IncollaborationwithPwCCriticalBusinessActionsforClimateChangeAdaptationBRIEFINGPAPERNOVEMBER 2022Cover:Gettyimages/AndriyOnufriyenkoInside:Unsplash/spsuniversalContentsIntroduction1Thecaseforbusinessactiononclimatechangeadaptation2Aframeworkforbusinessactiononclimatechangeadaptation2.1Pillar1:Enhanceresilience2.2Pillar2:Capitalizeonopportunities2.3Pillar3:Shapecollaborativeoutcomes2.4EnablingactionsThebeginningofajourneyContributorsEndnotesDisclaimerThisdocumentispublishedbytheWorldEconomicForumasacontributiontoaproject,insightareaorinteraction.Thefindings,interpretationsandconclusionsexpressedhereinarearesultofacollaborativeprocessfacilitatedandendorsedbytheWorldEconomicForumbutwhoseresultsdonotnecessarilyrepresenttheviewsoftheWorldEconomicForum,northeentiretyofitsMembers,Partnersorotherstakeholders.?2022WorldEconomicForum.Allrightsreserved.Nopartofthispublicationmaybereproducedortransmittedinanyformorbyanymeans,includingphotocopyingandrecording,orbyanyinformationstorageandretrievalsystem.CriticalBusinessActionsforClimateChangeAdaptation 2November2022 CriticalBusinessActionsforClimateChangeAdaptationIntroductionWiththeimpactsofclimatechangebecomingmorethan1,800companieshavesetscience-basedfrequentandintense,theneedtomanagerisksandemissionsreductiontargets.Whilethefocusonunderstandcollaborationopportunitieshasneverclimatechangemitigation(reducingorpreventingbeenmoreimportant.Sincetheadoptionofthegreenhousegasemissions)ispositiveandmustParisAgreement,businesseshavesteppeduptheircontinue,engagementinclimatechangeadaptationengagementinglobalclimateaction.According(reducingthenegativeimpactsofclimatechangetotheScienceBasedTargetsinitiative,moreandleveragingopportunities)lags.Adaptationandmitigationmustbepursuedwithequalforceandurgency.AntónioGuterres,UnitedNationsSecretary-GeneralExtremeweathereventsshowthatclimatechangeWithoutaction,theywillintensifyandthecostsofisaffectingtheworldnow.Theimpactswilladaptationwillrise.toucheveryone,particularlythemostvulnerable.ThenumberofGlobaleconomicAccordingtotheclimate-andweather-outputcouldCDPanalysisofS&Prelateddisastershasdecreaseby500companies,risenalmost11-18%physicalclimaterisks35%$40-50billionwillpotentiallyhavesincethe1990s.duetoclimateinimpactsby2026.change.Adaptationisgainingtraction–butmoreactionThoughcompaniesareincreasinglytakingstepstoisneeded,fastassesstheirclimaterisksandplanforresilience(thecapacityofsystemstocope,respondorreorganizeWhilethepastdecadesawconsiderableprogressinwaysthatmaintaintheiressentialfunction,identityontheGlobalGoalonAdaptationestablishedandstructurewhilemaintainingthecapacitytoadapt,undertheParisAgreement,actionsfallshortoflearnandtransform),actiononadaptationremainsrequirements.Governmentsanddonoragencieschallenging.Itishighlycontext-specificandthereisnohavedrivenmostinvestments.unifiedambitionortargettoactasarallyingpoint.In2020,just7%Only40%ofCEOsoftrackedhavefactoredclimatechangeglobalclimateintotheirfinanceflowedtorisk-managementadaptation.45strategies.CriticalBusinessActionsforClimateChangeAdaptation 31FIGURE1

ThecaseforbusinessactiononclimatechangeadaptationClimatechangeadaptationisabusinessimperativeforthreeprincipalreasons.Whybusinessesshouldfocusonadaptation.1.Climatechange2.Climatechange3.Asclimatechangeisimpactsbusinessesandadaptationpresentsasystemicissuewiththeirvaluechainsacrossopportunitiesforbusinesscascadingimpacts,geographies;thishasgrowth,innovation,globaladaptationeffortsimplicationsforfinancialefficiencyandsustainabilityrequiremultistakeholderperformancecollaborationtosucceedByadaptingtoandBusinessescancapitalizeBycomplementingbuildingresilienceonopportunitiesbygovernmentandpublictoclimatechange,investinginclimatesectorefforts,businessesbusinessescanmitigatechangeadaptationcancontributetoriskstotheiroperationssolutions,therebygainingprotectingcommunitiesandvaluechainsandfromincreasedrevenueandecosystemsandavoideconomiclossesandcostsavingsgainfrommutuallyduetoclimateimpactsbeneficialoutcomesByinvestinginclimatechangeadaptation,companiescanleadandhelpgalvanizeasystemresponse,whileprotectingtheirbusinessCriticalBusinessActionsforClimateChangeAdaptation 41.Riskstobusinessareubiquitous,complexandcostlyClimatehazardspresentriskstobusinessesworldwidebutarelocation-specific.Theirimpactsdependonthebusiness’scharacteristics,supplychainspreadandcomplexity.Theycanbedirectorindirect.Directrisksimpactbusinessoperations;indirectrisksimpactitsupstreamanddownstreamvaluechainorthewiderecosystemandcommunitiesonwhichitdepends,forexampleforworkersorrawmaterials.

Combined,theycanhaveimplicationsonthefinancialperformance.Analysisof2021datagatheredbyCDPfor93majorcompaniesestimatesclimatehazardimpactsof$250-273billion.6FIGURE2 ClimatechangeimpactsonbusinessAdaptationopensavenuestoefficiency,growth,innovationandsustainabilityLarge-scalepublicandprivatesectoradaptationeffortsareneededtoprotectbusinesses,communitiesandecosystemsfromclimatechangeimpacts.Thisrequiresworkingtogethertoinvestinadaptationstrategiesacrosssectorsandintegratingadaptationandmitigation.Thiswillgeneratedemandforproductsandservicesandopenupnewmarkets,allofwhichcanhelpgeneraterevenueandachieveefficiencywhilemakingecosystemsandcommunitiesresilient.

Also,businessescanimprovecosteffectivenessand$19contribute-20billiontosustainabilitypotentialbyadaptationimplementing-adaptationrelatedopportunitiesactionsthroughoutreportedtheiroperationsby93andvaluecompanieschains.in2021.7CriticalBusinessActionsforClimateChangeAdaptation 5FIGURE3 Adaptationopportunitiesforbusiness1.Revenuegeneration2.CostsavingsandsustainabilityAdaptationsolutionsAdaptationactionsSupportclimaterisk-relatedReducesectoralandImplementresource-efficiencyPursuenature-basedsolutionsdecision-makingandenhancegeographicvulnerabilitiespracticesthatcontributewithmitigationpreparednesstobusinessefficiencyandco-benefitsthatcontributesustainabilitytonet-zerogoalsExamples–Climate/weatherdata–Drought-resistantcrops–Waterconservation/water–Afforestation–Software/hardware–Cloudseedingefficiencymeasures–Reforestationfordatageneration/–Insulationsystems–Gridmodernization–Wetlandrestorationprocessing–Restorativeagriculture–Earlywarningsystems–Mangroveprotection–Advisory,design,projectmanagementandmonitoringservices–ClimateriskinsuranceBusinessneedstobepartofglobalclimatechangeadaptationeffortsGiventhemagnitudeandfar-reachingnatureofclimatechangeimpacts,businessescannotaffordtorestrictadaptationactionstotheiroperationsandvaluechains.Acompanyoperateswithinasystemcomprisingotherbusinesses,organizationsandcommunities;itcannotachievethelevelofactionneededtoeffectivelytackleadaptationalone.Businesseshaveakeyroletoplaybycontributingtheirknowledge,expertiseandresources.Thiswill,inturn,benefitbusinesses,whichareultimatelydependentonastableandsecureoperatingenvironmentfortheirfuturesuccess.

$1.8trillionworthofinvestmentsinearlywarningsystems,climate-resilientinfrastructure,improveddrylandcropproduction,mangroveprotection,andresilientwaterresourcesfrom2020to2030couldgenerate$7.1trillioninnetbenefitsincludingavoidedlossesandeconomic,socialandenvironmentalbenefits.8CriticalBusinessActionsforClimateChangeAdaptation 62FIGURE4

AframeworkforbusinessactiononclimatechangeadaptationThepressingcaseforbusinessactionisclear.SoBusinessescanfollowtheenablingactionstohowshouldbusinessesrespond?Eachbusinesscreateafavourablebusinessenvironmenttoshouldevaluatethepillarsandcoreactionsthatimplementthem.Theyshoulddothisbyworkingapplytotheircontextandfocusonthosethatwithstakeholderswhoseknowledgeandinsightsarethemostrelevantandimpactfultothem.arecrucialforactiononadaptation.FrameworkforbusinessactiononadaptationBusinesscase AvoideconomiclossesPillars 1.Enhanceresilience

Increaserevenue,costsavingsProtectcommunitiesandsustainabilityandecosystems2.Capitalizeonopportunities3.ShapecollaborativeoutcomesCoreactionsAssesstheimpactsofclimaterisksonbusinessandacttoadaptandbuildresilienceWorkwithsuppliersandcommunitiesconnectedtothevaluechaintoenhancebusinessresilience

Leverageproducts,servicesandbusinessmodelsthathelpbusinesses,communitiesandecosystemsadapttoandbuildresiliencePursueadaptationopportunitiesthatcontributetoefficiency,sustainabilityandclimatechangemitigation

ParticipateinmultistakeholdereffortsthatpromoteactiononclimatechangeadaptationDelivertransformativeprojectstobuildcommunityandecosystemresilienceEnablingactions

Establishaclimatestrategythatintegratesclimatechangeadaptationandnet-zerotransformationMainstreamclimateriskconsiderationsintobusinessdecision-makingMakecomprehensiveandtransparentclimatedisclosuresCriticalBusinessActionsforClimateChangeAdaptation 72.1Pillar1:EnhanceresilienceAssesstheimpactsofclimaterisksonbusinessWorkwithsuppliersandcommunitiesandacttoadaptandbuildresilienceconnectedtothevaluechaintoenhancebusinessresilienceMitigateriskbyadaptingandbuildingresiliencetocurrentandfutureclimatechangeimpacts.Involvethelargerecosystemconnectedtotheirvaluechaintoensurebusinesscontinuity.Consider:Consider:–Conductingclimateriskassessmentofoperations,includingscenarioanalysis–Conductingvaluechainclimateriskassessmentstoidentifyhotspots–Identifyingadaptationandresiliencemeasuresbasedontheclimateriskassessment–Conductingcommunity-andecosystem-levelclimateriskassessmentstoprioritize–Implementingthemeasuresidentified,monitoringadaptationareasprogressandevaluatingtheireffectiveness–Supportingvaluechainstakeholderswithtechnicalandmanagerialskillsandfinancialsupport–Collaboratingwithcommunitiestoensurethe2.2sustainabilityofcriticalnaturalresourcesPillar2:CapitalizeonopportunitiesLeverageproducts,servicesandbusinessPursueadaptationopportunitiesthatcontributemodelsthathelpbusinesses,communitiestoefficiencyandsustainabilityandecosystemsadaptandbuildresiliencetoclimaterisksImplementadaptationinterventionstodriveefficiencyandsustainability;leverageadaptationopportunitiesRespondtoincreasingdemandforproducts,thatalsocontributetothenet-zerotransition.servicesandbusinessmodelsthatenhancetheresilienceofcommunitiesandbusinesses.Consider:Consider:–Prioritizingadaptationinterventionsrelatedtonaturalresourceconservation,resource–Reviewinghowexistingornewproductsandefficiencyandclimatechangemitigationwhileservicescansupportadaptationdevelopingaclimatechangestrategy–Investinginadaptationsolutionresearch,–Exploringthemonetizationofadaptationdevelopmentandinnovationprojectsthatsequestercarbonundercarbonmarketmechanisms–Collaboratingwithotherbusinessesandstakeholderstodevelopnewadaptation–Workingwithotherbusinessesandcommunitiessolutionsandtocreateasystemthatfosterstoimplementthesestrategiesinnovationandscalesupsolutiondeployment2.3 Pillar3:ShapecollaborativeoutcomesParticipateinmultistakeholdereffortsthatConsider:promoteactiononclimatechangeadaptation–EngagingwithgovernmentsbyparticipatinginCatalysecomprehensivegovernment,stakeholderpolicy-makingandplanningprocessesandcommunityactiononadaptationbyleveraginguniquecompetencies,resourcesandscale.–Collaboratingwithnational,regionalandlocalgovernmentstoimplementadaptationstrategiesCriticalBusinessActionsforClimateChangeAdaptation 8–Collaboratingwithindustryplayers,communityandindigenousleaders,academiaanddevelopmentagenciestopromoteactiononadaptation–ContributinginsightsandexperiencestosupportglobaladaptationeffortsDelivertransformativeprojectstobuildcommunityandecosystemresiliencePlayaroleindeliveringontheGlobalGoalonAdaptationbyco-creatingadaptationprojectswithandforcommunitiesandecosystemsthatarenotdirectlypartoftheirvaluechain.

Consider:–Joininginitiativesthatfocusonadaptation,suchastheRacetoResilience–Designing,investingandimplementingadaptationprojectswithotherbusinesses,thepublicsectorornon-stateactors–Addingaclimatelenstoexistingcommunityprogrammestoaddressthevulnerabilitiesofbeneficiaries–Providingtechnicalandfinancialsupporttocommunityandnon-governmentalorganizationsorothersinvolvedinadaptation2.4 EnablingactionsCreateafavourableorganizationalenvironmenttoenhancebusinessresilience,capitalizeonopportunitiesandcatalysesystemicaction.Establishaclimatestrategythatintegratesclimatechangeadaptationandnet-zerotransformationAdoptaholisticapproachthatlooksatadaptationandnet-zerotransformationasintegralandequallyimportantclimatestrategycomponentsanddrawsynergiesbetweenthetwo.Consider:–Formulatingaclimatepolicythatintegratesmitigationandadaptationstrategies–Communicatingthepolicyandstrategytoallstakeholders–EstablishingagovernancemechanismthatincludesboardoversightMainstreamresilienceconsiderationsintobusinessdecision-makingActontheadaptationagendamoreeffectivelybyintegratingclimatechangerisksintobusinessdecision-making,establishingsystemsandprocessesfocussingonplanningandimplementingadaptationstrategies,andallocatingfinancialandhumanresources.Consider:–Integratingclimateriskassessmentandadaptationplanningintoriskmanagementandbusinesscontinuityplanning

–Viewingclimateriskandadaptivecapacityascriteriafornewinvestmentsandwhenreviewingexistingprojects–Assigningclimateactionrolesandresponsibilitiesatallmanagementlevels–Buildingemployeeskillsinandknowledgeofadaptation–Linkingmanagementandstaffcompensationtosuccessfulclimatestrategyimplementation–PrioritizingfinancialresourceallocationandtechnicalexpertiseforsuccessfulclimatestrategyimplementationMakecomprehensiveandtransparentclimatedisclosuresBypublishingclimatedisclosures,businessescangainthetrustofinvestorsandcustomers.Climatereportinghasthepotentialtobeastrategicleverindrivingvaluecreationandensuringthesystems,processesandinformationareinplacetoinformdecision-makinganddeliversustainableoutcomes.Consider:–DevelopingclimatedisclosuresalignedwiththeTaskForceonClimate-relatedFinancialDisclosures(TCFD)andotherguidanceCriticalBusinessActionsforClimateChangeAdaptation 9ThebeginningofajourneyTheWorldEconomicForumisfocusedoncatalysingbusinessactiononadaptationthroughamultistakeholderapproach.ThenewBusinessAgendaonClimateChangeAdaptation

initiative,whichincludesover65companiesandorganizations,willhostdialoguesandfacilitatecollaborationonaspectsofthisframeworkthrough2023andbeyond.CriticalBusinessActionsforClimateChangeAdaptation 10ContributorsThisbriefingpaper,developedincollaborationwithPwC,presentsaframeworkthatbusinessescanusetodeveloptheirclimatechangeadaptationapproach.Itwasshapedthroughconsultationwithabroadgroupofstakeholdersfrombusiness,government,civilsocietyandinternationalorganizations.AyaanAdamBernhardMauritzStormyrChiefExecutiveOfficer,AFCCapitalPartners,AFCVice-President,SustainabilityGovernance,YaraCapitalPartners-AfricaFinanceCorporation(AFC)InternationalAustinAlexanderSaraMenkerVice-President,SustainabilityandSocialImpact,XylemChiefExecutiveOfficerandFounder,GroIntelligenceJoshuaAmponsemAkihiroMiyazakiFounder,GreenAfricaYouthOrganizationDeputyDirector-General;GroupDirectorforEnvironmentalManagement,JapanInternationalGreggaBaxterCooperationAgency(JICA)GeneralManager,USA,GulfInternationalBankPageMotesAngeChitateHead,GlobalSustainability,DellTechnologiesChiefOperatingOfficer,AfricanRiskCapacity“ARC”HiroshiOnoEmmaCoxVice-MinisterforGlobalEnvironmentalAffairs,MinistryGlobalClimateLeader,PwCUKoftheEnvironmentofJapanAniDasguptaHenkWJOvinkPresidentandChiefExecutiveOfficer,WorldResourcesSpecialEnvoyforInternationalWaterAffairsoftheInstituteNetherlandsNoppadolDej-UdomJoePaluskaChiefSustainabilityOfficer,CPGroupChiefMarketingOfficer,OneConcernMarisaDrewJayoungParkChiefSustainabilityOfficer,StandardCharteredBankHead,ProgrammeandPolicy,UnitedNationsGlobalCompactChristianHernandezFundOwner,2150ClausStigPedersenHead,GlobalSustainability,NovozymesLisaHookHead,SustainabilityandSocialImpactPartnerships,MatsPellb?ckScharpMetaPlatformsHead,SustainabilityUnit,EricssonCourtneyJermynJeremyAntoineRaguainSeniorResponsibleInvestmentandClimateAdviser,GlobalShaper,VictoriaHub,GlobalShapersCommunityNNGroupKarunaRanaRajivJoshiGlobalShaper,PortLouisHub,GlobalShapersFounder,BridgingVenturesCommunityYashovardhanLohiaJamesRobeyExecutiveDirectorandChiefSustainabilityOfficer,ExecutiveVice-President;GlobalHead,EnvironmentalIndoramaVenturesSustainability,CapgeminiSeanMaguireVeronicaScottiDirector,StrategicPartnershipsandCommunications,Chairperson,PublicSectorSolutions,SwissReCleanAirFundManagementWilliamMarshallJodaSilvaCo-FounderandChiefExecutiveOfficer,PlanetLabsGlobalDirector,SustainableDevelopment,ArupGroupPBCAnkitTodiRaniaA.Al-MashatDeputyGeneralManager,Sustainability,MahindraGroupMinisterofInternationalCooperationofEgyptCriticalBusinessActionsforClimateChangeAdaptation 11NigelToppingLisaWeeHigh-LevelClimateActionChampion,COP26ClimateGlobalHead,Sustainability,AVEVAGroupChampionsYolandeWrightTabbyTsengiweGlobalDirector,ChildPoverty,ClimateandUrban,GeneralManager,PublicAffairsandSustainability,OldSavetheChildrenMutualWorldEconomicForumAntoniaGawelHead,ClimateAction;DeputyHead,CentreforNatureandClimate,MemberoftheExecutiveCommitteePeerMMunaProjectFellowEricWhiteHead,TechfortheSustainableDevelopmentGoalsPwCEmmaCoxGlobalClimateLeader,PwCUnitedKingdomEmmaDohertyAssistantDirector,PwCUnitedKingdomMadhuraMitraDirector,PwCIndiaAndreaPlasschaertDirector,PwCSwitzerlandAshokVarmaPartner,PwCIndiaCriticalBusinessActionsforClimateChangeAdaptation 12Endnotes“WorldDisastersReport2020”,IFRC,2020,/sites/default/files/2021-05/20201116_WorldDisasters_Full.pdf“Theeconomicsofclimatechange:noactionnotanoption”,SwissReInstitute,2021,/institute/research/topics-and-risk-dialogues/cl