Aligning interests - government and business must partner for a climate-resilient future


Aligning interests - government and business must partner for a climate-resilient future

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Date: 22nd September 2011
Author: CDKN Global
Type: Feature

By Sally Prowitt, Research Analyst, and Samantha Putt del Pino, Co-director, Business Engagement in Climate and Technology at the World Resources Institute

Across the globe, extreme weather events have dominated headlines. Flooding and mudslides claimed hundreds of lives in Brazil earlier this year, while severe drought threatened food and drinking water in China. In our changing climate, recent studies suggest we may see such events occurring with greater frequency and intensity. These and other disruptions do not just impact people and infrastructure—they have profound effects on businesses, the economy, and government policies. It is time to find ways of aligning public and private interests to help communities and economies adapt to the risks of – and find opportunities in – new climate conditions.

Commodity prices are one prominent example of increased market risk due to climate instability. Drought and wildfires in Russia last year destroyed one-third of the country’s wheat crops, resulting in a ban on grain exports and sending the price of wheat up 70 percent. In Sri Lanka, a country still recovering from the 2004 tsunami, floods this year destroyed much of its vegetable crop. This led to price spikes—in some cases more than 80 percent—and fears of food shortages. Similar extreme events also disrupt trade and transport routes, as seen in China, where reduced water levels in the Yangtze River left it partially impassible to ships that move more than one billion tons of cargo each year.

In a world of interdependent markets, such price shocks and disruptions reverberate throughout supply chains, raising costs for businesses and consumers. This can be devastating for countries that rely heavily on resource exports and imports, often the  same developing nations already most affected by dramatic climatic changes and weather events. Governments and the private sector must find ways to address these risks and help vulnerable markets and communities adapt.

Confronting any risk or challenge, however, creates demand for new solutions. WRI recently released a new report, Adapting for a Green Economy: Companies, Communities and Climate Change (with the UN Global Compact, UN Environment Programme, and Oxfam) showing that a majority of leading companies recognize they can be solution providers. The report also describes policy action that can help create new economic opportunity while helping communities and countries adapt.

Among the report’s primary takeaways for business and policy decision makers:

Private sector innovators need shared visions and clear regulatory frameworks to contribute appropriate climate change solutions. Companies need a clear signal of what the policy landscape will look like in order to invest in strategies and solutions for climate change adaptation. Governments need to tap into the expertise and innovation of the private sector to help identify and implement climate change solutions for vulnerable communities.

Countries and companies must create a new “business-as-usual” for a changing climate. Fundamental business and policy decisions need to recognize emerging climate change challenges. Governments and businesses alike need to develop strategies that monitor and adjust to new climate conditions, sharing information and solutions. This means new risk and opportunity assessments, new partnerships, and new solutions, particularly for those countries that are most vulnerable to climate change.

These solutions and measures must create a new way of doing business. It will involve strategies and incentives for new products or services, such as clean water technologies. It can also include policies and corporate practices that integrate climate risks into investments or new business models. Countries and companies can take proactive steps, for example, to avoid productivity losses by addressing potential health impacts from climate change (for example, mosquito-borne diseases) on their workforce.

Much of tomorrow’s new economic opportunity is expected to be in emerging markets—the very markets that are often most vulnerable to climate change. Countries and companies must work together to ensure that these economies and communities can thrive in a changing climate.


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