Adaptation: How Businesses Should Prepare for an Uncertain Future

Despite global efforts to mitigate climate change, its effects are already having an impact throughout the globe, including the UK. Businesses need to prepare for risks to supply chains, operations, and demand, though often don’t know where to start. The IEMA Climate Change Adaptation Report provides practical steps that businesses can take to prepare themselves for this complex unravelling future.

An imperative for all businesses

Beyond climate change’s direct impacts, the business context is changing significantly. Recognised as a Paris Agreement goal equal to mitigation, investors are demanding more robust adaptation plans, insurers are strengthening requirements, and regulators are enforcing stricter measures to ensure compliance.

In this context it is important to consider adaptation as an opportunity. The IEMA report reflects on the ‘triple dividend’ identified by The Global Commission on Adaptation. Adaptation not only reduces losses due to climate change: it provides social and environmental benefits while reducing risk, increasing productivity, and driving innovation.

Adaptation is essential to ensure the resilience of businesses in the short and long term. It is a response to changing conditions and key to increasing competitiveness.

But what can businesses do?

The question of how to adapt can be difficult for businesses. The future is uncertain, while risks are contextual to each business, industry, and location, so there isn’t one off-the-shelf adaptation solution.

Nevertheless, tangible steps can be made to effectively adapt a business. These broadly fit two areas: adaptive capacity building and on-the-ground action. Building adaptive capacity involves enhancing a business's preparedness to anticipate and respond to risks by utilising networks and institutions. On-the-ground actions are those that directly reduce risks, either in the short or long-term.

The IEMA report outlines three stages of adaptation intensity that businesses can undertake to increase preparedness. These stages are not prescriptive but serve as examples of possible measures to enhance resilience.

The first stage is immediate low-investment actions to adapt while assessing risks and capacity. Actions include staff adaptation training, promotion of sustainable policies in supply chains, conducting risk assessments and creating a strategic vision. For instance, while conducting climate risk assessments at sites lays the groundwork for further action and training builds adaptive capacity by ensuring staff are aware of climate risks.

In the second stage, businesses develop detailed adaptation planning and begin implementing larger-scale concrete actions. Setting targets for adaptation while envisioning different risk scenarios helps identify priorities and prepares for further implementation. Concurrently, engaging in inclusive dialogue with internal and external stakeholders increases responsiveness and overall adaptive capacity.

The third stage, involves maintaining adaptive capacity through strategic and responsive implementation of concrete actions. Businesses can showcase a clear adaptation strategy with ongoing concrete actions to investors. With developed networks and contingency plans, businesses possess the adaptive capacity to respond to emerging risks and transparency ensures consistent evaluation to increase preparedness.

So where next?

Investing in the adaptation of a business involves taking tangible steps that lay the foundation for a future-proofed business. To begin on this journey to adaptation, business can commission ESG consultants.

As a key part of the Paris Agreements, Beyondly recognises adaptation as key in providing a comprehensive ESG consultancy service, which it complements with experts in sustainable supply chains. For more information, reach-out to Beyondly’s ESG team.

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Author: Tom Davies, University College London