Leader-
ship on Climate Change Adaptation: Encouraging
engagement and action.
 63

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68

Annex A

KEY TERMS AND CONCEPTS short-term gains or economic benefits but lead to
exacerbated vulnerability in the medium to long-term
Climate adaptation: Initiatives and measures to re- (UNDP 2009).
duce the vulnerability of natural and human systems
against actual or expected climate change effects. Mitigation: Technological change and substitution
Various types of adaptation exist, e.g. anticipatory that reduce resource inputs and emissions per unit of
and reactive, private and public, and autonomous output. Although several social, economic and techno-
and planned (Adapted from IPCC 2001). The private logical policies would produce an emission reduction,
sector’s adaptive response to climate change can be with respect to climate change, mitigation means
defined by efforts to adjust business models and take implementing projects to reduce GHG emissions and
appropriate measures to both minimize vulnerabili- enhance sinks (Adapted from IPCC 2007).
ties and risks to climate hazards and explore new
opportunities. Mitigation vs. Adaptation: Mitigation aims to slow
the rate of climate change whereas adaptation deals
Climate change and development: Refers to the with the consequences of climate change that are
impacts of climate change that are already happen- already happening or are projected to happen. There
ing and that have important consequences on global are synergies between mitigation and adaptation.
development priorities such as water sustainability, Both are required to achieve a low-carbon, climate
energy and food security, poverty reduction, biodiver- resilient economy.
sity and ecosystem protection, and market stability.
Resilience: The ability of a social or ecological system
Community-based adaptation: Focused at the com- to absorb disturbances while retaining the same basic
munity level on assisting the poor in developing structure and ways of functioning, the capacity for
countries to adapt to climate change, building their self-organization, and the capacity to adapt to stress
adaptive capacity and resilience to create sustainable and change (Adapted from IPCC 2007).
livelihoods and strategies for coping with climate
change (Adapted from IPCC, Oxfam). Risk: Defined by the nature of the climate hazard
itself and the probability of the hazard’s occurrence
Ecosystem-based adaptation: Use of biodiversity and (Tyndall Center for Climate Research 2003).
ecosystem services as part of an overall adaptation
strategy to help people and communities adapt to the Vulnerability: The degree to which a system is sus-
negative effects of climate change at local, national, ceptible to, and unable to cope with, adverse effects
regional and global levels (Adapted from UNEP). of climate change, including climate variability and
extremes. Vulnerability is a function of the character,
Ecosystem Services: Ecological processes or functions magnitude and rate of climate change and variation
having monetary or non-monetary value to individu- to which a system is exposed, its sensitivity and its
als or society at large. There are supporting services adaptive capacity (IPCC 2007).
such as productivity or biodiversity maintenance;
provisioning services such as food, fiber or fish; regu-
lating services such as climate regulation or carbon
sequestration; and cultural services such as tourism.
(Adapted from IPCC 2007).

Green Economy: One that results in improved hu-

man well-being and social equity, while significantly
reducing environmental risks and ecological scarcities
(UNEP 2011).

Maladaptation: An action or process that increases

vulnerability to climate change-related hazards. Mal-
adaptive actions and processes often include planned
development policies and measures that deliver
 69

Annex B

CARING FOR CLIMATE COMPANY EXAMPLES applications include monitoring of agricultural green-
house gas emissions; wireless automatic water-saving
Caring for Climate companies are beginning to drip irrigation; wireless water quality monitoring
develop strategies that respond to climate change of freshwater aquaculture; water conservancy and
impacts by building resilience within their operations hydrographical data; and animals and plants sourc-
and value chains and through the development of ing. In Guangdong, the company launched the Rural
climate-resilient goods and services. The following are Information Access value-added services — expert
select examples where Caring for Climate signatories guidance and market price analysis, new farming
showcase their activities and practices to address risks and animal husbandry techniques, and seed selection
and opportunities posed by climate adaptation.1 — to help farmers learn new agricultural technolo-
giesand increase their income.
Agbar (Spain, Gas, Water & Multiutilities) invests
in adaptive measures through its Water Technology Coca-Cola Company (Global, Beverages) focuses on
Center (CETaqua), where the company researches addressing several climate risks with its Replenish
and develops methods and tools for managing flood Africa Initiative (RAIN), including: water scarcity and
risk. This includes evaluations of the medium- and deterioration of water quality; changes in weather
long-term impacts of global change more broadly. The patterns and extreme weather conditions; frequency
company is also working on a research project related and severity of natural disasters; decreased agricul-
to the assessment of the climate resilience of water tural productivity; and energy, transportation and
resources and water supply infrastructure. The objec- raw material costs. RAIN is a six-year, $30 million
tive is to estimate the capacity of current infrastruc- commitment to provide access to safe drinking water
ture to adapt to climate change, and to define how to to communities throughout Africa. The Initiative also
advance infrastructure that takes climate change into seeks to empower 5 million women entrepreneurs
account.2 throughout Coca-Cola’s global business system by
2020, capitalizing on its operations in 200 countries
Banco do Brasil (Brazil, Financial) focuses on analyz- as well as its business model, which relies on millions
ing impacts of climate change on its financial process- of small-scale distributors and retailers.
es through its Sustainability Forum framework. The
Sustainability Forum is an update to the company’s EDF (France, Electricity) launched its climate adapta-
Agenda 21 (2008-2012), bringing together executives tion strategy comprising 10 key priorities implement-
from various boards and the Banco do Brasil Foun- ed through its climate action plan within its Group
dation to support the dissemination of the environ- business lines. Examples of these priorities include
mental principles and practices and related risks and producing and exchanging climate-related data to
opportunities. Senior Management including the chief launch a joint project of databases for its businesses;
executive officer is responsible for the Sustainable boosting resilience to extreme climate events through
Development Directory and the water programme.3 direct application of its Climate Hazard Plan; and ac-
tively participating in national debates devoted to the
CEMEX (Mexico, Construction & Materials) invests development of national climate adaptation strategy.
in research to develop products, services and opera-
tions that have mutual mitigation and adaptation Eskom (South Africa, Electricity) integrated adap-
benefits. This includes efforts to develop and adopt tation into its six-point plan on climate change to
equipment that reduces both energy and water ensure reliability and continuity of its energy supply.
resource demand. CEMEX is also actively working to The company completed a scoping exercise to develop
develop more resilient and affordable housing for an adaptation strategy focused on addressing risks
low-income communities, which are often the most related to availability of water for power generation;
vulnerable to climate change.4 extreme weather events impacting on the ability to
supply; and infrastructure damage and relocation of
China Mobile Communications (China, ICT/Mobile people. In addition, Eskom works with other institu-
Telecommunications) has developed various infor- tions to look at opportunities to draw more infor-
mation-based applications, which help the company mation from climate models to better inform this
advance mitigation and adaptation priorities. The strategy.
70

Newmont (United States, Mining) collaborates with

communities surrounding its mines to help them
evaluate their climate change risks and integrate risk
mitigation plans into sustainability programs, with an
emphasis on water security. Newmont also incorpo-
rates climate adaptation and development priorities
into efforts to offset carbon emissions, giving pref-
erence to projects in locations where it operates to
support local communities, including their capacity
to build resilience to climate change, and protecting
ecosystems and biodiversity.

Unilever (Global, Consumer Goods) uses EIGER, a

web-based tool that identifies themes related to global
change, to evaluate and monitor risks and opportuni-
ties related to impacts of climate change, including
water vulnerability and irrigation water demand for
its crops. The tool is presented as searchable maps
that give detailed information about agricultural raw
materials, biodiversity, water and other socio-eco-
nomic trends. Unilever uses this tool to assess climate
risks, such as water scarcity, around factory sites and
to develop sustainable solutions to ensure long-term
supply of its raw materials.

1. The list of companies presented in this piece is intended to be illustrative

and is not comprehensive. The examples were chosen based on companies that
participated in the Caring for Climate survey and/or the UN Global Compact
Communication on Progress (CoP). The information provided here came from the
companies themselves.
2. UN Global Compact Case Study Interview. Agbar, S.A. 15 April 2011.
3. Banco do Brasil. 2009 Sustainability Report. http://www.bb.com.br/docs/pub/
inst/dwn/english.pdf
4. CEMEX. “About Sustainable Development”. http://www.cemex.com/Sustain-
ableDevelopment.aspx (accessed April 2011).
5. China Mobile Communications. 2010 Sustainability Report. March 2011. http://
www.chinamobileltd.com/images/pdf/2011/sr/en/EW00941.pdf
6. The Coca-Cola Company. “Coca-Cola Helps Improve Lives of African Women
and Girls”. March 2011. http://www.thecoca-colacompany.com/dynamic/press_cen-
ter/2011/03/improving-lives-of-african-women-and-girls.html
7. EDF. “Leading the Energy Change”. Presentation. December 2010.
8. Eskom. “Eskom’s Climate Change Commitment – The 6 Point Plan”. February
2009. http://www.eskom.co.za/content/GI0004_6_POINT_PLAN~2.pdf
9. Newmont. “About Environment Features”. http://www.newmont.com/features/
our-business-features/Newmont-ICMM-Tackle-Climate-Change (accessed April
2011).
10. UN Global Compact Case Study Interview. Unilever. 1 April 2011.
 The UN Global Compact wishes to recognize and thank the
following companies that kindly contributed to the report
by participating in the Caring for Climate Working Group on
About the United Nations Global Compact Climate and Development:
Launched in 2000, the United Nations Global Compact
is a both a policy platform and a practical framework for Companies
companies that are committed to sustainability and respon- Abengoa Danfoss Group Mitsubishi
sible business practices. As a multi-stakeholder leadership ABN AMRO Bank Deloitte Chemical Holdings
initiative, it seeks to align business operations and strate- Mitsui Chemicals
gies with ten universally accepted principles in the areas of Accenture Deutsche Telekom
Munich Re
human rights, labour, environment and anti-corruption and to ACCIONA Dow Chemical
catalyze actions in support of broader UN goals. With more Natura
Agbar DuPont
than 8,000 participants in over 135 countries, it is the world’s Newmont Mining
Airbus EADS France
largest voluntary corporate responsibility initiative. Newton Invest-
Alcatel-Lucent Bell EDF
http://www.unglobalcompact.org ment Management
Allergan Endesa
Nokia
Anglo American ENI
Novartis
About the United Nations Aramex Eskom
Environment Programme Novo Nordisk
Arcelor Mittal Essilor
The United Nations Environment Programme Novozymes
Areva Euskaltel
(UNEP), established in 1972, is the voice for the Pax World Funds
environment within the United Nations system. Arla Foods Fuji Xerox
PepsiCo
UNEP acts as a catalyst, advocate, educator and ARM Gamesa
Pfizer
facilitator to promote the wise use and sustain- Asia Pacific Gas Natural Mexico
able development of the global environment. To Publicis
Resources GDF Suez
accomplish this, UNEP works with a wide range International Pulmuone Holdings
of partners, including United Nations entities, Hewlett Packard
Aviva Rathbone Green-
international organizations, national governments, Company
bank Investments
non-governmental organizations, the private sec- AXA Hilti
Repsol YPF
tor and civil society. http://www.unep.org Banco do Brasil Hitachi
RICOH
Bayer ICA
Saint-Gobain
Broedrene Hart- Infosys Technolo-
About Oxfam mann Sasol
gies
Oxfam is an international confederation of fifteen SEKEM
Cadbury Johnson Controls
organizations working together to find lasting
Capgemini SOMPO Japan
solutions to poverty and injustice. Together with Kikkoman
Insurance
individuals and local groups in more than 90 CEMEX Lafarge Swiss Re
countries, Oxfam saves lives, helps people over- China Minmetals LG Electronics
come poverty, and fights for social justice. Tata
Corporation Li & Fung Group
http://www.oxfam.org/ China National
Telvent
Macondo Media TIMA
Offshore Oil Group
Corporation Unilever
(CNOOC) Mansour
Vattenfall
Cisco Martha Tilaar
Veolia Envi-
Group
Coca-Cola ronnement
Company MAS Holdings
About the World Resources Institute Westpac
The World Resources Institute (WRI) is an environmental Coca-Cola Hellenic Metso Corporation
think tank that goes beyond research to create practical ways
to protect the Earth and improve people’s lives.
The UN Global Compact and UNEP also acknowledge and appreciate the
http://www.wri.org/
contributions made by the UN Secretary-General’s High-Level Panel on
Global Sustainability; UN Secretary-General’s Climate Change Support
Team; UNEP – Finance Initiative; UNFCCC; and Principles for Respon-
sible Investment.

Special thanks go to the members of the Report Team: Nancy Hopkins,

About Caring for Climate International Development Consultant; Heather Coleman, Oxfam; Sa-
Launched by the UN Secretary-General Ban Ki-moon in 2007, mantha Putt del Pino, Eliot Metzger, and Sally Prowitt, WRI; Tim Kasten
“Caring for Climate” is the UN Global Compact and UN Environ- and Richard Munang, UNEP; Lila Karbassi and Jayoung Park of the
ment Programme’s initiative aimed at advancing the role of Global Compact Office; as well as Andrew Mambo and masters’ students
business in addressing climate change. It provides a framework from the Earth Institute of Columbia University.
for business leaders to advance practical solutions and help
shape public policy as well as public attitudes. Chief executive The World Resources Institute wishes to recognize valuable input and
officers who support the statement are prepared to set goals, guidance from several colleagues, including Rishi Aggarwal, Siddar-
develop and expand strategies and practices, and to publicly than Balasubramania, Hyacinth Billings, Catherine Easton, Polly Ghazi,
disclose emissions as part of their existing disclosure commit- Stephanie Hanson, Kirk Herbertson, Bharath Jairaj, Kelly Levin, Heather
ment within the UN Global Compact framework, that is, the McGray, Jennifer Morgan, Suzanne Ozment, Janet Ranganathan, Ash-
Communica­tion on Progress. Caring for Climate is endorsed by leigh Rich, and Lauren Withey.
nearly 400 companies from 65 countries. http://www.unglobal
compact.org/Issues/Environment/Climate_Change/ UNEP wishes to recognize the valuable support and input of Maria Gonzalez.
 The Ten Principles of the
United Nations Global Compact
Human rights

Principle 1 Businesses should support and respect the protection of

internationally proclaimed human rights; and
Principle 2 make sure that they are not complicit in human rights abuses.

Labour

Principle 3 Businesses should uphold the freedom of association and the

effective recognition of the right to collective bargaining;
Principle 4 the elimination of all forms of forced and compulsory labour;
Principle 5 the effective abolition of child labour; and
Principle 6 the elimination of discrimination in respect of employment
and occupation.

Environment

Principle 7 Businesses should support a precautionary approach to

environmental challenges;
Principle 8 undertake initiatives to promote greater environmental
responsibility; and
Principle 9 encourage the development and diffusion of
environmentally friendly technologies.

Anti-corruption

Principle 10 Businesses should work against corruption in all its forms,

including extortion and bribery.

Published by the UN Global Compact Office

Contact: unglobalcompact@un.org
June 2011 | 0.3M