Why now is the time to build climate resilience: and how to make a start
- Published: Tuesday, 21 September 2021 08:04
Developing climate resilience is now essential for organizations looking to ensure long-term continuity but it is not a simple task. Here Lou Gritzo explains how breaking down assessment and planning into three distinct areas - property, operations and people - can help.
The recent report from the UN’s Intergovernmental Panel on Climate Change (IPCC) has issued a warning for humanity: the planet’s temperature is rising, with the impact already evident across the globe.
Business leaders may have read this report with a sense of déjà vu. Indeed, there is nothing dramatically new here – scientists have been warning for decades about climate change and rising temperatures. This report, however, has been important in placing climate change back on the radar screen. The big takeaway for business executives is to understand what they can be doing now, and how to be strategic in the long-term.
This report should act as a catalyst to spur organizations into action. Developing climate resilience should be the focus of this action – not a simple task but nevertheless a truly essential undertaking for businesses looking to ensure long-term continuity.
What are the risks?
The first step of this journey involves understanding what the risks are, as a changing climate can exacerbate various extreme weather events. The biggest risk is flooding caused by increasing rainfall produced by the higher water holding capacity of warmer air and the accumulation of surface water. As global sea levels rise, flooding of coastal areas will increase and the risk of large area inundation due to storm surges from wind-storms increases. Wildfires are also expected to become more frequent and severe, as extended drought and high temperatures become more common in vulnerable locations.
In Europe, for instance, a high number of flood events occurred this summer, impacting countries such as Germany, Belgium, and Great Britain. Extreme wildfires have also occurred in parts of Greece and Turkey and in southern Spain as recently as September 2021. While we can’t pinpoint any single event to a changing climate, we do know that these events are becoming more common and severe. These changes, along with increases in the value at risk, exacerbates the economic and social impact.
Understanding these extreme weather risks and how they may specifically impact a company’s risk profile will be vital moving forward. To develop climate resilience, businesses must understand their fundamental vulnerabilities in order to take the most appropriate measures. Climate resilience can be overwhelming, like an insurmountable challenge with a lot of uncertainty. To approach this in a strategic way, the solutions can be broken down into three distinct areas: property, operations and people.
Businesses with a strong understanding of climate risks and a willingness to act will be able to make decisions to protect their commercial property facilities more effectively. Being able to answer key questions - like whether buildings are located in areas near forests potentially impacted by wildfires or near locations vulnerable to coastal flooding - can allow climate resilience strategies to be created.
Asking these questions and using available facts and data to back up decisions is a positive move for businesses, as it can lessen the potential impact of a changing climate and extreme weather on their property.
Starting at the local level, businesses can work with architects and engineers to make buildings stronger and sometimes more sustainable, for instance putting in place vegetative roofs which have been designed to be more resistant to extreme weather events. Physical risk mitigation can also include measures such as installing flood barriers which divert water away from a facility or structurally reinforcing a building’s envelope to make it more flood and wind proof, for example.
Businesses also need to take the time to properly evaluate their operations, understanding which aspects are critical to their success. They can use an inside out approach for this process, starting with operations inside their property line and around the facilities such as industrial equipment housed outside – and examine how this can be impacted by climate change. In a worst-case scenario, certain equipment being taken offline due to a coastal storm, for instance, could have major ramifications for a business’ bottom line.
Move outside next on to maintenance of access, infrastructure, and energy. Although these elements may sit outside of the walls of a particular facility, it is crucial that businesses don’t overlook how they may be impacted by climate change.
The same thinking also applies when it comes to properly addressing how supply chains will be impacted by a changing climate. It’s important to investigate how trends such as rising sea levels may impact facilities and routes, understanding that solutions like re-localisation or diversification may be necessary steps to develop climate resilient supply chains.
The most important audience to any business is current employees and future talent. It is FM Global’s experience that this audience is highly engaged on the topic of climate change, and they want to hear that their organization understands the issue, is concerned, and importantly, has a strategy in place.
For any organization, being able to communicate this strategy is key. It needs to be communicated internally and – depending on the structure – to owners or shareholders. Beyond this, businesses need to then communicate this strategy to the market and customers.
These audience groups have one thing in common, they want to know that the businesses they engage with – whether as customers, employees or shareholders – understand climate change, can see the impact and have the strategies in place to mitigate against its impact.
On a larger scale, the issue of climate resilience is highly complex, requiring collaboration beyond just businesses and their insurance partners; the issue is going to require collaboration between the private sector and governments everywhere. Any organization serious about climate resilience will appreciate and not shy away from this complexity. It is easy to feel overwhelmed by the scale of the issue but by working collectively and being action-oriented for the risks that most important, and are most certain to increase in a changing climate, it is possible to make immediate and meaningful improvements.
My key message to businesses reading the IPCC report is not to panic but to take stock. It is important to acknowledge that we can’t be complacent because there are short and long-term changes business can and should make to ensure resilience.
We’re now coming to see our environment as less static, defined by a constantly shifting dynamic set of factors. Learning to deal with these changes and the increases in risk associated with them will single out the winners of tomorrow.
Lou Gritzo, VP and manager of research at FM Global.