While citizens bear the brunt of the impacts of climate change, businesses have not managed to evade them either. Both rapid and slow onset events affect businesses’ core operations and supply chain. Over the long term, businesses also face increased insurance costs and more fragile business environments where climate change exacerbates social and political tensions. It is thus no surprise that businesses are becoming increasingly involved in the fight against climate change.
How businesses can engage in climate change adaptation, particularly in the water sector, is the theme of several events led by the private sector itself at the upcoming World Water Week. In the multinational corporate world, action is already being taken. IKEA has recently announced its plan to spend a total of €1bn on renewable energy and on helping vulnerable communities in developing countries cope with the impacts of climate change. While not a groundbreaking gesture in terms of mitigation, it does put IKEA in a leading position for adaptation efforts by businesses.
Researchers and practitioners have built and established the business case formitigation, arguing that low-carbon and energy-efficient operations incur more benefits than costs. Much less though is known about adaptation, especially at the community level. While it may not be immediately obvious to businesses, they have common interests with communities in adapting to climate change. The overlap provides strategic opportunities for both to reap mutual benefits through joint activities. After all, businesses have less to gain if communities are forced to relocate, fall ill to water-borne and vector-borne diseases, or are compelled to put other priorities first that oppose or at least do not actively support the businesses’ objectives. The same applies to communities, where businesses are no longer providing employment for or sourcing commodities as climate change drives them out of the area. The success of a business is inseparable from the resilience of communities in its business environment. In other words, how communities adapt to climate change influences their roles vis-à-visbusinesses, as workforce, consumers, and suppliers of natural resources and commodities.
There are many similarities between the business case for corporate social responsibilityand for adaptation. The nature of the benefits can be monetary or non-monetary. The non-monetary benefits tend to be overlooked despite their contribution to greater competitiveness. Businesses can gain an ‘early mover advantage’ through a proactive and inclusive approach to adaptation. They will experience a ‘steep learning curve on devising locally-relevant adaptation measures’. Businesses stand also ‘to improve their reputation’ and ‘gain broader community support for their operations and products.’
Businesses can impact on community adaptation in both unintentional and proactive ways. Examples of the former include where businesses improve or repair transportation infrastructure and build defenses against coastal erosion and flooding in order to protect their operations, which can have spillover benefits for communities in terms of improved safety and more sustainable livelihoods.
More proactively, businesses can fund community adaptation. They can invest in physical measures, such as sea walls, strengthened buildings, and restored mangroves or community development funds for water, sanitation and hygiene, healthcare, and education. Furthermore, businesses can use the funds to adapt in partnership with communities, non-governmental organizations (NGOs), and government. The creation of a joint solution arguably leads to more sustainable practices as well as community empowerment that contribute to longer-term resilience.
There are numerous examples of such proactive partnerships. The Kenya Tea Development Agency is working with its partners to develop drought-resistant varieties and making them available to smallholder farmers. It also provides extension services and training for farmers to raise their awareness of climate change risks and possible preventive measures. In the coffee sector, the Coffee Climate Care project launched by UTZ Certified and the Douwe Egberts Foundation aims at increasing the resilience of Vietnamese producers against climate change impacts. The project works with local institutions on vulnerability assessments, followed by training farmers on implementing adaptation. In addition to partnerships with the goal of securing commodity sourcing, there is Ericsson’s partnership with the World Meteorological Organization, where weather forecasts and early warnings are sent to fishermen on Lake Victoria via text messages to reduce their risks of exposure to extreme events. While these multi-stakeholder initiatives demonstrate the appeal and feasibility of a proactive approach, a more robust and systematic understanding of their effectiveness and impact is required.
Although these examples may prompt other businesses to support adaptation at the community level, they will be further motivated if the impacts are measurable and can be made transparent. Businesses can use a checklist of key performance indicators (KPIs) to help measure costs and benefits of adaptation and their progress towards resilience building for businesses and communities. Publication of the achievement of KPIs can also promote businesses to the general public, who can then make conscious choices about which businesses to become customers of. Reporting mechanisms on sustainability-related KPIs already exist, such as the Dow Jones Sustainability Index, the FTSE4Good Index Series, and the Global Reporting Initiative. Adaptation would fit in these indices and reports, which at present largely focus on carbon footprints and mitigation.
Globalized supply chains mean that many businesses have ties with communities in developing countries. Examples in different sectors have shown that risks presented by climate change can be transformed into profitable opportunities for businesses to climate-proof their operations as well as their communities. It would be intriguing to see what lessons could be learnt from the World Water Week events and from adaptation work of the IKEAs of the world. As more such best practices become available, there are likely to be more businesses recognizing such opportunities and acting on them.
The Hague Institute’s team on water and climate change will be attending the World Water Week between 24 and 26 of August. The institute is the lead convener of two events: ‘Governance of Climate Adaptation and Disaster Risk Reduction in Vulnerable Low-Lying Countries’ and ‘Water Diplomacy: Making Water Cooperation Work’. In the former event, the topic of businesses involvement in community-level adaptation will be discussed, as the event focuses on the role of participatory planning in yielding broadly-supported strategies for sustainable development and adaptation.