September 20, 2019

Business Resilience in a Time of Climate Change

Newman Jackson Smith and Rose-Marie T. Carlisle

The public is taking notice of the manifest evidence of climate change.  From “rain bombs” to sea level rise to “sunny day flooding,” the fact of climate change is inescapable, regardless of disputes in some quarters as to its cause.  Adverse effects are felt not just in coastal areas.  Wildfires spawned by droughts and high temperatures threaten large swaths of the United States, and more intense storms forming over ever-warmer waterbodies lead to inland flooding.  Businesses must also take notice and deal with increasing risks by assessing vulnerabilities of their property, their supply chains, their transportation systems, their energy and utility providers, and their work force.

The Fourth National Climate Assessment, released on November 23, 2018, https://nca2018.globalchange.gov/ , part of the quadrennial reporting required under the Global Change Research Act of 1990, notes that while risk assessment and planning for climate change have increased, the focus tends to be on actions related to current impacts of climate change rather than on the anticipated future impacts.  The Assessment points out troubling interconnected impacts to infrastructure, land use planning, water resources, food production and distribution, and energy production and transportation.

Key take-aways for business from the Assessment are

  • Adapting to climate change impacts is essential to preventing massive losses from changed climate patterns.
  • Instead of planning based on data from the past and present, businesses must predict the changes that will occur in the future and adjust their business decisions accordingly.
  • Adaptation is an iterative process incorporating awareness, assessment, planning, implementation, monitoring and evaluation, and re-assessment, and continued planning and implementation.
  • Actions to reduce climate risk fall into three types:  reducing exposure, reducing sensitivity, and increasing adaptive capacity.
  • Businesses’ risk management must include resilience in the face of climate change in every aspect of design, planning and operations workflows.  The Assessment terms this “mainstreaming.”
  • Most resilience planning occurs at the local level.
  • The benefits of proactive adaptation exceed costs.

Local governments across the country are taking steps to deal with climate change.  For example, cities as diverse as Boston, Dallas, Tulsa, Nashville, and Pittsburgh are members of 100 Resilient Cities, www.100resilientcities.org ,[1] a nongovernmental organization that provides financial and logistical guidance for establishing a Chief Resilience Officer as well as technical support for member cities.  Local efforts extend to San Francisco’s 2015 Seawall Resiliency Project, which addresses vulnerabilities of the seawall to earthquakes and sea level rise, as well as infrastructure at risk of inundation.   Other resources to which cities may look for guidance on adaptation planning and mainstreaming efforts are cited in the Assessment.  Businesses would do well to provide input on and encourage government entities’ planning for adaptation to climate change because transportation (both short and long-distance for workforce, supply lines, and product distribution), water, sewer, power, communications, and disaster planning, to a large extent are controlled by government rather than private business.  

For a business’s resilience planning, numerous tools exist.  These from changes in designs, green spaces, and building materials to reduce heat island effects in urban areas to similar changes to resist wildfire damage to property.  At the most general level, information is available through the National Oceanic and Atmospheric Administration (NOAA), which maintains governmental agencies’ long term data and climate projection studies.  From FEMA flood insurance programs to risk analyses for sea level rise threats, substantial information is available online now for free.  NOAA also makes available the U.S. Climate Resilience Toolkit, https://toolkit.climate.gov  [currently unavailable due to shutdown]

Some private entities also offer guidance on resilience planning, such as Zurich Insurance Group’s Managing the Impacts of Climate Change:  Risk Management Responses, https://www.zurich.com/en/knowledge/articles/2018/09/managing-the-impacts-of-climate-change-risk-management-responses. 

Already some businesses have had the foresight to work with companies that supply raw materials to them to jointly prevent or reduce disruptions occasioned by climate change.  A soft drink company reportedly has partnered with farmers to prevent crop losses from drought conditions and to deal with water shortages.  Businesses that use textiles have looked to sources that are predicted to maintain cotton crops rather than continuing to rely on materials from areas that are now or are predicted to suffer floods or severe droughts.

Robust resilience planning may also allow companies to proactively perform climate risk accounting and thereby achieve higher credit ratings, along with presenting more favorable financial analyses in public filings. Businesses will be driven to resilience planning at some point by insurance and financial requirements, or from adverse experiences with it.  Prognosticators expect 2019 to be the year that climate change is severely felt in the United States.  Perhaps resilience planning should be your company’s New Year’s Resolution.

[1] References to programs and resources should not be construed to be an endorsement by either of the authors.

Newman Jackson Smith

Partner; Nelson Mullins Riley & Scarborough, LLP

Newman Jackson Smith is a partner in the Charleston, South Carolina office of Nelson Mullins Riley & Scarborough, LLP. He practices in the areas of environmental law and litigation, administrative law, land use law, and constitutional law. He may be reached at jack.smith@nelsonmullins.com.

Rose-Marie T. Carlisle

Counsel; Nelson Mullins Riley & Scarborough, LLP

Rose-Marie T. Carlisle is Of Counsel in the Columbia, South Carolina office of Nelson Mullins Riley & Scarborough, LLP. She practices in envrionmental law and litigation. She can be reached at rory.carlisle@nelsonmullins.com.