Is Climate Adaptation CSR?

Is Climate Adaptation CSR? “Private Sector Engagement in Adaptation to Climate Change,” a new report from the Organization for Economic Co-operation and Development is a worthwhile read, especially for discovering solid examples of extractive industry, water utility and agricultural adaptation.  However, the report notes that adaptation “does not fit neatly within standard Corporate Social Responsibility narratives.” This is because a defining characteristic of adaptation is that its benefits are often local and private, whereas mitigating greenhouse gas emissions has global and public benefits.

I believe that climate adaptation fits squarely within CSR for at least three reasons.  They are:

Community: Climate change requires community resiliency, and corporations have an opportunity to both show a commitment to their communities and gain market share through their community-level response to climate change.  After Hurricane Katrina struck in August 2005, the early-in companies that provided goods more efficiently than did FEMA exemplified this. Their reputations benefited.

Social: Climate adaptation can help ensure the health and well-being of employees, in preventing climate impacts as well as mitigating harm during and after climate events.  Helping to prepare your workforce, from your headquarters to the factory floor, safeguards the safety – and contentment – of your employees.

Governance: Climate adaptation involves a great deal of risk mitigation, for which investors are always on the lookout. Of course, risk management at many organizations isn’t (yet) called climate adaptation.

What’s clear is that, say, without utilities, with shuttered stores and with impacted supply chains, the public experiences the direct local and global impacts of major climate events.  Indeed, the global benefits of a private sector resilient to changes in climate are more direct and tangible than the global benefits of private-sector greenhouse gas reductions.

My bet is that a handful of leading 2012 CSR reports will include a chapter on climate adaptation.  Good for them.

Climate and Society - A Look Back at 2011

Happy Lunar New Year!  It’s 4710 on the lunar calendar and, having reflected on the myriad end-of-year/start-of-year lists in my inbox since December began, Jan. 23 seems a good day to reflect on the most thought-provoking events and items concerning corporate climate adaptation in 2011.  Here are my top three – plus a wish for 2012:

1. Studies show that one-in-five major civil conflicts since 1950 may be linked to climate extremes associated with El Nino. Those big climate disturbances rooted in the tropical Pacific Ocean remind us to prepare for the collateral dis-benefits possible from shifting conditions.
2. Japan’s multi-layered tragedy – the worst earthquake there on record followed by a meter-high tsunami and concluding with the worst nuclear accident since the 1986 Chernobyl meltdown – prompts us to consider the domino effects of extreme events. It also changes the parameters of corporate extreme-event scenario planning.
3. Reflecting rising temperatures between 1980 and 2008, farms around the planet produced 3.8 percent less corn and 5.5 percent less wheat than they could have, suggesting that climate change is having an impact faster than we are adapting.

Between 1980 and 2008, climbing global temperatures took millions of tons of wheat off the dinner table, scientists say. Some countries experienced big losses due to weather (red), while in others, wheat production held steady (blue). (Science/AAAS)

My wish for 2012:  That companies boldly embrace the opportunity that climate adaptation sparks – leveraging intellectual property to sell climate-proofed and climate-resistant products.  I’ve mentioned some winners in previous blogs.  Here’s another set:

• Construction equipment – for clearing debris and rebuilding weather-stricken communities
• Mold removal – for helping communities cope with basements swamped by overbank flooding or basement backups
• Power tools – for chopping up felled trees that fall victim to arbor pests that weaken them or intense storms
• Auxiliary-powered equipment- such as generators and transistor radios for use in power outages during extreme weather

And what are your wishes?

Ten Point Checklist for Making Corporations Resilient

The United Nations International Strategy for Disaster Reduction has published an interesting guide:  Making Cities Resilient:  My City is Getting Ready. Its ten-point checklist for making cities resilient begs for a companion list.  I’ve added my two cents by developing a “Ten Point Checklist for Making Corporations Resilient.” http://www.unisdr.org/english/campaigns/campaign2010-2015/documents/campaign-kit.pdf

Ten-Point Checklist
	For Making Cities Resilient (UNISDR)	For Making Corporations Resilient
1	Put in place organization and coordination to understand and reduce disaster risk, based on participation of citizen groups and civil society. Build local alliances. Ensure that all departments understand their role regarding disaster risk reduction and preparedness.	Include climate adaptation in a member of the C-suite’s job description. Establish a cross-function climate adaptation working group and connections with local and regional governments in key geographies in your enterprise – especially operations and supply chain.  Consider collaborating with key members of your supply chain, industry peers and neighboring businesses on climate adaptation planning and execution. Ensure that all departments understand their role regarding disaster risk reduction and preparedness.
2	Assign a budget for disaster risk reduction and provide incentives for homeowners, low-income families, communities, businesses and the public sector to invest inreducing the risks they face.	Include budget lines for both proactive adaptation measures and recoup from extreme event.  Include climate adaptation in performance reviews for the C-suite, lieutenants and managers.
3	Maintain up-to-date data on hazards and vulnerabilities; prepare risk assessments; and use these as the basis for urban development plans and decisions. Ensure that this information and the plans for your city’s resilience are readily available to the public and fully discussed with them.	Include climate adaptation in your emergency preparedness and continuity plans initially, with annual updates.  Ensure that this information and the plans for your corporation’s resilience are readily available to your leadership team and fully discussed with them.
4	Invest in and maintain critical infrastructure that reduces risk, such as flooddrainage, adjusted where needed to cope with climate change.	Invest in and maintain critical infrastructure that reduces risk, such as flood drainage, snow removal, vector-borne disease prevention, and heat mitigation for workers and machinery, adjusted where needed to cope with climate change. Consider supply chain and building decisions with these risks in mind.
5	Assess the safety of all schools and health facilities and upgrade these asnecessary.	Assess the safety of all facilities, especially those in locations vulnerable to extreme weather events (coastal, arid) and upgrade or move.
6	Apply and enforce realistic, risk-compliant building regulations and land-use planning principles. Identify safe land for low-income citizens and develop upgrading of informal settlements, wherever feasible.	Engage with local governments to ensure that climate adaptation regulations protect residents and economic growth. Identify your most vulnerable employees (age, income, tasks, geography) and plan especially for their safety.
7	Ensure education programs and training on disaster risk reduction are in place in schools and local communities.	Ensure education programs and training on disaster risk reduction are in place throughout your enterprise, not just for disaster preparedness, but also for heat exhaustion, vector-borne disease, and the like.
8	Protect ecosystems and natural buffers to mitigate floods, storm surges and other hazards to which your city may be vulnerable. Adapt to climate change by building on effective risk-reduction practices.	Protect and enhance ecosystems and natural buffers in and near your holdings to mitigate floods, storm surges, extreme heat and other hazards.
9	Install early warning systems and emergency management capacities in your city and hold regular public preparedness drills.	Install early-warning systems and emergency-management capacities in your enterprise and hold regular preparedness drills.
10	After any disaster, ensure that the needs of survivors are placed at the center of reconstruction with support from them and their community organizations to design and help implement responses, including rebuilding homes and livelihoods.	After any disaster, ensure the needs of survivors are placed at the center of reconstruction.  See http://climateadaptationexchange.com/crisis-communications-are-you-ready-for-a-climate-related-crisis-in-your-business/ for communications guidelines.

Ports: Staying Competitive Through Climate Adaptation

Climate change will impact longstanding infrastructure, such as our ports. And since the vast majority of non-service-sector corporations rely on ports for some part of their supply chain, I encourage you to read Climate Risk and Business Ports, a framework for both evaluating and mitigating the risks of climate change on port operations. Its summary can help us find ways to evaluate risk. The report notes that climate change is likely to impact:

• Demand, trade levels and patterns affecting total trade through the port

• Navigation and berthing

• Goods handling

• Vehicle movements inside the port

• Goods storage

• Inland transport beyond the port

• Environmental performance

• Social performance

• Insurance

Suggested solutions include raising causeway road heights, paving unpaved surfaces, increasing bridge clearances, increasing culvert diameters, reconsidering road underpasses, improving drainage, managing refrigeration’s energy intensity, developing trade in climate-resilient commodities, protecting storage areas from flooding and adding additional insurance.

Generally, building to a higher standard is now a viable climate adaptation for long-life infrastructure. Ports that begin now to increase the reliability of their infrastructure can improve their economic performance and attractiveness to investors and users.

A UN Resource for the Private Sector:

If you haven’t yet checked it out, spend some time online with the United Nations Framework Convention on Climate Change’s Adaptation Private Sector Initiative. Most of the material deals with agriculture in emerging economies, and at least a dozen situations posted there deserve a look. The website comprises a treasure trove of case studies from a wide range of regions and sectors. Of course, many relate to agriculture, a UN focus. But you will find other items of interest as well.  I particularly enjoyed:

Tomorrow’s railway and climate adaptation

Hurricane Katrina: A climate wake-up call

Adaptation and the legal sector

If any of them inspire you to write a guest blog, let me know!

Public Engagement Can Spark Innovative Climate Action

Public Engagement Can Spark Innovative Climate Action During Chicago Ideas Week, Edelman sponsored a panel that explored, “Climate Action, an Economic Growth Opportunity.”  Our co-host and partner was Net ImpactFor those of you who don’t know about Net Impact, it is a nonprofit based in San Francisco that supports members through a volunteer-led chapter network spanning six continents. Their mission is to mobilize a new generation to use their careers to drive transformational change in their workplaces and the world.

(Panelists were Jon Creyts, principal and leader of the U.S. climate change practice at McKinsey & Co.; Aaron Durnbaugh, deputy commissioner in the City of Chicago’s Department of the Environment; Jacky Grimshaw, vice president of policy at the nonprofit Center for Neighborhood Technology; Shannon Schuyler, leader of PricewaterhouseCoopers’ U.S. corporate responsibility practice; and Alex Weiner, founder and chief operating officer of Inbalance, a Chicago-based management consultancy that specializes in improving buildings’ energy efficiency and other green-related services.)

As panel moderator –  surrounded by professionals with rich and diverse backgrounds and some strikingly divergent opinions; responding to perceptive questions from the audience; and monitoring Net Impact and Edelman tweets – got me to thinking about the innovative, ideas-focused culture at Edelman.

Few of you probably would put “the world’s largest PR firm” in the same sentence with “climate action counselors.” It’s a testament to Edelman’s leadership, especially Jane Madden, executive vice president and director of CSR & Sustainability in the Chicago office and an executive vice president here, that we hang that shingle out.

The panel served to exemplify Edelman’s public engagement road map, which we use to guide our client counsel on social responsibility and sustainability, while illuminating that we: :

1. Listen with fresh intelligence.
2. Create galvanizing ideas.
3. Grasp the socialized approach to media relations.
4. Develop and co-create content.
5. Participate in the conversation.
6. Build active partnerships for common good.
7. Embrace complexity.

I encourage you to partner with external organizations, seek input from the public and embrace the uncertainty of an issue as important but as tough as climate action and business growth.

Climate change science – reach out and grab it

Climate change science – reach out and grab it I participated last weekend on a Net Impact panel that explored, “Climate Change Adaptation Strategy: Why Every Company Needs One.”  Among the key takeaways for me: corporations must close the gap between scientific information and industry action.  (Other panelists included Kathrin Winkler, vice president and chief sustainability officer at EMC Corporation; Dina Kruger, president of Kruger Environmental Strategies; and Jeff Senne, director of Environment and Marketplace at PwC U.S..)

At least three reasons explain the chasm:

• Corporations haven’t made it clear they desire data on climate change. For instance, they’re not clamoring to seek such information from the Feds.
• Aggregated climate change data can be hard to penetrate and are never geared toward a corporate audience.  (The adaptation clearinghouse, for instance, is loaded with information, but it seems geared to policymakers and scientists).
• Scientists don’t talk ‘corporate’ and, therefore, don’t share their information with us.

I addressed No. 1 in my first blog post. (One reason we should be engaging on climate adaptation is that we’re missing out: if the corporate sector does not begin to engage, it risks being shut out of the climate-adaptation policy decisions emanating from federal, state and local governments).  No. 2 is driven by a lack of resources and poor marketing.  (Federal and foundation grants are awarded for communicating climate science – to policy makers and scientists, not to corporations). I wish to exchange ideas with you about this in a later post.

I’m particularly interested in how corporations can help scientists share their data.  I recall a poignant conversation with a climate scientist who said he knew no one in corporate America and couldn’t imagine how to apply his science to corporate needs.  It turns out his wife and sister were both employed by Fortune 500 companies’ a dinner conversation generated all sorts of climate science applications, involving supply chain, employee engagement and operational, among others.

A big issue is trust. Climate scientists work extremely hard to generate their particular data, and they often feel proprietary about it. Perhaps my very rusty undergrad degree in biology enhances my climate adaptation work.  Not that I remember much from those glorious courses in genetics and plant physiology.  But my tendency to sprinkle words like “methodology” and “supporting research” into enough of our conversations may explain why I possibly understand these researchers.

Of course, I understand them just some of the time.  My experience probing what they know, applying that knowledge to my challenges and then communicating results to other influencers leads me to conclude one major point.  It’s up to us corporate folks who market, sell and communicate to reach out ourselves and grab climate science from the scientists who gather, analyze and conclude.

The Climate-Adaptation pundits are talking…just not about a corporate role

The Climate-Adaptation pundits are talking…just not about a corporate role

• Andrew Winston’s “The Growing Divide: Climate Adaptation vs. Denial”
• NYT’s “A City Prepares for a Warm Long-Term Forecast.” (disclosure: I hatched this story with Ms. Kaufman when I worked for the City of Chicago)
• Bill McKibben’s “Keep Calm and Carry On.”

I’m surprised how many articles in my recent blog reading have been so direct about climate change happening.

Many of these stories, I maintain, miss the corporate angle.

We should learn from Hurricane Katrina that private enterprise can be the real victim in a climate crisis.  Research from that event found that “some 60% of the businesses in the New Orleans area were forced to close.”  “Statistically, 85% of these businesses will never reopen.”

Of course, that has huge implications for community resilience since those businesses provide the jobs that keep the community alive.  On the other hand, some of those companies forced to close had to do so not because of direct losses to their facilities, but because their employees weren’t able to return to work. Their community services – schools, day care facilities, police forces, health care – were not set up to support them.

So while I appreciate that big climate thinkers are now thinking adaptation, I am eager for them to join me in thinking about business resiliency; business climate adaptation is at the heart of community climate resiliency.

Sustainability Reporting and Adaptation

Sustainability Reporting and Adaptation As the Corporate Social Responsibility, or CSR for short, reporting season concludes for many corporations—and the concept of integrated reporting – preparing one report that links fiscal and CSR data – gathers steam, the opportunities abound for companies to make their climate-adaptation efforts transparent to their shareholders, customers, employees and external stakeholders.  Stakeholders need to understand how a company is managing risks and exploiting new opportunities to make informed future decisions, and these reports are an organized mechanism to elucidate these plans.

The Carbon Disclosure Project (CDP), for instance, does a good job of pulling climate adaptation information out of companies, and the independent, not-for-profit organization has been mulling the issue since at least 2006 when it published the CDP 2006 UK Adaptation Report.  At least three industry-specific reports on building business resilience have followed since along with Carbon Disclosure Project Report 2008: FTSE 350, Building Business Resilience to Inevitable Climate Change.

The thousands of companies that report through CDP also respond to adaptation-specific questions, such as:

• Is your company exposed to physical risks from climate change? (2.1)
• Do physical changes triggered by climate change present opportunities for your company? (5.1)
  • Have you identified any climate change opportunities (current or future) with the potential to generate a substantive change in your business operations, revenue or expenditure? (6.1)

By contrast, the Global Reporting Initiative is much more subtle in its adaptation questions. Someone digging for adaptation references (like me!) can see climate adaptation in questions like:

EN6 – Initiatives to provide energy efficient or renewable energy-based products and services and reductions in energy requirements as a result of these initiatives.

EN10 – Percentage of total volume of water recycled and reused.

EN 14 -Strategies, current actions and future plans for managing impacts on biodiversity.

EN20 – Total environmental protection expenditures and investments by type.

And, as mentioned in a previous blog, Securities Exchange Commission (SEC) guidance asks companies to disclose climate risks and opportunities, which some companies interpret to mean more than risks and opportunities to a price on carbon.

What really proves inspiring are the corporations that  use these tools and others to change their own behavior.  A recent piece by Nike’s Hannah Jones, “Why Sustainability Reporting Is Revolutionary” is particularly compelling.  She suggests that climate challenges can impact corporate success (citing droughts and floods and their impact on commodity prices, for example).  To her, the investor’s question is: “Will you invest in the company that innovates, is resilient and anticipates changes in the market?”  In other words, investors are trying to identify corporate-climate adaptation leaders.    The best way to identify yourself as that leader is to start talking about your climate-adaptation efforts – through rich descriptions in your CDP and SEC reports and through climate-adaptation-specific explanations in your CSR and financial reports.  Leading companies will create best practices in this budding field.

Crisis Communications: Are you ready for a climate-related crisis in your business?

If I were a corporate executive these days, I would keep a tip sheet on my Blackberry or carry a wallet-sized card titled, “What to Say to the Press When a Climate Crisis Affects My Business.”  You might never need it, but given the trends I’m seeing in climate and beyond, the chances are growing that you might. Here are some of the elements my note would include, with grateful thanks to my colleague Harlan Loeb who craft Edelman’s Crisis and Issues Management practice:

Review

• Typically, a crisis worsens before it gets better unless I am prepared and act quickly to handle it.
• Part of my role requires providing appropriate and prompt communication so a crisis is resolved with minimal disruption to my operations, services and facilities, returning to business as usual with my reputation and profitability intact.
• My communication around a crisis offers an opportunity to demonstrate that my company is competent, effective and caring.

Crisis Communications to the Media

• The first concern is always human life.
  • Only an incident that involves loss of life should be called a “tragedy.”
  • During the first minutes after an accident, refer only to injuries.  Do not report fatalities until an official has pronounced that there are fatalities.
  • Stick to known facts.  Avoid descriptive words such as “catastrophe” or “fireball.”
  • Do not speculate about the cause of an accident.
  • Do not leave the impression you have something to hide.
  • Do not estimate damage in monetary terms.
  • Never say “No Comment.” If I can’t provide an answer, explain why.
  • If I don’t know an answer, say, “At this point, we don’t know.”
  • Do not get specific about insurance.  If pressed, say that we carry general insurance protection.
  • Do not express opinions on comments from third parties.
  • Do not release names of injured or dead until after family members have been notified.
  • Pay attention to surroundings:  Do not be interviewed in front of a locale or backdrop that leaves a negative impression.
  • Use “The Company” and “We.”
  • Always assume the microphone is live, the camera is rolling and everything is on the record.

When Pressed

The media likely will press me, especially if the crisis persists and updates are necessary.   I need to remember these useful phrases for keeping control of the interview:

• “I should also point out”
• “The key issue here”
• “What’s really important”
• “I don’t have that specific information. What I can tell you is”
• “Remember”
• “For example”
• “Right now, our top priority is”
• “That’s not entirely right.  The fact really is….”

I hope you never need this tip sheet, but it’s much lighter than an umbrella and could prevent your company from getting soaked by the media.

Smart Grid a Climate Adaptation

Smart Grid a Climate Adaptation

I started my day listening to Pulitzer Prize-winning author and New York Times columnist Thomas Friedman, who is in Chicago for Ideas Week and also is stumping for his new book , How America Fell Behind. In his talk, Friedman’s first point emphasized that we need to adapt better to the energy and climate crisis.

The smart grid – the digital network that unites electrical providers, power delivery systems and customers, and allows two-way communication between a utility and its customers – promises to provide a key tool for that adaptation. That’s why I’m looking forward to participating in the Great Lakes Symposium on Smart Grid and the New Energy Economy next week to learn more.

Proponents of the smart grid note that its technologies allow customers to take control over their energy use. This suggests consumers can use generated electricity more efficiently – and efficiency generally equates with economic and environmental benefits.

I’m most eager, though, for the grid to get smarter since it is a key infrastructure change to assist with renewable energy.  A smarter grid should increase both utility-scale and distributed renewable-energy generation.  And as I’ve noted in previous posts, renewable energy is key for climate adaptation.  For instance, when extreme weather events impair utility-scale power generation or transmission, having access to on-site renewable energy (distributed generation, e.g., solar, wind or waste-heat recovery), can keep industry producing, retail selling and consumers buying.

Next week’s Symposium is taking a unique and interactive approach to exploring the connection between grid modernization, economic development and innovation, and environmental impact – all key elements of climate resiliency.  Perhaps I’ll see you there.

The Global Adaptation Index: It’s a True Corporate GaIn

The Global Adaptation Index: It’s a True Corporate GaIn  

The Global Adaptation Institute, a nonprofit environmental organization, is putting the final touches on a navigation tool that informs private-sector investment in adaptation.   And it represents a real GaIn for the corporate sector.

Pardon the play on words.  GaIn™ stands for Global Adaptation Index™ and it is the institute’s new adaptation tool.  It is a matrix that, using 35 indicators tracked over15 years, ranks every country's vulnerability to climate-change impacts against its readiness to attract private-sector investment.

GaIn’s premise holds that a multi-billion dollar gap exists between government and NGO investment in adaptation and what ultimately is needed. Private-sector resources are necessary to help fill that gap.  I consider this a worthy matter for corporate attention since climate-adaptation investments in emerging economies provide collateral benefits to the private sector.  And we recognize that today, companies want to see a positive impact on their bottom line from their social responsibility investments.

You can tell the tool was created by experts steeped in the multilateral development field. The data sets are enormous, the analysis seems foolproof, the goals are laudable – and it assumes the private sector embraces philanthropy for philanthropy’s sake.  So, when using the tool, it’s up to you to find the business value.

Certainly, business value can emerge when a corporation invests to shore up infrastructure for climate-change adaptation.  Say, to better protect its off-shore cloud-computing data or to ensure that a primary supplier’s employees can get to work during severe weather conditions. And determining which countries have the most water or agricultural vulnerability will help all of us make better business decisions, while making sure our supply chains are resilient.

We have a lot to gain from GaIn.

Hard Science Data Is Fine, But Let Communities Generate Data, Too

I spoke recently about adaption with some of the smartest thinkers in the climate change space, thanks to the Association of Climate Change Officers’ Leadership Series.  One session, in particular, rekindled my impatience with the significant distance between scientists working on these matters and the eventual users of their conclusions – public and private sector leaders.

The session dealt with types of scientific data needed to help advance climate-change adaptation and dialogue. We generally agreed that a need exists for more detailed historic weather data online.  But while I realize adaption relies on excellent hard science, it’s also inspiring when technology lets communities generate the data.  And that data inspires us to act.

Consider SHAVE, the National Oceanic and Atmospheric Administration’s Severe Hazards Analysis and Verification Experiment, a unique project that blends high-resolution radar data with geographic information.  It uses the awesome Google Earth to input phone location-specific storm data – when a storm started, how big a storm’s hailstones are, when a river crested over its bank – gathered from voluntary reports by citizens.  The map’s foundation is heavy science: high-resolution radar and satellite data fed into algorithms used for storm warnings and forecasts.  But the output is usable community-level maps that illuminate where a pinch point might be in a river or what part of town might be more vulnerable to damaging hail.

Also, myriad examples exist of information relayed via mobile devices that provide timely data. My current favorite involves the use of cell phones by Vietnamese farmers in the Mekong Delta. They relay when flood waters are rising, and to what level.  By sending early warnings upstream, farmers are better able to shore up their rice paddies and adjust their water-diversion structures to prevent damage.

What sorts of community-generated data might help your company be more resilient to extreme weather events?

SHAVE and National Weather Service reports for a storm in Lac qui Parle County, MN on 27 July 2006

Climate Adaptation: What Does It Mean for Supply Chains?

by Joyce Coffee My team hosted a recent conversation with our stakeholders titled “Maximize Supply Chain Gain: Addressing Social and Environmental Issues for Economic Return.” It occurred to me that adaptation is an increasingly important element of a cost-effective supply chain.  In earlier posts, I’ve noted the risks corporations face from supply-chain disruptions due to severe weather or agricultural pests. It’s apparent that from meeting evolving customer needs to providing higher-tech solutions, suppliers are adapting.

Indeed, while corporate supply-chain audits today may focus on cost-saving opportunities, labor practices and “greener” products. A good number of companies are employing innovative approaches to climate adaptation.  These examples are taken from the Carbon Disclosure Project report.

Increased Demand

Climate adaptation boosts demand for certain products.  For instance, Coca-Cola and Carlsberg Group anticipate an increased demand for bottled beverages as a result of temperature increases.

Innovation

Climate adaptation translates into fresh problems to solve.  Companies are creating proprietary public tools.  For instance, America Latina Logistica developed a new crack-detection technology that detects fissures along railway networks caused primarily by temperature changes.  And EMC acknowledges that its business recovery, continuity and back-up products, solutions and services are climate-adaptation tools.

Belt and Suspenders

Hitachi is ensuring business continuity by providing in-house energy generation, while Sprint has invested in mobile generators that help to restore electric service quickly.

Modal/Sourcing Shift

United Parcel Service uses “intermodal downshift” to avoid or respond to extreme weather events. This system lets UPS substitute different modes of transportation for each another to transport the same goods when challenging conditions warrant it.

Adidas employs a multi-country sourcing strategy to balance environmental and other risks, allowing for a shift in production in the event of extreme weather.

Can Insurers Drive Corporate Climate Adaptation?

Can Insurers Drive Corporate Climate Adaptation? It’s been a tough year for insurance companies: blizzards in the Midwest, fires in the Southwest, severe tornados in the Southeast, a damaging Oklahoma hailstorm and flooding along hundreds of rivers.

And it makes me ask: Can the insurance industry drive a change in corporate behavior toward climate adaptation?  Judging from the September 2011 report, “Climate Risk, Disclosure by Insurers,” by the non-profit Ceres organization, the answer appears to be not yet.  The report notes that information from a limited number of insurers responding to a National Association of Insurance Commissioners survey found that the vast majority (88%) don’t even have a climate policy, let alone specific climate change–management investment policies in place.

But a changing climate demands that insurers price physical risk differently and manage for those new liabilities that threaten their investment portfolios.  The industry is focusing much of its attention on a narrow set of coastal risks, but as 2011 has demonstrated, extreme weather in the non-coastal U.S. is becoming costlier, too.

So what might it require for the insurance industry to change?  Since every catastrophe leaves lessons learned behind, we could be moving toward greater awareness sparking changes in the insurance market.  With each new extreme event, the disaster scenarios on which the industry models its risk become more realistic. And as a recent Bloomberg article makes clear, those models need to reflect a lot more than just wind, hail and water damage. They also should consider how communities tolerate risk and whether they invite it by allowing buildings to be sited in vulnerable locations.

That’s a concept that Swiss Re, which I consider a climate-adaptation leader, uses to manage its portfolio.  Swiss Re now speaks about climate risk – not climate change – to reflect its understanding that when natural disaster destroys the built environment, it’s not nature’s fault. Rather, it’s ours for building in the wrong place, the wrong way.  It maintains that the insurance industry should focus on “loss mitigation,” encouraging potential customers to keep their property from being destroyed in the first place.  (and by the way, Swiss Re is also capitalizing on climate adaptation as an opportunity: They've developed tailored insurance products, including weather risk insurance, for rural poor in developing countries).

Let’s hope that its influence trickles down to the rest of the market.

Building Site & Climate Resiliency

Building Site & Climate Resiliency

When determining where to site a new building project, business executives usually base their decision on a short list of key criteria: the vibrancy of the local economy and hiring base; the adequacy of transportation and water resources; the strength of schools; and the diversity of housing.  “Resiliency” attributes – think community response to an extreme weather event – are usually overlooked (unless you’re locating offices in hurricane-prone Florida).

Ignoring such conditions today in site selection can prove shortsighted.  A recent conversation with Steve Adams, managing director of The Resource Innovation Group’s Climate Leadership Initiative suddenly brought this issue to the forefront for me.  Our conversation reminded me that developers and national corporate real-estate agents undoubtedly rank among the earliest climate-adaptation leaders in the corporate space.

These climate-adaption leaders should be looked to for counsel when siting a location.  They can identify possible crises that could occur with a site.  For instance, what happens if your cloud-computing operations are swept away from a flood or hurricane, especially abroad in developing countries ill-prepared for such an event?  As a result of that possibility, some companies are locating their cloud-computing operations off-shore.

Steve noted that some communities, such as a few along Florida’s Gulf of Mexico, successfully woo developers and corporations by marketing their response capacity, the depth of continuity planning and their track record at protecting economic loss from extreme weather.

I wager that business leaders’ short list of siting criteria soon will include a question or two that relate to preparation for, and response capacity to, extreme weather disruption. This might trigger broader demand for developers’ (and local governments’) adaptation thinking and action.  And if it doesn’t, insurability might. Increasingly, siting a structure in a questionable location can make it uninsurable or require it to pay higher premiums with a higher deductible.

Climate Adaptation: Your Examples

Climate Adaptation: Your Examples  

I’ve had dozens of lively conversations with my readers over the last month about what climate adaptation is.  I thought I’d share a quick list of examples to keep the conversation going.

Climate Adaptation is:

1. Planning a drug pipeline to include malaria prophylactics for the Southeastern U.S. (a global pharmaceutical company).
2. Installing on-site energy generation, including waste heat recovery, solar photovoltaic, wind) as a back up in the event of a power outage (a university hospital)
3. Budgeting to collaborate on port relocations as part of long term planning (an international shipping company).
4. Crafting new policies to prevent heat exhaustion, including on-site potable water access and shade provision (a Midwest construction firm).
5. Storing chlorine and fertilizer above ground, rather than in the sub-level parking garage (a parking lot owner).
6. Including a requirement in the employee handbook that everyone keep a sturdy pair of walking shoes at their desk (a service company headquartered in a NYC high rise).
7. Organizing the next fundraising campaign around natural disasters (a child’s health advocacy nonprofit).
8. Opting to develop a river view site, rather than a rivers-edge site (a Kentucky real estate developer).
9. Testing new variatals of drought-resistant wheat that require less consistent water (an agricultural research consultant).
10. Stocking snow-management equipment in Southern markets (a major hardware retailer).
11. Updating continuity of operations plan, on the 10year anniversary of September 11 (a major D.C. employer).
12. Ensuring that the protocol for accessing office files and emails from home is clear and well communicated (California retailer headquarters)

What’s your quick list?

Climate Adaptation – Corporate Learning from Past Disasters

  I advised a group of thought leaders recently at a workshop on Climate Adaptation:  Building a Community of Practitioners, funded by the Kresge and Johnson Foundations.  It proved to be a great opportunity to consider climate adaptation with a group of seasoned professionals who have helped their communities thrive after weather disasters.  As with any good workshop, I left with more questions than answers.  Today, though, let me share some key takeaways:

1. Climate (extreme weather) events have a disproportionate impact on companies.  When floodwaters entered the Des Moines (Iowa) Water Works, the damage cost the government $14 million to repair. Overall, flood damages to that city’s businesses were estimated at between $300 - $400 million. Source: Project Impact (Clinton administration NOAA program)

2. Corporations that often benefit from a changed climate (Wal-Mart saw an uptick in business from Hurricane Katrina, Target Corp. in Florida for annual hurricane protection and Siemens for power generators) are good places to identify climate adaptation leaders who understand the risks, prevention strategies and opportunities.  Sometimes, corporate engagement in disaster scenarios has occurred initially through Chambers of Commerce.

3. Corporations already engaged in significant climate adaptations (Chiquita Banana finding alternate supplies for their delta-produced bananas) also offer lessons in business continuity planning, risk management, and community engagement.  And private sector tourism entities may also prove to be low hanging fruit for climate adaptation engagement.

4. The broader climate adaptation community needs corporations for a variety of reasons but, primarily because corporations have powerful influence over elected officials (and elected officials are key to resource allocation, research and executive-level promotion). The President’s Council on Environmental Quality (CEQ) (conference participant), charged with enforcing the president’s executive order to all federal departments to prepare and execute climate adaptation plans, may not translate its work to compel the private sector for awhile.

5. Speaking of the CEQ, private institutions have lots to learn from governmental institutions about what climate adaptation is and how to create an institutional commitment to climate adaptation (this how piece may be the bigger surprise for corporations).

6. Companies prepared for a climate-related event can use the event to make major changes (instituting telecommuting policy, diversifying supplier chain to other countries and decreasing office space: employee ratios), to enhance their reputation through community engagement.  (Big  Box retailers identified as cooling centers during heat events; hardware stores offering reduced-price disaster-recovery goods and installation advice; C-suite advisors helping small businesses to develop recovery plans).

7. We have an opportunity to translate science into action for corporations. Focusing on hazards occurring now may be helpful since evidence is crucial for engagement.  Corporate risk management and business continuity planning managers may be our best areas of entry.

Climate Adaptation and the Car Behind You

Recently, I heard Paul Pisano of the Federal Highway Administration (FHWA) give an inspiring talk sponsored by the University Center for Atmospheric Research about how high tech helps to keep us safer on snow-swept and other climate-changed highways.  (His talk, incidentally, was at the Boulder Chautauqua in Colorado where I was vacationing with my family, and perhaps the most remarkable thing about it was that residents paid $10 to attend, illustrating the high degree of interest in learning what's new in climate.)

Paul manages research and development programs that address the effect of weather on all aspects of the highway system, including winter maintenance, traffic management and traveler information. He noted that in 2010, 7,130 people died on America’s highways from adverse weather conditions. Indeed, one in four of the nation’s 1.5 million-plus crashes annually (24%) is due to bad weather. (See chart.) In addition, trucking delays due to weather cost more than $3.1 billion annually for the 50 largest U.S. cities. And, lost productivity from snow closures can cost up to $10 billion a day.

The FHWA employs many tactics to keep the roads as safe as possible in adverse weather, but the one I find most compelling relies on the cars that drive the roads. Cars can gather data on air temperature, barometric pressure, headlight status and windshield-wiper use, among other measures. Sharing such data with FHWA allows the agency to determine everything from whether precipitation is falling to whether standing water exists on the road. These mobile-data sources offer a thorough picture of the weather, informing decisions about what sort of equipment and chemicals are deployed, what warnings are shared with drivers and, in the event of an accident, what weather impact might have contributed to it.

Given the mass of vehicles on the roads and how many miles they’re driven, the amount of data about them can prove overwhelming. And driver anonymity also is a factor. Still, I’m hopeful that as we enter an era of more severe and unpredictable weather, vehicle data will combine with traditional meteorological observations in intelligent ways to reduce delays and accidents on our highways.

Farmers and Climate Change – They’ve got the instinct

In the last few weeks, several articles have appeared related to climate change and agriculture. The

New York Times

cover story was one entitled

“Temperature rising: A WarmingPlanet Struggles to Feed Itself.”

There also was a big spread in the

Economist

entitled “

Hindering harvests:Changes in the climate are already having an effect on crop yields—butnot yet a very big one”

However, it was a Nov. 28, 2010, op-edpiece in the NYT that really moved me. Jack Hedin, a farmer, eloquently described how climate change has affected his farm – the legacy of a homestead his grandfather established in the late 1800s. His description of the unexpected forces that reshaped his farm really helped me to grasp it – more than all of those big-model descriptions and dire warnings of the depletion of our food stocks.

If I were in the food business, I would want to talk to farmers like Jack Hedin to get a leg up on how this is really going to affect my operations.  If you know a farmer, ask him to tell you about climate change and his farm.  Then think about what that means for your business.  I’m eager to hear from you on what these conversations with the world’s weather experts tell you.

I had a conversation like this, myself, with Ken, a wild urban farmer in Chicago.  He talked to me about the changes in how we predict weather changes. In the past, it was the smell of rain, the look of a bank of clouds, the shift in the wind. Today, we benefit from extraordinary weather satellite data.  And then Ken shared that climate change is forcing such incredible resource demands for more irrigation and more pesticides. The conversation reminded me, thinking of the world’s food, of a quote on my desk, which says:  “The best starting point for (climate change) adaptation is to be rich.”

The

Economist

reported last week that the price of wheat in Texas is more than $8 a bushel, compared with last year’s average of $5.25.  Perhaps everyone will need a bit more cash.