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Here's How Businesses Can Be Resilient To Climate Change Disruption

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POST WRITTEN BY
Diane Regas
This article is more than 6 years old.

The octopus in a Miami Beach parking garage is a problem for just about every business executive in the country. It shows that no amount of denial can alter the fact that climate change is reshaping our planet. Businesses are already being surprised by climate disruption, and smart leaders are already taking action to get ahead of it.

First, a review: sea levels are rising, with high tides now bringing regular flooding to coastal areas.  Increased torrential rains have caused an unprecedented number of devastating 1000-year floods, with more than 30 inches of rain falling in the Baton Rouge, Louisiana, area last August. Phoenix and San Diego just experienced all time record high temperatures, forcing airlines to cancel flights.

Businesses, cities, and small communities have no choice but to adapt to these new conditions.

But how?

The strategic centerpiece needs to be “resilience,” the alternative is devastating. Companies and communities must learn quickly to inform investments and operations with realistic expectations of change so our economy can roll with the punches thrown by climate change instead of suffering knockout blows.

Implementing resilience means building and restoring marshes along the Gulf Coast as buffers to protect communities from storm surges from the next hurricane. It means installing bigger culverts in Vermont so that hundreds of bridges and miles of road destroyed by Hurricane Irene will survive future deluges. It means planting trees in San Fernando, California, adding “green roofs” to Chicago buildings to dial down summer heat waves, or creating riverside parks and moving vulnerable facilities to dramatically reduce damage from floods in Cedar Rapids, Iowa.

These steps often offer multiple benefits beyond just reducing the damage wrought by the next weather disaster.  This benefit is called the “resilience dividend” and it’s vital for city and municipal economies because it costs 50 percent more to rebuild after a disaster than to invest in infrastructure that can withstand climate change impacts.

But boosting resilience isn’t just a job for government. Business leaders also need to think hard about how to better survive and thrive in a changing world. In the next 10-30 years, the risks they are facing are growing rapidly.

Trillions of dollars worth of oil refineries, chemical plants, hotels, offices, big box stories, farms, and every other type of business are vulnerable to sea level rise or flooding. Searing heat can slash the productivity, even threaten the health of, outdoor laborers, from construction workers to farm hands. And even in the most developed countries electricity and transportation systems that we take for granted are already being affected by conditions outside design expectations.

Companies also need to analyze their supply chains for vulnerability and come up with resilience strategies. A changing climate threatens America’s amber waves of grain, coffee plantations in Colombia and Ethiopia, even the diamond mines in Canada that depend on ice roads that are now melting. Meanwhile, severe droughts or floods can shut down the nation’s lifebloods of commerce, like the mighty Mississippi or key ports.

And the risks aren’t just physical. As the momentum builds for a global shift to clean energy, with increasingly stringent regulations and policies, fossil fuel-based industries will suffer the same fate as the dinosaurs unless they can adapt.

In my discussions with CEOs, I’m gratified that many do indeed understand the risks to their bottom lines and the opportunities for future resilience —and are taking action. Smithfield has helped farmers move out of floodplains and better manage the manure from their hogs, including installing covers on manure lagoons. The results have been encouraging. When Hurricane Floyd struck North Carolina in 1999, 20,000 pigs died and dozens of lagoons overflowed, with serious environmental and economic consequences. But thanks to the changes, the damage was far less in the aftermath of Hurricane Matthew 17 years later.

Similarly, Starbucks has plans to provide 100 million trees to coffee farmers and to develop new agricultural practices that make plantations more resilient in a changing climate. New Orleans-based utility giant Entergy has invested many millions of dollars to replace wooden poles with stronger concrete or steel and to take other steps that make its electricity grid stronger. That investment will pay off big time when the next storm hits, not only in less damage to the grid, but also in far smaller losses to thousands of business and residents from grid failures.

Sometimes, just a simple gesture from top management can be a powerful symbol of the willingness to adapt. When President Trump announced that the U.S. would withdraw from the Paris Climate Agreement, Elon Musk of Tesla, Jeffrey R. Immelt of General Electric and Lloyd C. Blankfein of Goldman Sachs all publicly voiced their dissent. The unfortunate truth, though, is that the corporate leaders who are aggressively working to make their companies more resilient are the exceptions rather than the rule. While 90 percent of companies say they’ve already been hit by the impacts of climate change, only 30 percent are actually responding to those threats, according to an Economist Intelligence Unit study sponsored by UK Trade & Investment.

So what should corporate leaders be doing?

The task starts with an assessment of the risks climate change pose to every aspect of the business, from raw materials and supply chains all the way to operations, sales, investors and the customers themselves. Many companies don’t have the expertise in-house to assess these risks, it is essential to bring in solid scientific expertise to help identify realistic conditions.  What will the heating and cooling load be?  Where will flood risks rise?  What supplies might be disrupted?  How will reduced productivity of crops affect supply chains—and how can we adapt?

Once those risks are analyzed, companies need to devise detailed plans for reducing the most important risks, making the business more adaptable in an uncertain future, and assuring access to natural resources and clean energy supplies needed for future profitability.

The chemical and plastics industry, for example, can support efforts to rebuild the coastal wetlands that protect their facilities from rising seas and bigger storms, while also stepping up the use of recycled or biomass-based feedstock to cut greenhouse gas emissions. Food giants can help farmers cope with more extreme conditions, while also reducing the fertilizer runoff that’s choking rivers and streams with toxic algal blooms. Utilities can accelerate the transition to more distributed renewable electricity generation, which has the benefit of making the overall electricity grid less vulnerable to sudden shocks.

I’ve also seen firsthand the benefits that companies receive from publically committing to aggressive targets and big goals, such as slashing greenhouse gas emissions by a gigaton by 2030 or restoring forests and other vital natural habitats.

Yes, these goals can be a tool to burnish a company’s image. Meeting such goals is also essential to the crucial task of preventing catastrophic planetary warming. But far more important to individual companies, these efforts to increase resilience are good business. They drive innovation, create jobs, and boost efficiency. And they send a strong message to suppliers, shareholders, and customers that the company plans on being one of the agile survivors in a world reshaped by climate change.