Risks of climate change impacts in communities around the world are also business risks as well as opportunities for climate adaptation.

Businesses that adapt to climate change with community needs in mind can gain a competitive edge.

This is one of the key findings of a report that Oxfam released today in partnership with the UN Global Compact, UN Environment Programme (UNEP), and the World Resources Institute. The report makes a strong business case for investments in climate change adaptation while finding that most companies have yet to develop strategies to deal with the long-term impacts of climate change.

Drawing on the results of a survey among companies engaged in Caring for Climate, the joint climate action platform of the UN Global Compact and UNEP, the report calls on the private sector to invest in climate change adaptation in ways that build the resilience of vulnerable communities in developing countries – many of which are already affected by more frequent and intense storms, water scarcity, declining agricultural productivity, and poor health.

The bottom line is that community risks are business risks. In fact, 83 percent of companies surveyed responded that climate change impacts pose a risk to their products and services. Local and global companies rely on community members as employees, suppliers, and customers, and they depend on services and infrastructure to be able to operate. If farmers are unable to meet production targets, a local port is destroyed by a storm, or a community is ravaged by malaria, then businesses suffer as well.

The good news is that there is growing recognition among companies that while climate change poses significant risks to operations and value chains, it also brings new opportunities to improve business practices, and to create business value while helping people adapt. Among the companies surveyed, 86 percent of them saw responding to climate risks or investing in adaptation as a business opportunity, and 56 percent of them recognized the important opportunity of accessing new markets for climate adaptation-related products and services. Swiss Re, for example, is highlighted in the report because of an innovative weather-index insurance product offered to poor farmers in Ethiopia has helped to protect their staple crop, teff, in the event of drought. Because of its success, Swiss Re is working with Oxfam and the World Food Programme to scale up this new product to achieve critical mass necessary for commercial viability.

But beyond planning for the most obvious or immediate threats, such as increasingly unreliable access to key inputs like water, for example, or damage to assets from flooding, most companies are not yet taking concrete steps to address climate change risks and to respond to new opportunities in a comprehensive, integrated way. This is at least in part due to a lack of widespread understanding of climate-related risks, what climate adaptation is, and what it means for companies or for the markets they serve.

Strategic private sector adaptation to climate change must be a purposeful process: it will not happen by chance. Companies must prioritize adaptation and take action to address risks and pursue opportunities in partnership with communities. Governments can assist companies to overcome barriers to investment and harness the resources and innovation of the private sector to contribute to the public good.

Addressing the adaptation needs of vulnerable communities at the scale that is necessary will require unprecedented levels of cooperation, collaboration and resource mobilization among governments, businesses, civil society groups, and communities themselves. The private sector has much to contribute to and benefit from the development and implementation of climate change adaptation solutions, including sector-specific expertise, technology, significant levels of financing, efficiency and an entrepreneurial spirit. The key is to find the nexus of shared interest where business incentives align with communities’ adaptation needs.