March 10, 2022
Authors
IPCC report identifies areas for immediate action that companies can take to address increasing human & environmental risks of climate change
On February 28, the United Nations Intergovernmental Panel on Climate Change (IPCC) released the Working Group II report, Climate Change 2022: Impacts, Adaptation and Vulnerability. Findings of the IPCC report are highly relevant across business sectors and are likely to foreshadow increased challenges in conducting business operations, greater scrutiny of corporate sustainability commitments, and potentially increased regulation or litigation.
Takeaway 1: Climate adaptation measures are being deployed in a variety of sectors with success, however, the scale and pace of adaptation needs to accelerate to meet rapidly changing climate conditions
Human-induced climate change is increasing the frequency, intensity, and duration of extreme weather events. Extreme conditions are surpassing the resiliency of some vulnerable ecological and human systems and threatening the ability of other systems to adapt to changing conditions. These changes are occurring even before the 1.5°C target of the Paris Agreement has been breached and are likely to prompt demands for more rapid and greater reductions in greenhouse gas emissions by nations and businesses.
Takeaway 2: Extreme weather is causing food and water insecurity, disrupting supply chains & damaging property and infrastructure
The report notes that economic damages and losses increase non-linearly with warming and are greater than previously predicted. Industrial sectors with high exposure to climate factors, including agriculture and fisheries, forestry, energy, and tourism, are already experiencing economic impacts. However, all industrial sectors are at risk of economic impacts from business interruptions caused by effects of extreme weather on resources, facilities, and their work force. For example, construction of levees and warning systems have helped water management in some areas, but restoration of wetland, rivers, forest management, and agricultural changes offer further options for companies to meaningfully improve water systems while potentially improving their own resilience to floods. Companies can actively assess actual and anticipated risks that climate change poses to their business operations and factor those risks, plus the costs of mitigation and adaptation, into short- to long-term economic projections.
Takeaway 3: Biodiversity and ecosystems services are imperiled, which will impact business operations & supply chains
Warming temperatures are contributing to reductions in biodiversity, which in turn is accelerating warming. With the loss of biodiversity comes the loss of ecosystem services that nature provides. The report concludes that climate change has altered biodiversity and impacted ecosystem structure and resilience in most regions of the planet. Many business sectors depend on, or cause material impacts to, biodiversity. Several organizations are actively developing standards for businesses to measure biodiversity impacts, and pressure is building for disclosure of that information.
Takeaway 4: Adaptation is necessary, can address multiple business risks, but is not unlimited
The report notes that the rapid rate of climate change will limit our ability to adapt to changing environments. The report identifies two classes of limits. Soft limits are those where no currently feasible adaptation options exist but may in the future. Soft limits are largely determined by policy and financial constraints. Hard limits will emerge when existing adaptation options cease to be effective and no additional options exist. Hard limits will increasingly emerge at higher levels of warming when adaptation to extremes of temperature, sea level rise, etc., become impossible. Companies should consider the limits and future feasibility of their adaptation and mitigation strategies. For example, as warming increases, the availability of hydroelectric power may decline as water volumes decline. Corporate decisions should consider that the current availability and cost of hydroelectric power may not be representative of future levels.
One strategy identified in the IPCC report that may help offset adaptation limits is creative adaptation where multiple adaptation strategies are combined. Creative adaptation could take the form of combining urban agriculture and structural adaptation, which could reduce adaptation costs and contribute to flood control, sanitation, water resources management, landslide prevention, and coastal management. Companies would benefit from considering creative adaptation options while factoring adaptation limits into medium and long-term business projections.
Takeaway 5: There's still time
Despite its ominous projections, the report finds there is still time to avoid the most severe effects of climate change. However, that window of opportunity is short, and delayed or minimal actions will likely create risk and competitive disadvantages. Transformational changes to government, social, and business systems are anticipated in a climate resilient future. For businesses, this may mean a stronger and more rapid implementation of sustainability goals, which could take multiple paths. It may mean more rapid and expansive use of renewable energy sources and energy storage systems, protection or restoration of ecological communities to preserve resources and supply chains vital to business operations, greater water use efficiency, or implementation of nature-based solutions to protect facilities or infrastructure.
How Exponent Can Help
Exponent offers strategic, multidisciplinary climate consulting to public and private sector stakeholders seeking to mitigate the risks of climate factors, reduce greenhouse gas emissions and water consumption, and assess the environmental and ecological impacts of business operations. Exponent published a series on how companies can use SMART goals to implement sustainability programs to help them lower their carbon and water footprint. Our broad expertise across numerous engineering disciplines, public health, ecological and environmental sciences, hydrology, natural resource damage assessment, and restoration and mitigation analysis gives our clients access to an unparalleled wealth of skills and resources that can help build unique solutions to unprecedented challenges.
