SRK Consulting explains why business resilience is the best response to climate change.
A hard reality has begun to dawn on farsighted companies climate change is not an environmental issue so much as a high-risk set of emerging impacts that threaten business survival. It has been many years since the King Report on Governance started talking about environmental risks. Driven in part by the UN's Sustainable Development Goals, the focus has since shifted to environmental, social and governance (ESG) issues, including climate change. The real significance of this shift is that business realising that while environmental action was focused on compliance or doing the right thing, climate change is an existential threat. It needs no regulation to alert companies to this fact, or inspectors to check compliance. Instead, many businesses are moving proactively to find solutions well ahead of regulators' efforts to guide and enforce action indeed, notwithstanding the publication for comment of the government’s draft Nationally Determined Contributions this year (the country's planned Paris .Agreement commitments) there's been a step-change in recent years in the private sectors acceptance of climate change as a strategic risk. But what should business' focus be?
It really is all about resilience. Climate change is another risk that must be managed, and sustainable businesses are those that succeed in doing this, Yet perhaps a key differentiator of this risk k is that we're only beginning to understand its depth and breadth This limits how well We can plan tor resilience, as many risks have yet to show their full force. A response strategy towards greater resilience, then, needs to include a few basic phases becoming resilient, maintaining that resilience in the medium term, and sustaining that resilience-building approach into a future, changing world.
Becoming resilient means understanding the impacts that climate change is likely to have on a business and its stakeholders and identifying the gaps that exist in managing those impacts. In this context, a climate change impact assessment (CClA) is very different from a traditional environmental and social impact assessment(ESIA). While an ESIA considers mainly the effect of a project on its immediate and broader environment, a CCIA is - conversely - more about understanding the environment’s effect on the business and its stakeholders and formulating practical responses to these effects in order to build resilience.
