Competition and regulation push companies to take action to protect themselves from the effects of climate change, not climate science, Jon Williams, partner at global consultancy firm PwC told the Reuters Global Climate Change Summit.
Williams, who leads the finance sector team at PwC’s sustainability and climate change practice, advises clients such as banks, insurance companies, asset managers, corporates and governments on climate risks.
“More and more businesses are seeing climate change for what it is – a risk issue, a resilience issue and a business opportunity,” Williams said at the summit, held at Reuters’ office in London.
Many companies are incorporating climate risks into their business models to get ahead of the competition, he said.
For example, PwC has done analysis for British supermarket chain Asda which showed that over 90 percent of its food chain is at risk from climate change. This has prompted the company to start thinking about how it sources food and about building climate resistance for the farmers they buy from.
“They have also done it to show leadership. If your competitor is taking action to reduce their energy use or build up their resilience to the financial hits of floods caused by climate change they are better placed financially than you are,” Williams said.
In an annual survey published in February, PwC asked 1,344 chief executives in 68 countries whether climate change was one of their top three concerns and forty six percent said it was.
By sector, 70-80 percent of CEOs from energy, mining and forestry companies said it was a worry, compared to 25-30 percent in the finance sector.
Another, more short-term driver for climate action is from government regulation on energy use or greenhouse gas emissions, which companies have to comply with.
“Companies have to keep an eye on the competition as well as on the regulator and the science will be what the science will be,” Williams said.
For example, in the transport sector, automotive manufacturers are vying to design the most efficient car.
“The electric vehicle sector has gone from being a marginal distraction or a nice fad to other manufacturers stepping in. So competition can drive action on climate change,” Williams said.
Toyota produced the first mass-produced hybrid car, Prius, which was introduced worldwide in 2000. Since then, other major car manufacturers are developing electric or hybrid vehicles.
A lot of climate science looks at a long-term trajectory of mid-century for climate change effects, which is too far off for many chief executives who may not even be alive by then.
“The reality is climate change impacts will not happen in a smooth line. The path will be increasingly erratic,” Williams said.
“We don’t talk about 2050 but rather play some scenarios. Can a company tolerate flooding every five years and if not, what is their risk management strategy? Is it to relocate, is to build infrastructure or is it working with government to share the burden?”
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