ARCHIVE: VIEW FROM THE WEST

Climate Change Adaptation Strategies Still Thin on Details Len Coad, Director, Energy, Environment and Technology Policy, Director, Western Office May 1, 2009

Most Canadian companies know that climate change will affect their operations, but only 18 per cent of companies responding to a Conference Board survey for the Leaders Roundtable on Climate Change Adaptation have evaluated how it might affect their business and just 12 per cent have attached cost estimates to these assessments. While most businesses have developed broad climate change strategies, their challenge is to identify the specific nature and extent of the impact. Without those details, it is difficult to include climate risks in an overall corporate risk management strategy.

The Conference Board surveyed 61 companies in 2008 about their risk analysis and mitigation strategies, and the way the firms consider climate risks within the broader context of corporate risks. Companies see physical impact to company facilities as the most important climate change related risk, followed by supply chain disruptions and operational impacts (such as interruptions in communications or business continuity due to weather related infrastructure failures).

Climate Change Effects Are Imminent

More than half of the companies surveyed expect to feel the impact of climate change within the next three years. These effects are expected to continue for at least the next 20 years. Although respondents expressed broad awareness of general risks, they identified four primary barriers to action on climate change adaptation:

• lack of time and resources;
• lack of certainty in identifying specific risks;
• lack of clarity regarding lines of responsibility for managing the risks; and
• lack of capacity to integrate adaptation strategies into broader risk management strategies.

Companies see physical impact to company facilities as the most important climate change related risk, followed by supply chain disruptions and operational impacts.

Climate experts have predicted three impacts for Western Canada.

• More extreme weather events: Companies considered themselves relatively well prepared for extreme weather events, based on a view that existing design standards for their facilities will allow those facilities to withstand the conditions that might result from climate impacts. Firms do not directly assess related potential impacts on transportation, communications, water infrastructure, or business continuity. The lack of certainty or precision increases the difficulty of evaluating the claim that existing standards are adequate.
• Increasing average temperatures of ambient air and flowing water: Similarly, the exact nature and timing of temperature increases is not known, making the impact on industrial equipment that uses air or water for cooling difficult to predict. Companies already face physical risks related to their facilities; the incremental risk due to climate change is hard to quantify.
• Changes in the volume of surface water available: As glaciers melt and snow pack becomes less reliable, the seasonal flow of water will change. Further, as weather events become more extreme, variability in water flow could increase.

Climate risk analysis can be done under the broader umbrella of corporate risk analysis, using traditional approaches such as cost/benefit analyses, cost effectiveness analyses, environmental impact assessments, and sensitivity analyses. As understanding of the risks improves, so does the ability to adjust design and construction standards, and insurance requirements and costs will evolve to reflect these risks. But until more firms move beyond broad strategies to specific plans, it will be difficult to know how significant their climate change risks are—and how companies can best mitigate them.

Len Coad Director, Western Office Director, Energy, Environment and Technology Policy 403-221-3041

Related Events
The Alberta Water Conference

Related Executive Networks
Leaders’ Roundtable on Climate Change Adaptation
Business Council for Sustainability