Climate change adaptation in the boardroom
This report discusses climate adaptation for the corporate sector as a key strategic issue relating to changes in policy and trade environments and risk management opportunities including insurance.
Climate adaptation is recognised by many of the world’s largest businesses as a global risk and one that requires critical attention. The World Economic Forum’s 2013 Global Risks Perception Survey, identified the ‘failure of climate change adaptation and rising greenhouse gas emissions as among those global risks considered to be the most likely to materialize within a decade’ (p.16). Yet despite action by many transnationals and international firms, it seems evident that most Australian companies appear to be struggling to move forward in responding to climate change impacts, apparently paralysed by short-term profit-first thinking, uncertain political risks and a corporate culture unused to volatility and disruption.
This project set out to communicate adaptation to climate change to the “big end of town” and to gather soft data, acquire information and present issues back to the National Climate Change Adaptation Research Facility (NCCARF), the funder of this research. Our approach to the research challenge differed from a traditional technical, analytical or academic method. We used action-learning principles to engage a community in which we, as advisors to corporate Australia and as co-researchers, have social capital and standing. Through trusted information sharing networks, private closed-door meetings and one on one conversation with executives and senior management from over 100 companies we shared ideas, gathered, researched and refined information and tested our findings.
Our findings from the boardroom engagement include the following:
1) The Australian Government expects the private sector to adapt, yet little or no incentives exist to promote this behaviour.
2) Autonomous adaptation as practiced may only benefit the lead actor while creating disbenefit for others (including other corporations, society and the environment).
3) Market practices on current paradigms cannot be expected to meet greater societal adaptation needs.
4) Further adaptation research is required in some areas to help guide shape and monitor adaptation for the private sector.
5) A multiplicity of policy reform may be necessary, but crafting and implementing it is likely to remain beyond the capability of the Australian Public Service (APS) or individual Governments.
6) Highly sophisticated mining, gas and some Asian owned technology companies are leading the way with many opportunities missed by Australian companies.
7) Adaptation for the corporate sector is a key strategic issue, unlike mitigation and corporate social responsibility (CSR), as it benefits the corporate primarily.
8) Insurance dependency may only be a short-term risk transfer mechanism as, in its current paradigm, it can mask risk, create a false sense of security and may impede adaptation.
We hope that this report is of benefit to Australian organisations, policy makers, regulators and to researchers in adaptation science. This project shows that, on a whole, the Australian private sector is giving little consideration about the impacts climate change. This project has identified that considerable research gaps exist, but has also provided direction for organisations and researchers. Individual corporations and private sector peak bodies urgently need to explore the risks and opportunities that climate change and associated responses bring. This is especially so for the ICT, aviation, energy, insurance and finance sectors.
Please cite this report as:
Johnston, GS, Burton, DL & Baker-Jones, M 2013, Climate change adaptation in the boardroom, National Climate Change Adaptation Research Facility, Gold Coast, 68 pp.
Finance and Insurance
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