Think climate risks aren’t your problem? Think again

The companies that will thrive in the face of rapid climate change are those that make adapting to it a top priority, says PwC’s Ashok Varma.

Ashok Varma

Agriculture and Social Sector Consulting, Partner, PwC India

+91 98309 13014


Not long ago, I participated in a PwC climate-action roundtable in Mumbai. One of the attendees, an executive from a hospital group, made an observation that grabbed my attention: the seasonal changes being caused by global warming, he said, were affecting the patterns and frequency of vector-borne diseases. His hospitals were increasingly having capacity issues, with sick patients coming in earlier and later in the year than before, straining hospital resources, from beds to diagnostic facilities.

This struck me as a prime example of the kinds of novel climate risks facing more and more of the companies I work with. Most of these organisations are already making progress on decarbonisation, and many have well-defined net-zero goals. But few of them have mature plans to address what has become a stark reality: climate change is already here, and its effects are real and urgent. 

It’s not that the C-suite is oblivious to the problem. As PwC’s 26th Annual Global CEO Survey shows, a considerable share of senior executives acknowledge the risks:

But acknowledging the need for climate adaptation and doing something about it are two different matters. The same survey reveals that, outside of mitigation, only a small share of companies (17%) have fully implemented initiatives specifically aimed at protecting the business’s assets and people from the impacts of climate change:

The fact is, no companies are immune to climate risks, even businesses with a minimal physical footprint. Consider a company specialising in, say, digital marketing. It doesn’t have a fleet of vehicles, or goods to unload in sea ports, or direct operations located in places exposed to climate shocks, and so you might not be surprised if the company’s leadership put climate adaptation pretty low on the priority list. 

But what about the data centres that fuel the cloud capabilities this company depends on for its day-to-day operations and to deliver its services to customers? Many of those facilities, the largest of which can require more than a million of gallons of water a day for cooling, are located in places where drought is exacerbating groundwater depletion, which can make cooling more expensive—a cost that gets passed on to cloud customers—or cause service disruptions. For the digital marketing company, that’s material impact.

Even among leaders who are actively taking adaptation measures, I hear concerns about the cost of implementation, especially in light of the immense resources already being poured into decarbonisation and mitigation. One thing I encourage clients to do is look harder at those mitigation efforts to see where they might yield efficiencies. I recently worked with a real estate and construction company that was developing new building materials that could reduce a structure’s carbon footprint. What they discovered is that those same materials could also protect the properties from the climate shocks of extreme temperatures and flooding. Businesses should also look for ways in which their existing business-continuity and resilience programs can be widened to encompass the kinds of disruptions that climate shocks can bring.

Let’s take it a step further. During that roundtable in Mumbai, as talk turned to diseases and other threats spurred by climate change, someone mentioned offhandedly that many of them were risks that you couldn’t insure against. At this, some participants who are in the insurance industry chimed in, and a lively discussion ensued about innovating new insurance products to address those risks. With risk comes opportunity, and climate adaptation is no different. 

Adapting to climate risk starts with understanding and measuring exposure across your entire value chain, from suppliers to consumers. This, too, is a novel challenge, because unlike carbon emissions, these risks aren’t easy to quantify in discrete units. This also makes them hard to regulate. But here’s another area where businesses can piggyback on existing efforts. Are you one of the thousands of organisations that support the reporting requirements of the Task Force on Climate-Related Financial Disclosures? Those requirements call for analyses that can shed light on climate-risk exposure and impact within your company. So can the assessments required to obtain Leadership in Energy and Environmental Design (LEED) certification. 

The tough reality, though, is that we’re way behind where we need to be in terms of awareness, much less on action, when it comes to climate adaptation. But I also see cause for hope. Here in India, a vast country with many variations in ecosystems and terrain, there’s a proliferation of start-ups developing tech for the agricultural sector—weather forecasting tools, tools for monitoring soil conditions amid more extreme temperatures and rainfall patterns—as it comes to grips with global warming. And we’re also seeing more private–public collaboration on issues like irrigation and clean water, with corporations and local and regional governments amplifying their impact in a way they could never have done on their own. 

I’m not under the illusion that all companies will turn climate adaptation into opportunity, but I am sure of this: for businesses that don’t adapt, innovation and growth are going to get a lot harder to achieve.

Learn more about how climate adaptation can spur innovation and growth.

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