Climate change needs adaptation and engagement

According to a recent survey from Deutsche Bank, more than half (53%) of investors view climate change as the most important factor affecting their investment decisions. It’s unsurprising that climate change tops the environmental, social, and governance (ESG) investment strategy list for the majority. Investors are increasingly aware of both the existential threat of global temperature rise, and the limited time we have to manage it. But with this race against time in mind, how much consideration is applied to adaptation? 

Warmer temperatures are here to stay

In short, not enough. A report from Adaptation Leader outlines the necessity of a climate adaptation strategy to complement corporate mitigation processes. It outlines the substantial action required from investors, and the senior executives and Board members of the companies they invest in, to better understand and navigate the “new normal” resulting from irreversible climate change, and increasingly frequent and severe extreme weather events.

We mustn’t underestimate the implications; the most recent IPCC report highlights how climate change has already adversely affected the physical and mental health of millions of people in all regions of the world. It has resulted in excess mortality and morbidity, increased the spread of food-, water-, and insect-borne disease, and degraded ecosystems and the services they provide. A warming climate now poses risks to nutritional security, well-being, livelihoods, and economic activity at local and international levels.

“Adaptation and mitigation must be pursued with equal force and urgency.”

António Guterres, United Nations Secretary-General

Though adaptation is gaining traction, the report’s authors Peter A. Soyka and Ira R. Feldman observe:

‘Thus far, neither corporate nor investor behaviour (including that of ESG investors) indicates that these threats are adequately understood or are being acted upon. To the extent that corporate leaders are addressing climate change, they tend to be focused on GHG emission reductions (mitigation) rather than on modifying their business practices to reflect the changes in climate that are becoming increasingly clear (adaptation).

According to a 2021 report from the Climate Policy Initiative, adaptation initiatives receive only 7% of climate-related investment, allocated across a vast spectrum of needs such as flood and wildfire prevention, resilient agriculture, clean water supply, infrastructure modification, and population resettlement.

Moving towards climate resilience, together

Adaptation is good business. Successful organisations adapt to continually changing market landscapes, and as a result of globalisation, many organisations will be exposed to the risks posed. 

The Adaptation Leader special report emphasises the need for bold leadership, new ways of thinking and more inclusive and collaborative behaviour to address the unprecedented challenges climate change presents. It advises that enhanced engagement with portfolio companies about adaptation readiness should become a regular component of periodic reviews among investment analysts, portfolio managers, and company representatives.

SI Engage simplifies engagement so you can quickly and easily plan, report and track activity across your portfolio companies. Collaborative, real-time data is a fundamental part of the adaptation action we all need to be taking. Get in touch to see how we can support your journey to climate resilience. 

 

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