ENVIRONMENT Building resilience is key to managing climate change risks

Building resilience is key to managing climate change risks

Recent years have seen a step-change in how business understands climate change: more than just an environmental concern, climate change has now become an existential threat.

BY SRK CONSULTING

“The focus on environmental risks, like those featured in the King reports many years ago, has evolved to include ESG issues and climate change,” says Philippa Burmeister, principal environmental scientist at SRK Consulting. “While policy and regulation have tended to drive progress in this field, climate change is now increasingly recognised as a strategic risk to business survival.”

Many businesses are moving proactively to find solutions to climate change impacts, well ahead of regulators’ efforts to guide and enforce action. Burmeister argues that a constructive approach needs to prioritise business resilience to climaterelated trends.

“Climate change has become a significant risk that must be managed,” she says. “The sustainability of businesses is becoming increasingly reliant on how well they succeed in doing this.”

One of the challenges is that business is still discovering the sheer breadth of these impacts, and in what ways they affect operations, according to Ashleigh Maritz, principal environmental scientist at SRK. The process of identifying risks is still developing – whether these relate to the business itself or its upstream and downstream stakeholders.

“A climate change impact assessment (CCIA) is therefore quite different from a traditional environmental and social impact assessment (ESIA),” says Maritz. “An ESIA considers mainly the effect of a project on its immediate and broader environment; conversely, a CCIA is more about understanding the environment’s current and forecasted effects on the business and its stakeholders and formulating practical responses that will build resilience to risks identified.”

She highlights that response strategies need to include the early stages of becoming resilient, the maintenance of that resilience in the medium term, and then sustaining that resilience through building a future proof approach – where a much-changed world awaits.

Building business resilience rests strongly on adaptive management, which emphasises ongoing and in-depth monitoring of factors that have potential to destabilise operations. According to Lisl Pullinger, principal ESG consultant at SRK, heightened uncertainty makes such monitoring vital.

“In the past, we could rely on historical rainfall records to provide predictions for the scaling of infrastructure, for instance,” explains Pullinger. “Now we must model future scenarios in real time, based on how conditions are changing.”

She notes that it is not enough just to collect data; it must also be regularly analysed and interpreted to inform decision-making and decisive action at a strategic level.

WATCH VIDEO

Philippa Burmeister and Ashleigh Maritz, principal environmental scientists at SRK Consulting, in conversation with Gordon Brown, publisher of Green Economy Journal.

Climate change impacts will require collective action that will require traditional silo thinking to be broken down.

“To sustain resilience into the future, business needs to move beyond silo thinking – to ensure that company functions do not operate as stand-alone pillars,” she says. “Rather, climate change impacts will extend across traditional disciplines and departments, from community dynamics and employee wellness to optimising water and energy resources.”

Effective resilience to climate change will mean integrating companies’ responses to the various impacts. The pinch is already being felt as businesses seek finance for their projects, as financiers have been among the first to recognise how climate change puts their investments at risk.

“Many of these key stakeholders now ask clients to respond to climate change risks in their project planning and execution,” Pullinger concludes. “Finance therefore now comes with strings attached – which demand that borrowers essentially build their climate change resilience into project scoping and design.”

To sustain resilience into the future, business needs to move beyond silo thinking.

Predicting the impacts of climate change, like the increase in the prevalence of fires, is difficult given the uncertainties so building resilience and systems to manage disasters will be key.