Resilience Thriving Through the Transformation - WBCSD
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Business Climate Resilience Thriving Through the Transformation
22 Business
BusinessClimate
ClimateResilience:
Resilience:Thriving
ThrivingThrough
Throughthe
theTransformation
Transformation
Contents
Foreword | 4
Executive summary | 6
Resilience | 8
1 How the urgency of climate change will shape global
system transformation | 9
2 Building business climate resilience | 13
3 Practical steps to achieve business climate resilience | 19
4 Call to action for businesses | 22
5 Call to action for policymakers | 27
Business Climate Resilience: Thriving Through the Transformation 3
Foreword
Message from Sunny Verghese
CEO of Olam and Chair of WBCSD
It is becoming impossible to While we must continue to Climate risk is something we all
deny the devastating effects implement every possible effort face, no matter our geography,
that climate change is having to limit global warming and sector or socioeconomic status.
on society, the environment and - reduce emissions at the proper It is global in nature and will
increasingly - on the economy. speed and scale - we also need impact every single one of us in
to focus on adapting to the one way or another. Taking the
Even though the world has made changes that are already here, appropriate steps to prepare
some progress through the while simultaneously preparing and adapt will be critical for any
Sustainable Development Goals for the significant environmental, business who wants to continue
and the Paris Agreement, current regulatory and economic operating past 2050.
global emissions reductions changes that are likely to emerge
targets will still result in 3.3°C in the near future. It is our sincere hope that this
of warming by 2100, according report helps propel you forward
to the IPCC. As Chairman of the World on your company’s journey to
Business Council for Sustainable resilience.
This will have catastrophic Development, I am encouraged
impacts. to see our members taking
climate resilience seriously
The world has already warmed
through the release of “Thriving
1°C above pre-industrial levels,
through the transformation” -
and we are already seeing
designed to provide a common
impacts on people, biodiversity,
vision and language for what
crops and our planet more
“climate resilience” means to
widely. As the climate continues
business and the role the private
to change, negative effects will
sector has to play.
intensify. Many are taking action
to mitigate the impacts of climate The work brings together
change. important global developments Sunny Verghese
on adaptation and resilience
Over the past five years, business CEO of Olam and Chair of WBCSD
- such as new, fit for purpose
has dialed up efforts to address
frameworks for enterprise risk
the climate challenge, taking
management, as well as the
strong steps towards reducing
Task Force for Climate-related
emissions to limit warming in
Financial Disclosure’s (TCFD) key
line with the goals of the Paris
recommendations - in order to
Agreement.
help business understand the
importance of building climate
resilience while outlining initial
steps for doing so.
44 Business
BusinessClimate
ClimateResilience:
Resilience:Thriving
ThrivingThrough
Throughthe
theTransformation
Transformation
Business Climate Resilience: Thriving Through the Transformation 5
Executive summary
The climate emergency is a Adaptation clearly delivers a triple There are three key steps that
present-day reality. The world dividend in terms of avoided businesses can take to build
has already warmed 1°C above losses, economic benefits and business climate resilience:
pre-industrial levels and we are social and environmental benefits.
on track to surpass a 1.5°C global 1. Develop and maintain
temperature rise as soon as 2040.1 Ambitious mitigation is crucial to ambitious mitigation efforts.
reducing long-term climate costs. If a business makes progress in
Already, climate change has This ambition will translate into the its mitigation efforts, it becomes
displaced over 22.5 million people; deep and systemic transformation less vulnerable to disruptive
more than 800 million people of global economies and risks, such as policy and legal
lack sufficient food; and over one associated business activity. It will measures, resource scarcity or
million animal species are facing require reprioritizing economic adverse market developments.
extinction. issues according to the magnitude
of change that is required, the 2. Adapt to ensure business
There is an urgent need for interconnected risks across our continuity in the face of
governments and the private global systems, and the urgency climate-related physical
sector to take bold climate of a rapidly diminishing timeframe. risks. Businesses must assess
action. This is a critical and evaluate climate-related
necessity in order to reduce Successful businesses will be physical risks throughout their
emissions drastically, and to those that are able to adapt operations, supply chains and
make the transition to a net-zero to and thrive through this across the communities in
emissions world that is aligned transformation. which they operate.
with the 1.5°C scenario of the
Paris Agreement. Over the past year, WBCSD has 3. Assess the connections,
been working with the business dependencies and value
The report from the Global community on their imperatives to society and nature.
Commission on Adaptation for climate resilience. Companies The connections, dependencies
(September 2019)2 highlights need to prepare for both the and interrelationships between
three key imperatives for action: physical risks that are associated climate and society, climate
with climate change, as well the and nature and climate and
1. the human imperative that calls associated transition risks on sustainable development will
for adaptation for all people; the path to an economy that is increase public pressure on
net-zero greenhouse gas (GHG) the true purpose of business
2. the environmental imperative to
emissions. Businesses need to activities and the role of
reverse the current degradation
integrate their climate change business in society.
of the natural environment; and
risks into their Enterprise Risk
3. the economic imperative, which Management processes, and
shows a cost-benefit ratio of factor climate action into their
investing in resilience from decision-making processes.
between 2:1 and 10:1.
6 Business Climate Resilience: Thriving Through the Transformation
Key takeaways
Enterprise risk management and transformation to resilient business models are key elements in
1 building business climate resilience.
Delivery of the Paris Agreement objectives and the Sustainable Development Goals depends
2 on our ability to connect climate, nature and people to assure a resilient future for business and
society.
The urgent response to climate change will inevitably lead to a reprioritization of economic
3 activities.
Business climate resilience focuses on understanding, assessing and acting – based on physical
4 and transition climate-related risks.
Companies need to adopt resilience strategies that include ambitious mitigation measures to
5 adapt to climate change impacts, as well as steps to strategically transform so that they can
benefit from new opportunities and address unprecedented risks.
CALL TO ACTION FOR BUSINESS CALL TO ACTION FOR POLICYMAKERS
Understand and assess business risks Collaboration between governments and business
to achieve net zero emissions
Put resilience at the core of business strategy Creation of adaptation and resilience plans,
including regulatory instruments that support
resilient economies
Scale up investment in mitigation efforts Strong policies that provide clarity and confidence
alongside efforts to adapt for businesses to invest in climate action
Communicate with stakeholders Policy measures supporting TCFD implementation
including carbon pricing
Work with others Data to support business decision-making
Advocate for climate resilience Capacity building
The case for adaptation and The urgency of the climate This report is a call for action
resilience is clear. However, action emergency demands clear to the business community
in this field is not taking place at leadership and strong to double down their efforts
the immense pace and scale that collaboration. Governments on building resilience. It is a
is required. and the private sector have a call to action for the public
crucial role to play. sector to strengthen win-win
collaborations with the private
sector as well. It is only by
working together that we
can adapt and increase our
resilience.
Peter Bakker María Mendiluce
President and CEO, WBCSD Managing Director,
Senior Management Team, WBCSD
Business Climate Resilience: Thriving Through the Transformation 7
Resilience
2020 will be a “super year” in the The Intergovernmental Panel on The concept of resilience as
climate agenda bringing focus Climate Change (IPCC) defines it relates to the Task Force
to the climate emergency. resilience and adaptation as on Climate-related Financial
follows: Disclosures (TCFD):
As the year in which ambition
and performance against Resilience: The capacity of social, Climate resilience requires
the Paris Agreement will be economic and environmental organizations developing adaptive
assessed, there are a number of systems to cope with a hazardous capacity to respond to climate
major scientific and economic event or trend or disturbance, change to better manage the
reports which are sounding a responding or reorganizing in associated risks and seize
clear alarm on the urgency to ways that maintain their essential opportunities, including the ability
act now to ensure delivery of a function, identity and structure, to respond to transition risks and
1.5°C degree world. while also maintaining the capacity physical risks.
for adaptation, learning and
At the same time, climate transformation. Opportunities include improving
resilience is being increasingly efficiency, designing new
framed within the need to also Adaptation: In human systems, production processes, and
protect nature and achieve the process of adjustment to developing new products.
resilient communities. Indeed, actual or expected climate and its Opportunities related to resilience
the delivery of the Sustainable effects, in order to moderate harm may be especially relevant for
Development Goals (SDGs) or exploit beneficial opportunities. organizations with long-lived fixed
depends on our ability to In natural systems, the process of assets or extensive supply or
connect climate, nature and adjustment to actual climate and distribution networks; those that
people to assure a resilient its effects; human intervention may depend critically on utility and
future for all. facilitate adjustment to expected infrastructure networks or natural
climate and its effects. resources in their value chain; and
With this report, we aim to clarify those that may require longer-term
the concept of “business climate financing and investment.
resilience” for policymakers and
companies specifically within
the global climate agenda. The
goal is to provide stakeholders Long-term transformative scenarios need to be an integrated
with a common language and the part of business strategies, or companies will soon become
principles for effective climate irrelevant. Businesses who already have a long-term vision are
action that build resilience, going to be the champions of tomorrow.
recognizing its connection to
nature and society. We also
highlight current corporate
approaches to climate resilience Joyashree Roy
– underlining strategic actions IPCC author, and Bangabandhu Chair Professor
companies and policymakers can at Asian Institute of Technology (AIT), Thailand
take. and Professor of Economics at Jadavpur
University-online
8 Business Climate Resilience: Thriving Through the Transformation
1 How the urgency of climate
change will shape global
system transformation
Business Climate Resilience: Thriving Through the Transformation 9
1 How the urgency of climate
change will shape global
system transformation
The 2018 Special Report from ambitious enough, and their However, mitigation and
the Intergovernmental Panel implementation still not advanced adaptation present different
on Climate Change (IPCC) enough, to achieve the long-term challenges. Mitigation is a global
on the impacts of global goals of the Paris Agreement. challenge while resilience and
warming of 1.5°C3 made a clear adaptation require addressing
statement: While achieving a The world is on track to exceed impacts and risks that have the
limitation of global warming to 1.5°C warming as soon as 2040. potential to be much more diverse
1.5°C is possible, economies Projections show that current and localized. For business,
and societies worldwide policies will lead to total global this means developing and
must undergo rapid and far- warming of 3.3˚C by 2100. implementing mitigation strategies
reaching transformation at and targets at the global level (e.g.,
The urgent need for climate
unprecedented speed and scale. net zero emissions targets), while
action demands leadership
also addressing local risks affected
The Paris Agreement reached in from governments and the
by climate change, including water,
2015 is a major milestone in the private sector to achieve urgent
nature and just transitions for
global response to the climate emissions reductions and
communities, both for operations
challenge. Its central aim is to transition to a decarbonized
and sourcing strategies.
strengthen the response to the world. This translates into the
climate change threat by keeping need for deep and systemic Thus, businesses of all sectors
the global temperature rise well transformation of economies must approach climate change
below 2°C above pre-industrial and associated business systemically, changing their
levels by 2100 and to pursue activities globally.
overall business strategy to
efforts to limit the temperature better understand, anticipate
The private sector has a crucial
increase even further, to stay and navigate new risks and
role to play.
within 1.5°C warming. opportunities. Doing so will
Companies need to prepare help businesses that are the
To achieve this, governments set
for both the physical risks most prepared to not just
nationally determined targets and
associated with climate change survive but to thrive through the
long-term strategies designed to
as well the associated transition transformation.
achieve overall decarbonization
risks on the path to a net-
of the global economy. However,
zero greenhouse gas (GHG)
these commitments are still not
emissions economy.
10 Business Climate Resilience: Thriving Through the Transformation1. CLIMATE CHANGE Businesses must incorporate The urgency is clear: governments,
IS NO LONGER JUST climate change challenges into businesses and civil society must
Enterprise Risk Management drastically raise their climate
A RISK, IT’S A REALITY (ERM), and will have to learn ambitions if the world is to stay
The next ten years will be critical to develop decision-making within the 1.5°C safe operating
to limit global warming to 1.5°C processes in a changing climate. space for society and the
as the global effort to address environment.
climate change must accelerate 2. AMBITIOUS
Thus, “business as usual” is
dramatically. MITIGATION IS CRUCIAL
incompatible with addressing
TO ACHIEVING TARGETS the climate challenge.
The 2018 IPCC Special Report
has provided clear scientific
AND REDUCING LONG-
understanding of the current and TERM CLIMATE COSTS Systems transformation is inevitable
and smart companies are starting to
potential future impacts of climate prepare for the transition risks and
GHG emissions continue to
change, as well as the urgency opportunities as defined by the Task
rise globally.
for governments, society and Force on Climate-related Financial
business to act. For the first time in human history, Disclosures (TCFD).7
carbon concentrations in the
The frequency and intensity of Major companies across the
atmosphere reached 415 parts
tornadoes, floods and droughts chemicals, electric utilities and oil
per million (ppm) in early 2019.
are increasing direct physical and gas sectors are implementing
The latest research show that the
risks to human lives and health, the TCFD recommendations and
gap between actual emissions
infrastructure and buildings, as well taking steps to publicly share
and the world’s carbon budget,
as indirect risks to the stability of their experiences in doing so.
derived from the Paris Agreement
a region or country.4 Leading food, agriculture and forest
objectives, is wider than ever.
Unless the private sector is products companies are preparing
As stated by UN Environment now for TCFD. The goal is to help
prepared, it will suffer. According
in the findings of its Emissions drive further implementation within
to CDP, 215 of the world’s 500
Gap Report 2018, “the technical and across sectors.
largest companies could see
feasibility of bridging the 1.5°C
USD $1 trillion in potential costs
gap is dwindling.”6
over the coming decades.5
Figure 1: The scale and urgency of action needed is set to trigger reprioritization of economic activities.
Historical global CO2 emissions Pathways3. REPRIORITIZATION OF 3c. Connectivity and Additionally, banks such as BNP
relationships: The Paribas have stated that they will
ECONOMIC ACTIVITIES
connections, dependencies decrease their financing in sectors
WILL BE DRIVEN BY and interrelationships between not aligned with a 2°C scenario
MAGNITUDE OF CHANGE, nature and climate, climate (for instance through sectoral
URGENCY OF THE SHORT and society, and climate and policies on coal and unconventional
sustainable development highlight Oil & Gas).
TIME FRAME AND THE the imperative for business to
INTERCONNECTED RISKS understand broader impacts It’s clear that economic
reprioritization will likely favor
ACROSS SYSTEMS and dependencies. The low-
the most sustainable option,
carbon transition must be just
Civil society and recently-launched and equitable, prioritizing people, supporting systems transformation.
social initiatives, especially by our social security, development and Successful businesses will
youth, are calling louder than well-being. It is also necessary to be the ones that are able to
ever for global climate action, understand resource constraint adapt and thrive through the
stressing the urgent need and implications given the vital and transformation.
responsibility of governments irreplaceable role of nature.
and businesses to transform and
decarbonize the global economic
5. ASSESSING
system. 4. UNLOCKING AND DE- MATERIALITY AND
RISKING INVESTMENTS ACTING ON BUSINESS
This will lead to a reprioritization IN SUSTAINABLE RISKS IS A PRIORITY
of economic activities driven by
SOLUTIONS REQUIRES
policy change, consumer habits There is a clear push for innovative
and business action.
FINANCING solutions and strategies to
According to The New Climate encourage business climate action
Business has a vital role to play that simultaneously supports
Economy, “The world is expected
in taking the lead to ensure their emissions reductions and increases
to invest about USD $90 trillion on
climate actions can have the business climate resilience while
infrastructure in the period up to
greatest impact for the future of preparing for the likelihood of
2030, more than the entire current
their business and beyond. increasing climate risks ahead.
stock today.
Three main drivers are likely to Specific frameworks like the
“Much of this investment will be
kickstart this reprioritization across COSO and WBCSD framework9
programed in the next few years.
the business sector: for applying enterprise risk
“[Investing in] the right management to environmental,
3a. The expected magnitude of
infrastructure now will deliver a new social and governance (ESG)-
change: With escalating physical
era of economic growth … drive related risks help companies
risks and the unprecedented
innovation, deliver public health identify and manage new risks
call for action on mitigation,
benefits, create a host of new jobs and opportunities, including those
companies will increasingly feel
and go a long way to tackling the related to climate change.
pressured to rapidly decarbonize
risks of runaway climate change.”8
while implementing adaptation The TCFD framework10 provides a
plans. The finance sector has increasingly clear pathway to help companies
recognized the risks and disclose how they’re managing
3b. The short timeframe: To align
opportunities associated with these physical and transition
with the decarbonization pathways
climate change. For example, rating risks and pursuing low-carbon
of the Paris Agreement, the global
agencies such as S&P Global have opportunities – clarifying where
economy will need to reduce
conducted extensive assessments they may be more exposed or more
emissions by 50% by 2030, with a
of potential impacts on business resilient.
goal to becoming carbon neutral
across all sectors exposed to
before 2050. This will urgently Additionally, implementing
physical risks and transition risks
require substantive strategic Science Based Targets11 is a
associated with climate change.
changes, rapid innovation and tool for companies to set clear
great investments with high targets and pathways for reducing
impact and at scale. emissions in line with the Paris
Agreement and the 1.5°C target.
12 Business Climate Resilience: Thriving Through the Transformation2 Building business climate
resilience
Business Climate Resilience: Thriving Through the Transformation 13Business resilience to climate
change is about preparing for
RESILIENCE = CONTINUITY + TRANSFORMATION
the physical risks associated of business to withstand of business models
with climate change while at to climate the physical and activities to
the same time shifting to a net- change impacts align with a net-zero
zero emissions future.12 A truly
emissions economy
resilient business also works
to protect nature and achieve
resilient communities.
Climate resilience is important for
all sectors of the economy, but it TCFD climate-related risks14
will look and feel different across
industries and activities. For Climate change will lead to risks and opportunities linked to policy
example, the agri-food sector and and market shifts (transition risks), as well as physical changes to
water-intense industries are highly the environment.
vulnerable to physical climate- and
nature-related risks and equity Transition risks/opportunities
of rural communities. The energy The transition to a low-carbon economy may entail extensive policy,
sector’s challenges are in ensuring legal, technology and market changes to address climate change
security, equity and sustainability; mitigation and adaptation requirements. Efforts to mitigate and adapt
the built environment is facing to climate change can also produce opportunities, for example,
new demand for sustainable and through resource efficiency and cost savings and the development
functional structures that can of new products and services.
withstand climate-related impacts.
Physical risks
This section details a new framing
of climate resilience that applies Physical risks resulting from climate change can be acute (e.g.,
specifically to business and draws extreme weather events) or chronic (e.g., sustained higher
on the TCFD’s categorization temperatures). Physical risks may have financial implications for
of physical and transition risks companies, such as direct damage to assets and indirect impacts
associated with climate change from supply chain disruption.
(see TCFD climate-related risks
box).13
In a time of climate emergency,
it’s important for businesses COMPANIES SHOULD These measures are crucial
to move beyond responses to PREPARE TO WITHSTAND for business continuity as they
extreme weather events and THE PHYSICAL RISKS OF constitute an approach to the
physical risks of climate change –
supply chain disruption and CLIMATE CHANGE. adding to direct climate resilience
consider the transformational
changes and associated The first aspect of business actions.
transition risks needed to resilience is related to continuity.
Physical climate change risks can
achieve climate resilience. Continuity planning, linked to
have a significant impact on basic
risk severity and likelihood, put
In other words, business plans for economic system functions.
plans in place for a company to
climate resilience must include withstand and absorb climate All sectors depend directly or
both managing the physical risks shocks, recover and then indirectly on the provision of key
of climate change (e.g., building return to normal operations economic system functions and
recovery capacity to extreme as soon as possible. Specific access to the infrastructure that
weather events), to integrating actions to enhance continuity enables them, such as electricity,
active, strategic and meaningful can include developing sourcing water, roads and the internet.
transformation to net-zero and operational contingencies,
emissions. implementing infrastructure EDF Group, a major electricity
protection, creating flexible and company, has put in place a
adaptive supply chains, and set of adaptation policies to
predictive analysis for future minimize climate change shocks
shocks. on its utilities and distribution
infrastructure. It has also
developed strong meteorological
and climate services to anticipate
climate impacts.
14 Business Climate Resilience: Thriving Through the TransformationCOMPANIES MUST To guarantee a higher degree of MAKING THE
TRANSFORM TO reliability, adaptation and flexibility, TRANSITION
ADDRESS TRANSITION companies will often need MEANINGFUL FOR
innovative and disruptive solutions.
RISKS AND SEIZE NEW KEY STAKEHOLDERS
OPPORTUNITIES AS As a result, companies may plan BEYOND THE COMPANY.
THE ECONOMY STRIVES to – or may ultimately be forced to –
Business has a significant role
TO ACHIEVE CARBON transform their business models.
to play in helping deliver the
NEUTRALITY. Transformational measures will Sustainable Development Goals
always need to involve the strategic (SDGs) which help translate
As climate change impacts sustainable development
increase, major environmental, planning function and should apply
to business models and strategic priorities into business strategies.
social, cultural and economic In doing so, the SDGs enable
shifts will occur, fueled by the direction.
companies to better manage their
reprioritization of economic risks and unlock opportunities.
Business must therefore consider
activities. Business as usual will
different time horizons and both
no longer be a viable option. Business activities should foster
physical risk management and
further societal development
This reprioritization comprises a strategic development aligned with and support the functions and
proactive approach to resilience resilience and net-zero emissions. resources provided by nature.
that considers long-term strategic
Those who thrive will be able The Stockholm Resilience Centre
changes supporting system
to connect both physical highlighted that the health of
transformation.
and transition risks and the biosphere – that is, the
Companies will need to consider opportunities to business environment – is the basis on
the various risks associated with actions and strategies. which all the other SDGs sit.15
the transition, including public This connects all 17 SDGs,
opinion, investor sentiment and making nature critical to ensuring
responses to differential costs, resilience.
competitor behavior, and actions To become truly resilient,
taken by other sectors companies will need to help
or governments. ensure the success and
vitality of the environment and
Figure 2: communities in which they
In the transition to a climate resilient world, economies and societies operate.
must be seen as embedded parts of the biosphere.
(© Azote Images for Stockholm Resilience Centre) Business resilience
strategies should also
consider relationships and
interdependencies across
systems and beyond the
company itself. The aim should
be to contribute to wider socio-
economic and environmental
benefits across the board.
Business Climate Resilience: Thriving Through the Transformation 15CASE STUDY
In 2018, Tata Chemicals launched a center for marine biodiversity and coastal ecosystem
conservation in India. Through this project, Tata is increasing its knowledge of ecosystems that are an
integral part of its business model and at the same time preserving and restoring those ecosystems.
Enel promotes the achievement of the 17 SDGs by aligning its own strategy with them. It has
the ambitious goal of steering the energy transition and the related electrification of energy
consumption through all facets of the “future of energy”: efficiency, flexibility, digitalization, electric
mobility and the integration of renewable energy, and the role of customers.
While Enel is actively working on mitigation, it is also transforming itself for the greater good of society
by actively engaging in the circular economy. Enel has made the circular economy a driver of its
strategy, setting out a global vision and developing concrete actions for its business lines in various
countries. For instance, Enel Green Power has combined the group’s approach to the circular economy
with its own activities, focusing on the reuse, recovery and recycling of materials during work site, plant
and office management phases.
CASE STUDIES ON THE AGRICULTURE SECTOR
The WBCSD and Opus Insights agri-tech Olam, a leading food agribusiness, has
initiative, CocoaCloud, aims to provide developed AtSource, a sustainable
critical data for farmers and industry.16 sourcing solution designed to promote
the long-term resilience of agricultural
With the target of reaching one million
raw materials and food ingredients.17
farmers in Ghana and Côte d’Ivoire by 2024,
the CocoaCloud data platform generates, In 2018, Olam International launched
translates and disseminates critical AtSource18 – a sustainable and traceable
information – such as weather forecasts sourcing solution that provides unrivalled
and location-specific agricultural advice – environmental and social insights into the
supporting “climate-smart” decisions for journey of agricultural raw materials and food
agriculture. ingredients from the farm to manufacturing
and retail customers.
The impact initiative already supports 7,500
cocoa farmers, extension advisors and wider AtSource will also enhance Olam’s ability
community members in the western region to assess and positively influence the
of Ghana by providing training and localized environmental footprint of the 4.8 million
weather forecasting services (including farmers in the company’s supply chain,
mobile phone alerts), enhanced by four the vast majority of whom are smallholders
weather stations installed locally in 2018. growing crops such as cocoa, coffee
and cashews in emerging markets.
16 Business Climate Resilience: Thriving Through the TransformationCASE STUDY
DSM
Climate Change is at the core of DSM’s business model driving innovation, risk management and
growth. Feike Sijbesma, DSM’s CEO, strongly believes the company cannot succeed or call itself
successful, in a world that fails. For DSM, combating climate change is not just a responsibility but
also a business opportunity and essential part of future-proofing the business. The company’s
climate agenda is structured around three core areas, addressing both ambitious climate
mitigation efforts and accelerated climate adaptation, by:
1. improving the carbon footprint from DSM’s operations and value chains to meet the
company’s NetZero by 2050 target, and working to assess and protect DSM’s assets
and value chains from emerging climate-related physical risks. This includes transparency
on the progress and working towards TCFD aligned reporting.
2. enabling customers to reduce their emissions by developing low-carbon solutions,
and providing solutions aimed at supporting societies’ ability to adapt to the adverse
effects of climate change.*
3. advocating for accelerated climate action and long-term policies, particularly related
to renewable energy and meaningful carbon pricing, but also long-term climate-smart
investments, collaboration between actors and better transparency on climate risks as
mainstreamed climate risk and opportunity assessment are key for ensuring that financial
flows are directed appropriately. DSM and DSM’s CEO Feike Sijbesma is actively engaged
and leading in several business networks for climate action, including acting as a
Commissioner for the recently established Global Center on Adaptation.
DSM’s climate agenda demonstrates how companies can integrate climate action into their
business strategy in order to increase both resilience and competitiveness.
“Research is showing that adapting to climate change is a real competitive advantage
for businesses. Transition opportunities really help companies since climate change
drives innovation.”
“By improving the impact of our own operations, enabling sustainable solutions for
our customers and advocating sustainable business, we can grow faster and reduce
our cost and risk profile”
Jeff Turner
Vice President Sustainability, DSM
* Examples of DSM innovations with significant emissions reduction potential are Clean Cow, a feed additive that reduces 30% methane emissions from
cattle and Niaga®, technology for fully recyclable carpets and mattresses. DSM solutions provide also solutions improving society’s’ resilience. Together
with Syngenta DSM has developed microbial-based agricultural solutions including bio-controls, bio-pesticides and bio-stimulants, which can prevent
increase of food loss in rising temperatures combat resistance and enhance plant productivity and fertility. These also include applications of DSM
advanced materials to protect infrastructure and buildings and-DSM advanced Solar solutions increasing energy resilience in increasingly demanding
climates, as well solutions compensating the nutrition value loss of crops caused by climate change, such as Supercereal+ and fortified rice.
Business Climate Resilience: Thriving Through the Transformation 1718 Business
18 BusinessClimate
ClimateResilience:
Resilience:Thriving
ThrivingThrough
Throughthe
theTransformation
Transformation3 Practical steps to achieve
business climate resilience
Business climate resilience Business leaders who effectively This section outlines practical
means developing and address all three can realize steps that companies can take
implementing strategies which unprecedented transition to understand where they are and
address: opportunities and mitigate where they can make progress
climate-related risks. along their resilience journey by
1. Mitigation linking three concepts: mitigation,
adaptation and transformation.
2. Adaptation
3. Transformation
N SFORMAT
RA I
O
T
N
Cultivating and sustaining INCREASE VALUE
climate resilience is TO SOCIETY AND
commensurate with sound ENVIRONMENT
business practice. Beyond
bolstering the long-term
competitiveness of companies,
it helps them to establish new
and constructive connections
with surrounding communities,
and to forge new levels of RESILIENCE
adaptive collaboration across
businesses facing similar
ce
fe a
sa
climate impacts. o perating sp
INCREASE
DECREASE
CONTINUITY
GHG
ION
TO PHYSICAL
A DA
EMISSIONS
IMPACTS
AT
Youssef Nassef
AT
PT
IG
T
I MI
Director, Adaptation programme, ON
UNFCCC secretariat
Business Climate Resilience: Thriving Through the Transformation 191 2 3
DEVELOPING AND BUSINESS MUST ADAPT BUSINESSES
MAINTAINING AMBITIOUS TO ENSURE BUSINESS MUST ASSESS THE
MITIGATION EFFORTS IS CONTINUITY IN THE FACE DEPENDENCIES AND
A KEY COMPONENT OF OF CLIMATE-RELATED VALUE TO SOCIETY
BUSINESS RESILIENCE PHYSICAL RISKS AND NATURE
If a business makes progress in Businesses must assess and The connections, dependencies
its mitigation efforts, it becomes evaluate climate-related physical and interrelationships between
less vulnerable to disruptive risks, risks throughout operations, climate and society, climate and
such as policy and legal measures, supply chains and across the nature and climate and sustainable
resource scarcity or market communities in which they operate. development will enhance public
developments. pressure on the true purpose of
Specific frameworks, such as the business activities and the role
In the long term, climate COSO and WBCSD framework21 of business in society.
mitigation efforts will enable aimed at applying enterprise risk
companies to reduce the cost management to ESG-related Business should encourage policy
of adaptation to climate-related risks, help companies identify measures which provide political
physical impacts. and manage new risks and and economic priority to activities
opportunities, including those with the best outcomes for society
Mitigation is a likely driver behind related to the physical impacts and the environment.
the surge of climate action of climate change.
commitments companies are Assessing a company’s value to
making around the world, with Additionally, the World Business society and nature is a challenging
many businesses taking concrete Council For Sustainable task. The Natural Capital Protocol,24
action already. Development (WBCSD) developed and the Social Capital and Human
in 2014 the Building a Resilient Capital Protocol,25 which WBCSD
For example, though the We Mean Power Sector22, a comprehensive helped to develop, provide the
Business Coalition, more than report that analyzes climate methodology and approach to
900 companies representing impacts on power systems, assess the materiality and value.
over USD $19 trillion in market explores how to better forecast
capital have made nearly 1,500 weather and long-term climate A diverse, and powerful group
commitments to climate action. risk, and shares companies best of 14 organizations (including
As part of this, more than 630 practices from around the world. and hosted by WBCSD) working
companies have committed to with business on environmental
setting science-based emissions Through the Building Resilience issues have come together
reductions targets through in Global Supply Chains report23 behind Business for Nature26
the Science Based Targets we also gave businesses the tools to align business action behind
initiative.19 they need to implement productive impactful commitment platforms
adaptation measures throughout and solutions. The coalition aims
WBCSD’s Low Carbon their value chain and global to build a business movement
Technology Partnerships operations. that gives context and voice to
initiative (LCTPi)20 offers proof the many good, but fragmented,
that business is moving beyond Through case studies in commitment and action platforms
talk to implement real solutions by contrasting sectors, we highlight that, exist while ensuring effective
bringing different sectors together the lessons learned across impact.
to sharply reduce emissions. business activities and different
kinds of supply chains.
20 Business Climate Resilience: Thriving Through the TransformationCASE STUDY ON INNOVATION TO FOSTER SOCIETY AND BIOSPHERE RESILIENCE
WHILE REDUCING GHG EMISSIONS AND INCREASE ADAPTATION TO THE CLIMATE
CHANGE IMPACTS ON WATER RESOURCES:
Suez is producing clean energy from wastewater in Chile27
NSFORMAT
RA I TRANSFORMATION :
O
T
N
The project was launched in
INCREASE VALUE 2017 to pioneer innovative
TO SOCIETY AND circular wastewater treatment
ENVIRONMENT
solutions in Santiago and to
provide increased value to
society and the environment.
Once the water is treated and
disinfected, it can serve as a
clean source of irrigation for
RESILIENCE farmers. The farmers then
produce food, which eventually
ce
fe a returns to the city.
sa
o perating sp
INCREASE
DECREASE
CONTINUITY
GHG
Life has returned to the
ION
TO PHYSICAL Mapocho river, which used to
A DA
EMISSIONS
IMPACTS
be a dead zone due to
AT
AT
PT
IG
T the wastewater.
I ON MI
GHG MITIGATION:
ADAPTATION TO THE EFFECTS OF CLIMATE CHANGE All three treatment plants will
ON THE WATER RESOURCES: be carbon neutral, energy
self-sufficient and zero waste
The plants secure the provision of water to Santiago by 2022. Biofactories convert
despite the climate conditions in the area. sewer sludge into clean energy.
Business Climate Resilience: Thriving Through the Transformation 214 Call to action for businesses
22 Business
22 BusinessClimate
ClimateResilience:
Resilience:Thriving
ThrivingThrough
Throughthe
theTransformation
TransformationBusinesses will have to prepare PUT RESILIENCE AT THE to include core business concerns,
for the physical risks associated CORE OF BUSINESS including finance, strategic
with climate change while at the STRATEGY planning, innovation, business
same time preparing to shift to a development and more.
net-zero emissions future. Companies that will thrive
through the transformation must Setting science-based targets to
Limiting global warming to ensure that their operations, assess and strengthen resilience
1.5°C will require a deep products, services and solutions will be crucial. Physical climate
transformation of economic are compatible with a net-zero impacts can be highly diverse
systems, eventually leading to emissions world. and are localized. Transition risks
a reprioritization of economic can be both locally dependent
activities. Only those companies Companies should review their or on a larger scale. Thus, both
that are most prepared, creative business models and portfolios risks need clear strategic planning
and skillful will thrive. to embed resilience as part of for companies to tackle them
strategic planning to mitigate risks successfully.
Companies that embed resilience and seize new opportunities.
will benefit from strong value We list some of the cutting-
propositions and strategic Addressing climate-related risks edge solutions available to help
differentiators – all of this while and opportunities should therefore companies take practical steps
actively leading through the extend far beyond the remit of to start on the road to climate
transition. sustainability departments resilience below.
Here’s how to start:
UNDERSTAND AND RESOURCES
ASSESS BUSINESS RISKS
WBCSD (2014)
Companies increasingly face a
Building a Resilient Power Sector
variety of physical and transition
climate-related risks, depending on WBCSD (2015)
sectoral and regional impact, such Building Resilience in Global Supply Chains
as water-related physical risks and
COSO & WBCSD (2018)
likely regulatory instruments that
Enterprise Risk Management: Applying enterprise risk management
impact water prices. to environmental, social and governance related risks
Frameworks such as the WBCSD WBCSD (2015)
and COSO framework for applying Climate Resilience: A Guide for the CEO
enterprise risk management to
ESG-related risks are supporting WBSCD (2018)
Why carbon pricing matters: A guide for implementation
companies to better assess and
understand their risk exposure. WBCSD (2018)
While the TCFD recommendations Low Carbon Technology Partnerships Initiative: Going further, faster
help companies communicate
these risks and opportunities TCFD (2017)
to the financial markets (see Final Report: Recommendations of the Task Force on Climate-relat-
“Communicate with stakeholders” ed Financial Disclosures and
below). Additionally, data provided WBCSD sector-specific resources on TCFD implementation
by governments or regional
authorities, as well as innovations
in data and smart technologies will CONTINUITY undergoing the physical impacts of climate change
support companies and suppliers TRANSFORMATION of business models and activities towards
in taking risk-informed decisions a net-zero emissions economy
(e.g., climate-smart agriculture).
Business Climate Resilience: Thriving Through the Transformation 23SCALE UP INVESTMENT WORK WITH OTHERS ADVOCATE FOR CLIMATE
IN MITIGATION EFFORTS RESILIENCE
No single company can address
ALONGSIDE EFFORTS TO the climate challenge alone. To be The private sector can catalyze
ADAPT effective, companies should join increased action on resilience
Meeting the Paris Agreement forces with others to find effective across entire sectors and
climate targets will require solutions that help drive systemic economies. By sending strong
a substantial reallocation of change across markets. climate action messages,
investments globally. There is companies can help shift the
Companies can connect with needle. Whether individually or
a clear business call to action other businesses that are leading
to scale up investments in through strategic collaboration,
the change. Initiatives such as the companies must reinforce the
mitigation and adaptation Global Resilience Partnership30
measures. According to the World momentum around the need for
and the Global Center on more mitigation and adaptation,
Bank, investing in more resilient Adaptation31 provide excellent
infrastructure in low - and middle- sending clear signals to
opportunities to share experiences policymakers and markets.
income countries would return and best practices.
USD $4 in benefits for each
USD $1 invested.28
COMMUNICATE WITH
STAKEHOLDERS
To ensure that key stakeholders INDIA WATER TOOL:
– including investors and
lenders – understand the efforts
companies are making to The India Water Tool32 is a comprehensive and user-friendly
address climate-related risks and application that makes water data from the government and other
opportunities, follow mainstream organizations available on a publicly accessible platform. The goal
recommendations to share is to assist stakeholders in identifying water risks and planning for
mitigation and adaptation efforts. better water management in India.
The TCFD Recommendations29
Water scarcity is an urgent risk in the country. A 2018 report by
are the best place to start.
India’s policy think-tank NITI Aayog33 highlights that the country
is facing the worst water crisis in history, which could lead to a
potential 6% decrease in the country’s GDP by 2030.
Businesses face significant risks from water scarcity and have real
opportunities to gain from addressing the challenge. The India
Water Tool encourages stakeholders to act, whether at national,
watershed or facility level. It includes:
• Over 20 datasets from key Indian government authorities
and other organizations
• A dataset on real-time satellite capture of surface water
availability from NASA and the US Geological Survey (USGS)
• Water stress models developed by the World Resources
Institute (WRI) and Columbia Water Center (CWC).
It provides companies with a data-led approach to working with
the other water users for better water management in local
geographies.
24 Business Climate Resilience: Thriving Through the TransformationCASE STUDY ON PARTNERSHIPS:
Veolia and Swiss RE partnering to enable resilient cities34
In 2016, Veolia and Swiss Re, under the auspices of the Rockefeller Foundation, launched a partnership
aimed at protecting cities’ vital infrastructure from the impact of natural catastrophes.
Under this partnership, Swiss Re and Veolia have agreed to work with cities to understand the risk exposure
of critical assets under current and future climate scenarios. Based on these assessments, cities can
develop resilience plans to lessen the risk of climate change affecting these assets and simultaneously
reduce their risk exposure over time. By planning for major shocks and stresses, cities not only strengthen
the resistance of their vital infrastructure, they also limit economic interruption and begin to quickly repair
damage without waiting for insurance assessments, payouts and solicitations for repair proposals.
The result of this partnership will arm cities with new tools to deal with the constantly evolving risks they face
and will also ensure the livability and vibrancy of cities by building their economic and physical resilience.
CASE STUDY ON THE CEMENT SECTOR:
Valuing biomass wastes from açaí production in Brazil -
Votorantim Cimentos reducing GHG footprint while developing local value chain
Around 40% of CO2 emissions in the cement process come from the use of fossil fuels. Finding
alternatives to use different types of waste derived fuels and/or biomass is a key driver to mitigate
emissions form the sector. Votorantim Cimentos has been using different sources of wastes and
biomass for fuel substitution. An example of a successful case is the Açaí Project in Primavera,
in the state of Pará, north Brazil.
The company invested in research and development to find a local raw material waste in its
production process. The famous Brazilian superfood called “açaí bowl” coming from the açaí
berry, is traditionally consumed for its high-energy value. Under this project, communities, small
farmers and suppliers in the region collect the açaí pits that would otherwise be discarded, and
after a process, the pits arrive at the cement plant to replace part of the imported petroleum coke,
the fuel used in the cement kilns.
This co-processing process, implemented by Votorantim Cimentos results in a series of social,
economic and environmental benefits, such as reduction of CO2 emissions, local job creation,
income generation, and inclusion of local communities in the state of Pará.
In 2018, Votorantim Cimentos used 40,000 tons of açaí pits, resulting in 14.3% thermal
substitution and bringing a reduction of 44,000 tons/year of CO2. The company aims to keep
increasing usage to achieve 30% of the thermal substitution.
Business Climate Resilience: Thriving Through the Transformation 25CASE STUDY FROM HEAVY INDUSTRY IN INDIA:
The Aditya Birla Group (ABG) endeavours to become the leading Indian
conglomerate for sustainable business practices across its global
operations.
K. M. Birla
Chairman, Aditya Birla Group
The Group has implemented a three-step approach towards sustainability:
1. Responsible Stewardship – ABG has created a framework to move towards
international standards and mitigate their impact on externalities.
2. Strategic Stakeholder Engagement – Gaining knowledge to understand how fast
“External Factors” will change and when disruptions will occur as we approach a two
degree sustainable world.
3. Future Proofing – ABG is transforming their strategic business plan to include
additional mitigation and adaptation to changes in the “External Factors”.
Together with Forum for the Future, Aditya Birla also decided to “look forward to the year 2040
and produced a set of materials to help businesses understand what the journey to climate
resilience might look like”. The report,5 Call to action for policymakers
Business
BusinessClimate
ClimateResilience:
resilience: Thriving Through the Transformation 275 Call to action for policymakers
Sectors don’t self-regulate. Companies’ ethical compasses
are not strong enough to compete with business-as-usual
short-term comfort and profits. External pressure is key
to achieve a desired level of decarbonization and to force
companies into having sustainable practices.
Thomas Yapo
Programme Coordinator, UNEP FI
Policymakers must proactively and to achieve a net-zero Policy frameworks across market
increase regulatory measures economy. It is important to align design, integration, trading,
and incentives to de-risk and public and private efforts, for renewable energy and energy
decarbonize economies in example by integrating the private efficiency, for example, must
alignment with the needs of the sector in the development of support coherent transition
Paris Agreement. regional and national adaptation objectives aligned with net-zero
plans. Moreover, governments emissions.
The urgency of the climate should create integrative
challenge requires governments ambition loops to foster business
to take the lead in supporting leadership on climate action,
business and society in the including resilience.35 Government IMPLEMENTATION
transition to a net-zero emissions agencies for environment, finance, OF THE TCFD
world. development and health should RECOMMENDATIONS
also work together in addressing
Business and governments can Financial markets need better,
the inter-connected risks for
increasingly work together to more comparable and complete
climate, nature and resilient
develop the right solutions to drive climate change information.
communities.
ambition and deliver the rapid and The TCFD aims to address this
deep decarbonization of the global issue through recommendations
economy. designed to help companies
REGULATION disclose climate-related
COLLABORATION financial risks and opportunities.
BETWEEN Governments should develop Through appropriate policy
GOVERNMENTS AND adaptation and resilience plans, measures supporting TCFD
BUSINESS TO CREATE including regulatory instruments implementation, regulators can
that support resilient economies,
CLIMATE IMPACT AT including in cities and in
improve the assessing, pricing and
SCALE agriculture, water and energy
management of climate-related
risks; investors can make informed
Closer collaboration between systems. They should design capital allocation decisions; and
governments and the private such plans in a manner that allows lenders, insurers and underwriters
sector will enable necessary businesses the flexibility to explore will be better able to evaluate their
climate action to mitigate the and scale innovative resilient risks and exposure over the short,
physical risks of climate change approaches. medium and long term.
28 Business Climate Resilience: Thriving Through the TransformationCLIMATE FINANCE AND DATA TO SUPPORT CAPACITY BUILDING
PRIVATE SECTOR ACTION BUSINESS DECISION-
Capacity building strengthens
ON RESILIENCE MAKING collaboration, knowledge, expertise
Policymakers can support the Data and metrics are crucial to and impact. Data generation,
unlocking of private investment the adoption of a science-based analysis and management
for climate action by implementing approach to climate action. partnerships are areas with
strong policies that provide clarity Despite large data sets and development opportunities.
and confidence for businesses – knowledge gathered though
to inform strategic planning, drive governments on a global scale,
low-carbon innovations and build there is limited availability, CARBON PRICING AS A
business climate resilience. accessibility and quality of
KEY ENABLER
information and data for long-term
There is clear demand for climate resilient planning. Impactful market mechanisms will
governments to foster innovative
be a key climate action enabler.
financial mechanisms for climate Public authorities have a key role
action that include the private to play in gathering, sharing and Governments should implement
sector. Enabling investment flows analyzing data and information robust and Paris Agreement-
into natural climate solutions that can lead to meaningful action. aligned carbon pricing policy
will help to also accelerate the Additionally, there is an increasing mechanisms (such as carbon
needed investments to transform need for national governments taxes, market-based mechanisms,
agriculture, land use and forest to support business through standards or a combination of
management for halting the loss knowledge sharing and technical these and other appropriate
of nature and increasing resilience assistance, for example in digital mechanisms) to redirect
of rural communities. This will infrastructure. investments to low-carbon
support businesses in creating solutions.
innovative approaches that
integrate both mitigation We also encourage governments
and adaptation efforts, such to set carbon prices consistent
as nature-based solutions and with the Carbon Pricing Leadership
climate-smart approaches, Coalition’s High-Level Commission
and climate action in cities. on Carbon Prices36 and other
similar analyses.
Business looks
forward to working
with governments to
develop the solutions
that build and enhance
climate resilience in
the private sector
and contribute to the
well-being of societies
and the environment.
Business Climate Resilience: Thriving Through the Transformation 29You can also read
