Why Your Business Should Conduct a Climate Risk AssessmentDecember 14, 2023
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We are already seeing the impacts of a changing climate on our businesses, communities, and the world. Regardless of policy decisions, emissions reductions, and other mitigation efforts, we will continue to experience these impacts. This is because there are already changes to our climate system that have been “locked-in” by human activity and emissions. It is possible for these changes to be reversed by earth’s natural processes, but it will take an incredibly long time.
Because of this, it is important for businesses to have a climate adaptation plan. This plan will help you navigate climate impacts and subsequent shocks while mitigating future risks. In this blog, we will discuss what goes into a climate adaptation plan, why you should have one for your business, and how to get started. First, we need to understand the difference between mitigation and adaptation.
Mitigation and Adaptation: What is the Difference?
The terms mitigation and adaptation are used very often when we are talking about climate change and the risks it poses. While it is important to take action on both simultaneously, we need to understand the difference between them so that we can make meaningful decisions.
Mitigation refers to any actions that aim to limit climate change. This can include reducing emissions, making processes more efficient, or changing the materials you use to reduce your impact. Adaptation is the process of adjusting to the changes that have already happened or will happen in the future. Initiatives that promote adaptation aim to reduce harm and take advantage of opportunities for innovation. Examples of adaptation include nature based solutions like green roofs that help to reduce the impact of extreme heat.
While this blog focuses on adaptation, it is important to remember that some adaptation efforts may also help to mitigate the worst impacts of climate change. Keeping this connection in mind can help you to make the most positive impact while increasing the resilience of your business.
What is a Climate Adaptation Plan?
A climate adaptation plan includes a clear plan for how to manage the risks that your business may face and any specific vulnerabilities the organisation may have. This plan should include risks and vulnerabilities for your entire value chain, along with ideas and actions you can take to mitigate the worst impacts.
Within your plan, you should outline initiatives to pursue different opportunities that will help to increase resilience and efficiency, safeguard access to necessary materials, and allow for collaboration across your value chain. Make sure to prioritise communication and collaboration with your team members and suppliers.
Your climate action plan should be a document that is reviewed regularly, especially as we learn more about climate change impacts and actions being taken. Continually update risks, vulnerabilities, and opportunities that your business will face along with cataloguing the impacts of actions that you have already taken.
Why Your Company Should Have A Climate Adaptation Plan
Our climate is changing. This means that we will be facing extreme weather events, changing growing seasons, new regulations and requirements, expectations from customers to be more sustainable and more. A climate adaptation plan can help you get ready to face all of these challenges.
There are many great reasons for your business to have a climate adaptation plan including increased resilience, new business opportunities, and better collaborative outcomes.
As the climate continues to change, we will be exposed to new risks and environmental and economic shocks. With a deep understanding of the risks facing your business and a plan to mitigate them, you are increasing the resilience of your organisation. Resilience refers to your ability to respond to any challenges, setbacks, or shocks that come your way. Having a climate adaptation plan in place is one of the best ways to achieve this.
By working with suppliers and communities that make up your value chain, you can identify and mitigate risks and strengthen relationships to help you weather climate shocks. Having this information in place, including contingency planning, can help you to mitigate economic losses in the future through your enhanced resilience.
Adapting to climate change may seem like a daunting project but it is actually a great opportunity for innovation and accessing new customer bases. By leveraging your products, services, and business models and learnings, you can help customers become more sustainable while winning new business. By entering these new markets and using your products, services, and knowledge in innovative ways, you have the opportunity to increase overall revenue.
A big aspect of climate adaptation planning has to do with increasing efficiency. Many times, increases in efficiency lead to cost savings. For example, if you switch to more energy efficient equipment, you will use less energy overall which will lead to lower bills. Adaptation also allows you to avoid costs from climate change related impacts, such as infrastructure damage or delayed supplies, in the future.
Better Collaborative Outcomes
Climate change adaptation for businesses is a broad topic that many organisations are already engaging with. Each business will have both successes and challenges during their adaptation journeys. Knowledge sharing and collaboration are integral to successful climate adaptation plans. You will be able to create partnerships with other businesses with similar goals that may have insights to share and are looking to learn from you. Working together, we will be able to adapt more effectively, creating a more resilient economy.
On top of this, you have the opportunity to participate in multi stakeholder efforts to promote climate adaptation that will help mitigate your identified vulnerabilities and risks. You and other stakeholders can collaborate to promote action and positive outcomes, building resilient communities and ecosystems.
How To Get Started
The World Economic Forum (WEF) put together a framework for accelerating business action on climate change adaptation. In their framework, they outline a five step approach for getting started with climate adaptation planning. These steps are very helpful for beginning your adaptation process and putting in place your first adaptation plan.
- Prioritise your value chain: Your value chain will be impacted by climate change which means that you need to consider it in your adaptation plan. Start by mapping your entire value chain and identifying areas that are integral to your business. This information will help you prioritise actions and collaboration.
- Identify vulnerabilities: Climate adaptation planning is all about understanding and planning to address risks and vulnerabilities. Conduct a thorough climate risk assessment for your entire value chain to identify the most vulnerable areas. To learn more about risk assessments, check out our blog Why Your Business Should Conduct a Climate Risk Assessment.
- Quantify business impacts: Metrics are a key part of your adaptation planning as we need to be able to monitor risk and impact. In this step, collaborate with your team to identify important impacts of your business that you would like to measure. Next, work together to identify quantifiable metrics that you can measure on a regular basis.
- Develop adaptation plan: With all of the information that you gathered in steps 1 through 3, you are ready to put together your adaptation plan. Using the vulnerabilities and impacts that you identified, brainstorm possible actions and initiatives that will help you build resilience and innovate to adapt to climate change. Make sure to involve your whole team so you can gather diverse perspectives and build a more robust plan!
- Disclose climate risk exposure: Clear and transparent communication is key to all sustainability planning, including climate adaptation plans. Make sure you have a strategy to disclose your current risks and vulnerabilities, proposed actions, and progress over time.
These five steps are a great roadmap for getting started with climate adaptation planning. We want to add one more step to round out the entire process.
6. Review your adaptation plan: Your adaptation plan should be a living document that you review on a regular basis. Throughout your sustainability and adaptation journey, you will learn more, mitigate risks, and identify new opportunities. Make sure you update your plan to reflect this and communicate transparently about any changes or achievements.
The climate is already changing. We are going to face extreme events and shocks regardless of our mitigation efforts. Because of this it is important for businesses to understand their vulnerability and to put in place their own climate adaptation plan.
Creating an adaptation plan does not mean leaving mitigation efforts behind. Very often, adaptation actions can help to mitigate the worst effects of climate change. Keep this in mind when taking action so you can have the greatest possible positive impact on both mitigation and adaptation efforts.