The insurance sector is a leader in risk assessment on climate change. The agriculture and tourism sectors have the highest awareness of climate impact. Yet, most businesses have not undertaken major adaptation measures. Instead they assume a ‘wait and see’ approach.
Timing, alignment of adaptation measures with overall firm policy, and commitment to adaptation measures is critical. Managers should openly discuss adaptation within their organization and collaborate with stakeholders to develop shared definitions and strategies. Researchers must bolster business practice with solid empirical research.
This systematic review, prepared by David Nitkin, Ryan Foster, and Jacqueline Medalye, synthesized the entire body of research on business adaptation to climate change, reviewing thousands of studies from academia and practice. It points to risks and opportunities for many leading sectors dealing with climate change.
Firms must prepare to adapt to climate change. But how?
The Intergovernmental Panel on Climate Change (IPCC) has shown that the Earth’s climate has begun to change as a result of human activity. Businesses will soon be forced by regulation to reduce their carbon footprint to mitigate future changes. However, businesses must also be prepared to adapt their activities and business models to the changes that will inevitably occur. The question is how.
Adapters are the exception, but there are tools to get other business started.
Sometimes adaptation is confused with mitigation. Businesses typically take a ‘wait-and-see’ approach. Adapters are the exception rather than the rule.
Some sectors are leaders in adaptation; the insurance sector in risk assessment, and agriculture and tourism sector in awareness of climate impact. The finance sector, though vulnerable, is also in a position to influence adaptation across sectors.
Existing tools deal mostly with risk management.
Five types of risk tools were found:
- risk frameworks
- scenario tools
- decision trees
- costing tools
- computer simulation tools
Five types of adaptation tools were identified:
- adaptation identifiers
- step-by-step guides
- success measurement
- adaptation networks
- adaptation option tools
Who Should Read the Report
This systematic review is primarily designed for academics. The report can also help managers assess risks, evaluate opportunities, and implement adaptation options.
Leaders and executives in strategy, operations, and finance can use the document to implement an adaptive approach to climate change in any organization.
Implications for Managers
Bring the adaptation discussion into the mainstream.
Increase awareness of risks and vulnerabilities related to climate change within your firm, your sector, and within multi-sectoral platforms. Ensure you develop shared definitions.
Lead collaboration efforts to share knowledge and address common risks.
Leading organizations can share knowledge with lagging organizations and be perceived as leaders. Collaborate across sectors, with academics, and with other stakeholders to create new solutions.
Develop tools for risk modeling and opportunity assessment.
Add to and improve the suite of tools available for climate change adaptation.
Implications for Researchers
Focus on primary research to uncover case studies, lessons learned, and best practices. Develop sector-specific climate impact scenarios and refine theoretical models. Conduct cross-sectoral studies to find common concerns and solutions that can promote collaboration among sectors.
This systematic review of multiple and varied resources – from the public sector, the private sector, and academia, dating from 1997 to early 2009 – revealed 201 sources pertinent to business adaptation to climate change. An interpretive narrative synthesis was employed to distill the data into accessible and intelligible frameworks.
- Briefing Note on Climate Change Adaptation (webpage summary, PDF)
- Primer: Business and Climate Change
- Summary Report on Business Adaptation to Climate Change (webpage summary, PDF)
- Blog: Weathering the Storm: 4 Steps to Prepare your Company for Climate Change
- Research Insight: Adapt your Climate Strategy to Stay Competitive
- Research Insight: Get Involved Early in Emissions Trading Talks