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Climate Adaptation: crucial for managing future climate impacts and risks

Manogna Goparaju
Mar 4, 2024

To ensure a just transition to Net Zero, we can no longer continue to rely on sustainability strategies focused only on climate change mitigation; it is time to pivot towards climate adaptation. Effectively tackling the long-term effects of climate change on businesses, individuals, communities, and countries will require a systemic, community-level adaptive approach. These adaptive strategies, policies, and actions needs to be based on future climate risks with longer timescales, the interdependencies of environmental, social, economic, and financial factors, and collaboration between businesses, sectors, and communities.  

Climate change has different impacts on interconnected ecosystems:

Climate change has far-reaching impacts on environmental, social, economic, and financial systems, with the magnitude of impacts varying across different sectors, industries, and geographies. To effectively address climate change and ensure an equitable, just future for all, businesses must take proactive measures to appropriately address their complete climate risk exposure and develop adaptive strategies to better prepare all stakeholders across value chains and ensure operational and business continuity.

It is important to consider the intricate and interdependent systemic relationship between environmental, social, and economic factors contributing to climate change to develop the appropriate thinking and strategies for climate adaptation. For example, with increased heat stress, geographies will experience negative impacts on biodiversity, soil, and the water table, resulting in changes in land use and positively affecting insect populations, resulting in additional yield loss due to infestations on stressed crops. On the one hand, this will increase the risks of crop failure and lower yields, contributing to food insecurity. Crop failure and lower yields will trigger supply chain disruptions, with critical sectors such as Life Sciences and Energy experiencing raw material shortages for the development of medication & vaccines and biofuels, respectively. The latter may additionally create political debates and societal concerns linked with the use of limited crop yields for nutrition versus the development of sustainable fuels. On the other hand, changes in land use will disrupt habitats, contributing to population displacement and migration and increasing the number of climate refugees. Countries receiving climate refugees will experience increased stress on health care and financial systems in the first instance, owing to increased health and financial vulnerabilities within climate refugee communities.

Example of order of consequences related to increased heat stress*
*This graphic is for illustrative purposes only and it is not a comprehensive view of all the climate hazards and associated consequences

Climate change will increase vulnerabilities – physical safety, health, financial, economic, and legal. According to the United Nations High Commission for Refugees (UNHCR), an annual average of 21.5 million people have been forcibly displaced by climate change-linked extreme weather events (drought, wildfire, flooding, storms) since 2008. By 2050, 1.2 billion people could be displaced globally due to climate change-related natural events. Climate change has direct impacts on human health. According to the World Health Organisation (WHO), climate change is expected to cause approximately 250,000 deaths per year between 2030 and 2050 due to undernutrition, malaria, diarrhoea, and heat stress alone.

Recognising and mapping the complexities and interconnectedness of these systems will better enable sectors and businesses to identify challenges and opportunities to effectively address climate change.

Impacts of climate change on business continuity:

The cost of weather-related disasters has increased by seven times since the 1970s, according to the UN University Institute for Environment and Human Security (UNU-EHS). In 2022, the world faced an economic loss of $313 billion due to such events. Climate change is causing a shift in the risk landscape, and the number of frequent disasters is expected to double globally by 2040.

Climate change will significantly impact business operations, supply chains, and the long-term viability of sustainability strategies and commitments, thus threatening business continuity. Climate risks will endanger physical assets within businesses’ portfolios, increasing risks to human health and safety and operational disruptions. Existing infrastructure may no longer be operationally viable, increasing operational costs and risks of stranded assets. Consequently, stakeholders across value chains will experience supply chain disruptions resulting in lower revenue and profit margins and heightened financial risks. Heightened perception of risks will negatively impact the valuation of businesses, decreasing future investments businesses may receive.

Disruptions experienced across value chains combined with increased financial and business risks will hinder businesses’ commitment and progress towards their sustainability and Net Zero targets, leading to reputational and policy risks, with increased dissatisfied consumers and stakeholders and governments tightening disclosure and conduct regulations. Businesses across sectors will need to start weaving their climate and sustainability strategies into their overall business strategies to effectively reduce climate risks, meet their climate commitments, and plan future CapEx, OpEx, and investments to ensure business continuity is not threatened by climate change.

Climate mitigation is no longer sufficient; we need to pivot to adaptation:

Effective climate action will require businesses to first identify where climate mitigation and climate adaptation will be appropriate. Climate mitigation includes efforts to reduce greenhouse gas emissions and slow down the progression of climate change. A majority of corporate sustainability focuses on mitigating the impacts of climate change. Climate mitigation will continue to be vital; however, it will no longer be sufficient, and economies will need to pivot towards climate adaptation. Irreversible effects of climate change are already being felt around the world, especially in the global south, increasing vulnerabilities. This formed the basis for the introduction of the Climate Loss and Damage fund at COP27, which aims at providing climate-vulnerable nations with adequate financial resources to adapt to the impacts of climate change.

Climate adaptation, according to the UNFCCC, refers to adjustments in ecological, social, and economic systems in response to actual or expected climatic stimuli and their effects, changing processes, practices, and structures to moderate potential damages or to benefit from opportunities associated with climate change.

By pivoting towards climate adaptative thinking, businesses can gain a better understanding of the full spectrum of future climate risks and develop associated risk management strategies. In doing so, businesses can improve the resilience of their supply chains, create new opportunities to gain market share with the development of new products and services, increase investor confidence and brand reputation, and ensure compliance with current and future policies.

Enablers for climate adaptation and how Capgemini is working with clients and partners to develop the right thinking and strategies

The initial steps towards climate adaptation are climate risk assessment and quantification and connecting climate strategies with overall business strategies and planning. While climate risk assessments are not new to most sectors (if not all), the context and timelines for climate risk assessments will need to change. Businesses will need to focus on future risks that span beyond a 10-year timescale and take into consideration the systemic, first and second-order impacts of these risks. Another key factor for success is collaboration – no business or sector will be able to address climate change alone. Businesses must collaborate across industries to ensure economies and countries adapt to climate change in an equitable, just manner.

At Capgemini, we are already working with clients and partners to improve our collective understanding of future climate risks, the interconnectedness of their impacts across sectors, and the critical collaborations required to effectively deploy community-based adaptation strategies and scale at pace. Capgemini has partnered with organisations such as Meaningful Business, Future Planet, and Forum for the Future – collaborative networks of client organisations focused on collectively addressing the climate crisis and driving positive impact. Through these partnerships, Capgemini brings together clients across multiple sectors to engage with our experts on critical topics and opportunities for climate adaptation, building critical friend relationships with peers to collectively develop competencies in key areas such as sustainable finance, responsible consumption, circular economy, biodiversity, water, and capacity building.

Meets our Experts

Manogna Goparaju

Climate Adaptation & Sustainable Finance Lead, Sustainable Futures UK
Manogna is a climate adaptation and sustainable finance expert within the Sustainable Futures team. Her expertise lies in analysing companies’ strategies, business architecture, processes, products, and services to enable companies to address future, systemic climate risks and positively contribute towards internal and external sustainability/ESG agendas. Manogna holds a PhD in environmental economics and management, focusing on private sector corporate sustainability & the Sustainable Development Goals, and a Masters and Bachelors in corporate and environmental sustainability. She has corporate and academic experience in systems thinking, sustainable development, and corporate sustainability, and has previously worked on building climate resilience across complex systems (supply chains, cities) and development finance. 

Mathilde Lacombe

Sustainability in Life Sciences Lead, Sustainable Futures UK
Mathilde is a sustainability strategy expert within the Sustainable Futures team. Mathilde’s proficiency is rooted in crafting strategic initiatives and fostering engagement with environmental stakeholders. She has a wealth of experience working across various sectors on sustainability strategy & environmental standards implementation, sustainable value chain and training & upskilling programme delivery. Mathilde holds a chemistry engineering degree with an environmental speciality. 

Juan Diaz Reina

Social Sustainability Lead, Sustainable Futures UK
Juan is a sustainability professional boasting over 12 years of international and cross-cultural expertise, collaborating with governments, private enterprises, associations, third-sector, and multilateral organisations. Juan leads social sustainability at Capgemini Invent UK. He has experience and knowledge applying different national and international frameworks related to sustainability, such as the UK Social Value Model, the Equality Act 2010, the Sustainable Development Goals, the Paris Agreement on Climate Change, the Universal Declaration of HHRR, the UN’s Guiding Principles on Business and Human Rights, and the UN Global Compact seeking to promote impact, value and legacy, leaving no one behind.