An Organisation for Economic Co-operation and Development (OECD) working paper assesses how the private sector is perceiving and responding to potential climate risks, the factors that influence their actions and how the public sector might might eliminate barriers to action by the private sector.
25 November 2011: The Organisation for Economic Co-operation and Development (OECD) has published a working paper titled “Private Sector Engagement in Adaptation to Climate Change: Approaches to Managing Climate Risks.” The paper notes that, while there is a high level of awareness among companies of the broad range of risks posed by climate change, not all perceive their businesses as vulnerable, and a gap exists between the risk assessments companies have performed and their implementation of risk management actions.
The Environment Working Paper, by Shardul Agrawala, Maëlis Carraro, Nicholas Kingsmill, Elisa Lanzi, Michael Mullan and Guillaume Prudent-Richard, is based on an examination of 16 case studies drawn from a range of industries, plus a high-level analysis of private sector responses to 2009 Carbon Disclosure Project questionnaires. The authors sought to gauge companies’ awareness of potential climate risks and vulnerabilities, companies’ assessments of specific impacts affecting their business and possible responses to such impacts, their motivations to act, and their implementation of adaptation measures and climate risk management strategies.
The paper finds common factors that affect companies’ capacities to adapt, their incentives to action, and their perspectives on the need to adapt. These include capacity to finance adaptation, in-house capacity and expertise to assess risks, uncertainties of climate impacts, production flexibility, policy and regulatory environments, business planning horizons, and company perspectives, such as prior experiences with natural disasters or extreme climate conditions, and the internal framing of opportunities versus risks.
The paper also assesses potential public sector roles in eliminating barriers to action by the private sector, encouraging the latter’s engagement and incentivizing private sector investment in adaptation. [Publication: Private Sector Engagement in Adaptation to Climate Change]