Risky business in an era of climate changeMay 31st, 2012 | by Guest Blogger
This blog was written by climate change program director David Waskow.
Hurricanes season is upon us (it officially starts tomorrow, June 1). In vulnerable communities in places like Haiti and Central America, everyone knows it’s a time when the consequences of extreme storms can be devastating.
But it’s also a moment when businesses should be thinking about the risks they face from those extreme weather events—and from the climate change that is making those extremes more intense and more frequent. Business supply chains and operations are already being affected—including in some of the hard-hit communities around the globe that businesses depend on for their supplies and operations.
That’s why Oxfam America, together with Ceres and Calvert Investments, released a guide today for companies and investors laying out what businesses should disclose about the physical climate risks they face and what they’re doing to manage them.
The guide builds on the guidance that the SEC released in 2010, which advised companies to disclose material risks from climate change impacts in their securities filings—from extreme weather events to increasing water scarcity and rising sea levels. There are also voluntary modes of disclosure, such as the Carbon Disclosure Project, through which companies can provide information about climate impacts they face. The new guide describes the types of impacts being faced in a set of seven key industries and outlines practicable, actionable steps that companies should take to report on physical climate risks and manage them.
In many cases, the climate impacts on business supply chains and operations are often intertwined with local communities–from facilities and employees to services and supplies. Companies need to understand—and be transparent about—the ways in which climate change is likely to affect them—not only so they can be prepared but also to ensure that the communities that they rely on are also prepared (and in order to avoid practices that undermine the climate resilience of communities).
Last year’s flooding in Thailand and Cambodia offers a dramatic and disturbing example of the way in which extreme weather events can cause extensive damage both to communities and business supply chains. More than 160 companies in Thailand’s textile industry were harmed in the floods and about a quarter of the country’s garment production was stopped in its tracks. It also was reported in the Financial Times that Dell’s share price fell by 5% at one point because of the impact from the flooding.
Of course, this is just the tip of the proverbial melting iceberg of the kind of impacts that climate change will bring. So as the changing climate bears down on us, we hope that this new guide lays the ground for businesses to acknowledge the risks that both they and communities face and to tackle this growing challenge.