The World Business Council for Sustainable Development (WBCSD) has this advice to businesses:
Build “resilience” into your business strategy if you want your company to survive in the new climate-change based economy.
That is the “call to arms” message in the WBCSD’s Business Climate Resilience: Thriving Through the Transformation report.
According to the WBCSD, there is an immediate need to cease and desist “business as usual” practices if the Earth is going to stay within the 1.5°C safe operating space for society and the environment, as laid out in the Paris Agreement, and if a company wants to continue to thrive in a climate-friendly economy.
“Companies need to prepare for both the physical risks that are associated with climate change, as well the associated transition risks on the path to an economy that is net-zero greenhouse gas (GHG) emissions”, the report says.
In addition, “Businesses need to integrate their climate change risks into their Enterprise Risk Management processes, and factor climate action into their decision-making processes”, the WBCSD says.
That is a mouth full, as well as a very intimidating task.
To help simplify, the reports breaks “resilience” down into three steps:
Step 1: Develop and maintain ambitious mitigation efforts
Mitigation is defined as being based on global influences and impacts. A business mitigation strategy, therefore, would target processes that would help a company reach net zero greenhouse gas (GHG) emissions.
If a business makes progress in this direction, “it becomes less vulnerable to disruptive risks, such as policy and legal measures, resource scarcity or adverse market developments.”
Step 2: Adapt to ensure business continuity in an era of climate-related physical risks
Adaptation strategies consider more diverse and localized risks and impacts. Because climate-related risks affect every portion of the product lifecycle, these risks must be assessed and evaluated throughout operations, supply chains and even across the communities in which a company operates.
To help develop adaptation techniques, the report suggests specific frameworks, such as the COSO and WBCSD framework, that apply enterprise risk management to environmental, social and governance (ESG)-related risks, and help companies identify and manage new risks and opportunities, particularly those related to the physical impacts of climate change.
If interested in reading more on the subject, the WBCSD offers a report that analyzes climate impacts on power systems: Building a Resilient Power Sector
For an in-depth look at implementing adaptive measures in the supply chain, WBCSD suggests the following report: Building Resilience in Global Supply Chains
Step 3: Transform business decisions by assessing the connections, dependencies and value to society and nature
This last one may sound a bit esoteric on the surface, but is perhaps the most critical.
“The Stockholm Resilience Centre highlighted that the health of the biosphere – that is, the environment – is the basis on which all the other Sustainable Development Goals (SDGs) sit…To become truly resilient, companies will need to help ensure the success and vitality of the environment and communities in which they operate” the report says.
To do this, business resilience strategies should be outward looking — considering relationships and interdependencies across systems and beyond the company.
To make this process easier, the WBCSD helped develop the Nature Capital Protocol and the Social Capital & Human Capital Protocol, which provide a methodology and approach needed to make such an assessment.
If a company is looking for more of a consulting approach, there is Business for Nature, a coalition of 14 organizations (including and hosted by WBCSD), which work with businesses to find viable solutions.
It’s Now or Never
As far as this WBCSD report is concerned, the writing is on the wall. There is no more waiting — sustainable actions must be taken immediately to ensure our future.
This is a two-fold process. Businesses will have to prepare for the physical risks associated with climate change, while at the same time preparing to shift to a net-zero emissions future.
Don’t Forget the Policy Makers!
Businesses, don’t despair! The report also calls out policy makers and their critical role in re-weaving the economic and social fabric of our current world financial tapestry; including the need to work with businesses, pass resilience and adaption regulation plans, and follow the Paris Agreement by aligning carbon pricing policy mechanisms (i.e. carbon taxes, market-based mechanisms, standards or a combination of these) to redirect investments to low-carbon solutions.
Tony Henshaw, CSO of Aditya Birla Group in India, sums up the situation this way: “External forces (of climate change) will lead poor performers to become unsustainable, i.e. financially, technically or geographically unable to continue and hence eliminated. In some cases, the world will not be able to afford some entire product ranges which will become unsustainable and out of business.”
Start building your environmental resilience today!