Private banks and financial institutions in Bangladesh requested CDKN’s support to build their capacity and understanding of climate finance mechanisms. Here, Will Bugler of Acclimatise and Yousuf Mahid of the International Centre for Climate Change and Development at the Independent University, Bangladesh highlight how the country can lead the world by showing how to engage the private sector effectively and ensure that businesses are squarely involved in the country’s adaptation process.

There are no two ways about it, when it comes to dealing with climate change, Bangladesh businesses will have to get involved. This year, global temperature records are being broken on a monthly basis. As the temperature rises, so does the cost of adapting to climate change. For Bangladesh, tackling climate change will require big changes to almost every sector of the economy. These changes will bring big investment opportunities for the country’s businesses.

An ongoing project funded by the Climate and Development Knowledge Network (CDKN) found that businesses in Bangladesh have a triple incentive to make climate investment a priority. Firstly, businesses themselves need to invest to avoid the risks climate change poses to their operations. Second, there is growing opportunity to profit from the emerging “climate market.” Lastly, businesses can take advantage of new streams of low-cost finance from international climate funds.

Climate change poses risk for industries

The first of these incentives -- avoiding risks -- is highly relevant for businesses in Bangladesh already experiencing adverse impacts of climate change. Flooding has disrupted the transportation of goods across the country, and delays in crop harvest have impacted food production in the agriculture sector.

These costs are significant. The severe floods of 2004 damaged Bangladesh’s garment industry by an estimated $3 million a day after a disease linked to the floods broke out and prevented employees from working. Businesses need to ensure their operations are resilient to climate change by reducing risk and avoiding potentially costly disruptions caused by climate change.

The new emerging ‘climate change’ market

But the project found that avoiding risks is only part of the picture. There is also a growing market which businesses could invest into to help the country adapt and respond to climate change. Since the private sector is innovative, they can generate new ideas to develop industries that not only cut carbon but also make the country more resilient to climate impacts.

One such opportunity in Bangladesh is in agriculture. As the impacts of climate change worsen, climate-resilient seed varieties and other products will need to be developed so farmers can maintain the size and quality of their harvests.

Two companies already involved in the seed industry are Lal Teer Seed Limited and Advanced Chemical Industries (ACI). Lal Teer Seed Limited has invested in saline-resistant seed varieties in the coastal areas of Bangladesh and drought-resistant crops in the northern region of the country whereas ACI is making a range of disaster-resilient products, including fertilisers.

International funding for the private sector

The third opportunity for businesses in Bangladesh comes in the form of new finance streams from international organisations keen to involve the private sector in building climate change resilience. Such funding streams are part of global efforts to tackle climate change and billions of dollars have been mobilised, some of which is designated to increase private sector involvement.

As part of the CDKN-funded project, a workshop was held in Dhaka last month to help companies engage with the Green Climate Fund. This is the world’s largest climate fund, promising at least a $100bn per year from 2020 onwards to help countries tackle climate change.

The workshop was hosted by the climate consulting firm Acclimatise, the International Institute of Environment and Development, and the International Centre for Climate Change and Development. The workshop helped companies understand how they could access the Green Climate Fund through a special “Private Sector Facility.” Depending on their circumstances businesses can either help to manage finances allocated from the Fund, or they could implement climate change-related projects with financial support.

Accessing finance through the Green Climate Fund is a rigorous process, but if companies are successful they will be better placed to take advantage of the market opportunities and will bring much needed innovations in how the country adapts to climate change.

More awareness needed

Through the workshop and wider consultation with a range of businesses in Bangladesh, the project found that the main barriers to business investment in climate change are neither the scepticism climate change is real (50% of interviewees reported changing climatic conditions posed a high risk to their operations) nor a disbelief that market opportunities exist under climate change (92% believed they did). Instead, the main barrier found in the consultation was the lack of awareness on how best to prioritise and invest into climate change for the largest possible returns.

If the government and other organisations want to engage the private sector in the fight against climate change, they will need to raise awareness about how exactly businesses can help. This means identifying suitable investment opportunities that can deliver returns that that are attractive to private sector investors. It also means actively linking funding streams like the Green Climate Fund, with the businesses who have the capacity and willingness to manage the funding, and invest in climate resilience.

When it comes to climate change, Bangladesh has already gained international recognition for its efforts to adapt. Now the country can lead the world by showing how to effectively engage the private sector in such a manner that businesses are squarely involved in the country’s adaptation process.

This article was first published in Dhaka Tribune, the fastest growing English daily in Bangladesh.