Companies: It’s Survival of the Fittest in A Changing Climate
By Dawn McGregor 24 October, 2022
Riskier and costlier water and climate-related water risks are drastically reshaping the operating environment, even for leading companies. See what companies need to do to survive with CWR's McGregor
The stakes have never been higher = only the fittest will survive
Water and climate-related water risks are getting risker and costlier, so much so that we’ve entered an era of survival of the fittest. And that’s just as much for business as it is for people as these risks are drastically reshaping the operating environment, even for leading companies.
Water & climate-related water risks are getting risker & costlier…
…and it’s only going to get worse as we are decades late on climate action & dangerously maladapted
Nobody can deny that we are already suffering catastrophic climate impacts, just look at the last six months or so – flooding submerged a third of Pakistan, 12m floods hit major states in Australia after already severe flooding in March & April of this year, and on the other end of the spectrum, China had a record breaking drought and several key global rivers including the Yangtze, Rhine and Colorado that hundreds of millions of people and trillions of the global economy rely on have nearly dried up. We are talking about systems that we’ve built our societies and economies around failing.
These climate and weather-related impacts mean material and widespread costs to business from crimpling power outages to forcing logistical providers & major companies to suspend operations and destabilising markets to more expensive or no insurance. And then of course there is the dollar cost, which is vastly increasing. Even Janet Yellen, the US Secretary of the Treasury is talking about it (see quote below). FYI – recent Hurricane Ian will cost private US insurers $63 billion in claims and will cause the largest storm-related loss in Florida’s history.
“Shocks [climate-related] that were unthinkable even a few decades ago are now presenting with alarming frequency. There’s been at least a five-fold increase in the annual number of billion-dollar disasters over the past five years compared to the 1980s, even after adjusting for inflation,”
-Janet L. Yellen, US Secretary of the Treasury, September 2022
And it’s only going to get worse since we are decades late on climate action. There is a 50:50 chance we will breach 1.5°C by 2026, 74 years early! We are already at 1.1°C – 1.2°C of global warming. Plus, having most likely already passed five dangerous climate tipping points and at 1.5°C will pass an additional five, impacts will no longer be linear. And don’t forget that our net zero focus has left us dangerously maladapted.
Now is the chance to change what business as usual means forever
I’m sure you feel great – not – after reading that… it’s hard to read, scary to think about and overwhelming as to where to start. But this is also an enormous opportunity. There has never been a bigger impetus than the existential threat from the climate crisis to change what business as usual means forever. To stop abusing natural resources and nature, to not need the label “green” or “blue” and just be that. To live in a world where profit at all cost, even human life is not the modus operandi. So, let’s do it! Now is the time for companies to set themselves and future generations up for survival and those that don’t, well… adios.
Do you have your survive & thrive guide?
Surviving and thriving now and for the future is totally different to what it is was just five, two years ago. The climate’s impact on companies needs just as much management as the company’s impact on the climate. This applies to all companies, regardless of its water profile or amount of carbon emissions.
Companies urgently need a survive & thrive guide that will allow them to mitigate, adapt to & capitalise on these risks…
…do you have yours?
Companies urgently need a survive & thrive guide that will allow them to mitigate, adapt to and capitalise on these risks. Do you have yours? Is it going to stand-up to the accelerating and intensifying climate impacts? Have fresh & saltwater risks been assessed holistically? Does it factor multi-meter sea level rise? Have direct & indirect impacts across the full value chain been mapped? Does it include catchment-based water targets? What temperature is being used to plan adaptation?
All these questions can feel endless and bewildering, I know from my discussions with leaders across different sectors, but the guide is a must do. If you’re not sure where to start or have questions or too much data and not sure what do to with it, drop us a line, we can help, and we do help companies. Most sustainability departments don’t have the expertise but that’s usual; it’s one block, though all-encompassing and interconnected, of all the sustainability/ ESG building blocks.
Are you on top of the latest climate science, emerging trends like water positive, new financial disclosure like the ISSB?…
…it’s our job to stay on top of all that so we can help you
It’s our job to stay on top of the latest and recently fast-moving climate science, available data (FYI – Aqueduct is developing the next-generation of future water stress projections), emerging strategies like being water neutral or positive (FYI – not the same as carbon neutral) and to understand the complexities and interlinkages of these risks vis-à-vis regulations, compliance, disclosure, access to capital, adaption, communication etc.
Speaking of disclosure, investors are after more climate risk data. Are you on top of the newly formed International Sustainability Standards Board? And what about the SEC proposed rule change that if adopted would require registrants to include certain climate-related disclosures (governance, risk identification ++)? Large companies would have to disclose most of this information as of fiscal year 2023.
The consequences of inaction and/ or insufficient action are rapidly intensifying. Impacts are bigger and lasting longer, material disruptions are increasing in frequency and in more geographies, it’s getting more expensive to mitigate and/ or adapt and capital access prerequisites are becoming more rigorous.
You need to plan with worst case scenarios in mind to survive, otherwise you’re shooting yourself in the foot
Don’t be one of the companies that underestimates the risks, leaves it too late or doesn’t have a survive & thrive guide that is prepared for the worst – you need to plan with worst case scenarios in mind to survive, otherwise you’re shooting yourself in the foot.
Leaders in the water sector are developing and executing their survive & thrive guides as I heard in my interviews of 14 water leaders at Singapore International Water Week 2022. Hear from them on how they are adapting and what they are doing to achieve their net zero targets, some even as soon as 2030. Plus, I got the chance to interview Dr Debra Roberts, Co-Chair of Working Group II (Impacts, Adaptation and Vulnerability) of the Intergovernmental Panel on Climate Change. See why she thinks water can be the rallying point for climate leadership and how cities can play a catalytic role.
The private sector can & should play a big role in building a climate-resilient economy for generations to come
All eyes are on the fast-approaching COP27. There is hope that with many countries having endured destructive climate and weather-related impacts since COP26, there will be more meaningful outcomes. However, there has been a lot on the global agenda to distract leaders – the war in Ukraine, spiralling inflation, energy security and it goes on. Indeed, only 9 of the 193 countries that vowed to submit more ambitious targets to cut greenhouse gas emissions last year had done so by the end of September 2022. This shows much the private sector can play a role in building a climate-resilient economy – and it should given its outsized contribution to GHGs – so, step on up and let us know if you need a hand!
- A Wave of Change: Companies’ role in building a water-secure world – Despite the pandemic, disclosing companies are up 20%. CDP’s Missaire shares the latest trends from their 2020 global water report
- Companies Are Taking Water Security Seriously – Here’s How – CDP’s Lamb on their latest 2017 Global Water Report
- How To Manage Water Risk In Your Growing Business – Water risk is financial risk so what does the new business as usual look like? Trucost’s Tsang & March explore
- Water: Can’t Always Buy What You Need -With competition for water intensifying, paying more for water may not get you what you need. Deloitte Consulting’s Will Sarni on strategies that can help corporates secure water for growth
- Corporate Water Reporting in China – CDP’s Gillespy on their latest report & why it’s time to report on water risks in China
- Water Stewardship: Actions Must Match Risk – Water risks continue to rise on corporate agendas but action taken does not match the risk
More on Latest
- Rivers are Running Dry Today – Rivers are our lifelines; they support cities, food & economies for centuries. This summer they were tested with severe drought/floods – will they fail? CWR’s Tan & Lam dive into challenges facing 5 major river basins that are the industrial/agricultural heartlands for China, Pakistan, US and Europe.
- China’s Growing Water Risk Factor – China is especially vulnerable to water-related climate risks but that also means increasing capacity for adaptation for which it has big ambitions. Moore, Director of China Programs & Strategic Initiatives at UoP, expands
- Building Too Close to the Water. It’s Ridiculous! – Reeling from climate disasters, it’s time for managed retreats & buyouts in Australia. O’Donnell, Honorary Associate Professor at ANU, expands
- A Climate-Ready Northern Metropolis – Seizing the opportunity, Loh, Chief Development Strategist at HKUST, launched the ‘Sustainable Northern Metropolis’ project. We sit down with Loh to talk about the project’s vision, risks, opportunities for HK to climateproof with Shenzhen & more
- Heat Waves Hit the Poor Hardest – Heatwaves are among the deadliest disasters and poorer countries will be 2-5x more exposed to them by 2060, which risks $ billions. Sadegh, Abatzoglou & Alizadeh share more key findings from their research
Read more from Dawn McGregor →