With a market worth of US $2.6 trillion, home to more than 630 million people and many of the world’s supply chains there is a lot at stake in Southeast Asia from their current climate reality.
An 18-month study that the Business for Social Responsibility (BSR) conducted, the “Building Climate Resilience in Southeast Asia,” examined the businesses in four Southeast Asian countries, namely: Indonesia, Myanmar, Thailand, and Vietnam. BSR selected these countries because of their exposure and vulnerability to climate hazards.
The study looked into the following industries: manufacturing including automobiles, garment, and information communications technology; tourism and hospitality; agriculture; and financial services.
Goals of the study
Because climate change affects the business core strategy and have cascading impacts all throughout the operation process from the supply chains and the community it works, it is worthy of action and leadership, the paper says.
The study seeks to analyse how the private sector in Southeast Asia is approaching climate risk, build resilience, and then provide the businesses tangible and accessible ways to understand climate risk and resilience, and benefits from an improved adaptive capacity.
The scenario in Southeast Asia
Businesses in Southeast Asia are facing a myriad of climate change risks such as sea-level rise, extreme weather events, flooding, storm surges, temperature rise, drought, heatwaves, heavy rainfall, land degradation, biodiversity loss, cyclones. These can have significant financial repercussions on their economy, human resources, and livelihood, the study states.
To avoid significant losses and for continuity of growth, the businesses have to prepare for these climate events and build resilience against it. Resilience is defined as the ability to anticipate, absorb, accommodate, and recover from climate change impacts, the study says.
It also recognises that doing climate action shall be a two-pronged approach: transition to a low-carbon economy and enhance adaptive capacity to climate hazards.
What the study found
Businesses lack long-term perspective and fail to account for climate impacts on their operations, supply chains, and the communities in which businesses depend on and work with.
However, there are some businesses, like the auto industry that assess risk throughout their supply chains, incorporating climate hazards into their risk assessments.
For instance, they are mapping suppliers to know whether they are in flood-prone areas. Then conduct surveys with suppliers to identify risks. Using the data from these surveys, companies are able to find ways to protect their facilities from risks.
The study also presented other case studies that demonstrate what climate actions companies are taking to adapt and build resilience.
Taking action to build resilience
BSR September 2018 report says, “To maintain business continuity amid a changing climate, BSR recommends businesses take a three-dimensional approach to assessing risk using the latest science compiled by the IPCC (Intergovernmental Panel on Climate Change):
- 1) Understanding the physical hazard of climate change,
- 2) Minimizing exposure to these hazards, and
- 3) Reducing vulnerability or underlying weakness that can exacerbate risk.
After identifying the businesses’ hazard, exposure and vulnerabilities, it should then assess climate risks against the business’ capital assets which are identified below. After assessment of climate risks, the business then can strengthen one or more of the six capital assets to reduce risk and build resilience (Building Climate Resilience, 2018, September).
Six capital assets that need resilience
Figure 3 of the BSR report describes the six capital assets:
- Human capital refers to the skills and knowledge in the workforce
- Physical capital or the infrastructure, equipment, logistics, transport, and communication
- Political capital refers to the decision and policy-making processes
- Social capital or relationships, mutual support, and collaboration
- Financial capital refers to the financial resources and access to it
- Natural capital or the biodiversity and ecosystems, including land and water.
These guidelines of assessing and identifying areas of climate risk resilience can be applied to each of the industries examined in the study namely, the agricultural, manufacturing, tourism and hospitality, and financial services.
Why businesses should invest in climate resilience
“Building resilience can help a business protect its valuable assets, maintain productivity, and reduce costs. But the benefits of building resilience extends beyond business continuity and asset protection and link to the broader community and operating context” (Building Climate Resilience, 2018).
The paper offers a lot of useful information, practical solutions and recommendations on how business in Asia can effectively tackle climate change.
Business owners, leaders, managers, and private sectors should take advantage of the information provided in this paper if they want to get a firm grip on climate change adaptation and mitigation.
Read the entire report by CLICKING on the image below:
NOTE WELL: Please read the “Building Climate Resilience in Southeast Asia Handbook” that the Climate Adaptation Platform had published about to know more information.