The following is an opinion piece by John Henry, who represents CFA on Standards Australia committee EV-015 Greenhouse Gas Measurement and Accounting, the national mirror committee to ISO/TC 207/SC 7.
The International Organisation for Standardisation (ISO) has Climate Change Adaptation on its radar thanks to the sub-committee on Greenhouse Gas Measurement and Related Activities (ISO/TC 207/SC 7).
When climate change adaptation first emerged as a topic in the late 1990’s, the approaches were all about defensive measures to deal with more extreme weather events, such as building desalination plants and raising the height of levees on river banks. However, that’s not really adaptation, that’s just attempting to preserve the status quo.
Adaptation to any change is about embracing the new reality. In order to adapt to the digital age, a business must restructure its operations to suit how people now communicate, rather than simply looking for ways to hang on to older forms of communication for as long as possible. For example, you wouldn’t be investing in a new plant to print better looking newspapers in the hope that this might make people abandon their digital devices. The same sort of paradigm shift in thinking is needed when planning for climate change.
Some have suggested that defensive measures are all right for short-term planning; and strategic adaptation is only for the longer term. The problem with this approach is that much of what a business might do in the short term could prove to be a wasted effort in the medium term. A company may spend a lot of money on improved drainage systems at its chemical plant, only to decide a few years later that extreme weather is not going away, and they really need to move the plant to a different location, less prone to flooding.
But adaptation is about more than just adjusting to extreme weather, it’s also about adapting to a carbon-constrained economy. If Australian businesses think that governmental policies related to climate change, or the lack thereof, will insulate this country from constraints on carbon, then they need to think again. The commercial world is not bound by national borders; and financial institutions are already adapting to climate change at a rapid rate, reducing governments to being mere spectators. It wasn’t a carbon tax that has seen coal-fired power stations exiting the national energy grid in Australia. Financial institutions are factoring in the business risk associated with investing in coal-fired power, making it uneconomic for existing power generators to update their ageing infrastructure.
So, like it or not, Australia is already part of a carbon-constrained world, the question is what should businesses be doing about it? First, they need to think of climate change as a two-edged sword, with both risks and opportunities. If you run a micro-business, with not a lot of capital invested, you may think this talk of adaptation is way out of your league, and you’ll just take your chances doing what you’ve always done. But ignoring climate change might mean you miss out on an opportunity to move into a new and more profitable business. Perhaps you could branch out into servicing storage batteries for domestic solar systems?
Fundamentally, a business needs to think about how its customers will respond to climate change, including what they will want to buy, or not buy, in future. It’s no surprise that major oil companies are already looking at what else they can sell at their service stations, now that the Australian market for petrol has peaked and is starting to decline. In future, you may be driving an electric car; but you still might be tempted to pull into a roadside service centre to drop off your dry-cleaning, pick up a few groceries or grab a quick snack on your way home from work.
In addition, the way that business activities are planned needs a rethink, especially when it comes to energy usage. For a long while we’ve had cheap and abundant base-load power, and businesses have taken it for granted. In the old reality, the decision to operate a night shift at a manufacturing plant didn’t need to factor in the availability of energy during the hours of darkness. However, if you’re getting solar power generated from the rooftop of the factory, it might make more economic sense to operate an expanded day shift, because the marginal cost of power is basically zero during the day. That may seem like a huge change to the way manufacturing operates; but other sectors successfully work in synch with the natural environment and plan accordingly: agriculture, construction and tourism, to name a few. It’s really just a case of working with nature, instead of trying to dominate it.
What role can ISO play in all this?
Well, if you’re going to invest in a business, either as a shareholder or by lending to it, you will want some assurance that the business has done a really thorough and systemic job of considering all the climate change risks and opportunities. ISO can offer an internationally agreed set of protocols for doing that analysis, much as it has done in other fields.
It’s still early days in the ISO work and those developing the proposed new standards are coming from different parts of the world, with a broad range of preconceptions about this topic. As with any standard-setting exercise, those involved will need to go on a journey in order to find a common, globally-relevant approach to how climate change adaptation needs to be addressed.
These proposed standards are for implementation by business; so it might seem that this doesn’t have a lot of relevance for consumers. Australian consumers are, by and large, already ahead of the game when it comes to climate change adaptation, as witnessed by the take-up of domestic solar panels and energy efficient appliances. However, the costs resulting from businesses not adapting to climate change in a timely manner will ultimately be passed on to consumers; especially the most vulnerable consumers who aren’t in a position to purchase a Tesla car or put solar panels on their roof. And when it comes to increased insurance premiums due to massive pay-outs to industries ill-prepared for severe weather events, nobody is immune.
We only have one planet to share, so what businesses do, or don’t do, about adapting to climate change is everybody’s concern.
Of course, we still need to stay focussed on greenhouse gas abatement and the targets agreed in Paris. But even with a two-degree rise in global temperatures, the world will still need to get on-board with climate change adaptation sooner, rather than later. With 7.5 billion people on the planet today, double the population in 1970, the impact of humans on the climate isn’t likely to go away any time soon, even if the average carbon footprint per person can be reduced. What we can do is take action to slow the rate of growth of temperature rise; which will give us the time needed to adapt to a world that is irrevocably changed by the effects of climate change.