UN: Businesses underestimating climate risk

By John Parnell

Averting climate and disaster risk will need a more positive message if the necessary urgency is to be achieved, the UN and consultancy PwC have warned.

More support from governments and awareness from business of the scale of the potential impacts is needed they have urged.

The 2011 Thailand floods affected a number of electronic component manufacturers with Sony and Toyota forced to close regional factories. At the time Intel cut $1bn from its quarterly profit projections in response to the floods.

Andrew Maskrey, head of risk knowledge at the UN’s disaster risk agency the UNISDR, told RTCC that the tangible, up-front benefits of preparing for the effects of disasters and worsening climate variability needed to be highlighted.

“No politician has ever won an election on the basis of loss or risk reduction. They win elections based on delivering concrete benefits to citizens,” said Maskrey.

“This is where we have been mis-selling disaster risk reduction (DRR) logic and why it has not developed into a real political or economic imperative,” he told RTCC.

The Bangkok floods demonstrated how exposed the global electronics industry was to climate risk (Source: UN/Mark Garten)

Maskrey gives the example of the head of the water authority in Ecuador’s capital city, Quito, who he recently visited.

“It’s his job to provide the city with clean water. But he is doing it in a way that involves green roofs and a number of other things that will actually go on to control droughts and floods.”

The UNISDR and PwC launch their joint report Working together to reduce disaster risk today calling on businesses to start mitigating for the potential impacts facing.

Dealing with these can present opportunities as well as challenges, according to PwC.

“Business growth is happening in emerging economies so there is a lot of investment in areas that are more prone to disasters. This has been building up risk,” Dr Celine Herweijer, partner, PwC sustainability & climate change, told RTCC.

“There is also an opportunity for businesses to contribute to DRR efforts in those countries.

“When it comes to how a disaster might affect their distribution network, supply chain partners, the consumer markets they operate in, that is frequently not adequately considered,” she said.

“There’s a gap in the management of those risks. This is happening against the backdrop of operating in a globalised economy that is very interconnected,” said Dr Herweijer pointing out that this means risks can quickly spread, even if they seem to be far away.

The UNISDR Global Assessment Report, launched last week. This week the Global Platform for disaster risk reduction takes place in Geneva. Representatives of national and local governments, the World Bank and businesses including Citigroup and Nestle will meet to discuss how to improve resilience to extreme and unpredictable events.


Read more on: Climate finance | | | |