The CCC’s case for scaling up adaptation
The UK's climate has already altered due to human greenhouse gas emissions, and it will continue to change over the subsequent decades. The Climate Change Committee (CCC) report that the UK is now falling short of addressing the impacts that these alterations in climate will bring due to gaps in planning and delivering climate resilience across the board. The CCC say that addressing this will require focused activities right across society to reduce the impacts of these changes on the UK's ecosystems, infrastructure, economy, and communities. The report outlined five key areas of investment to carry out the necessary adaptation activities.[i]
- To safeguard towns, cities, communities, and shorelines from more frequent and strong rainfall and rising seas, new infrastructure will be required.
- To ensure they work well under future weather extremes, current infrastructure systems such as our energy, transport, water, and telecoms networks need to be upgraded.
- Many homes, offices, and public spaces will require retrofitting to keep them secure and comfortable during upcoming floods and violent heatwaves.
- To protect the UK's natural environment from the effects of a changing climate and the vital contributions that it makes to our society and economy, ecosystems and biodiversity must be restored.
- To prevent an increase in exposure and vulnerability to the effects of climate change, a large portion of existing governmental, corporate, and family spending will need to be coordinated with efforts to improve climate resilience.
The CCC say that to properly address the variety of climate threats facing the UK, investments in climate resilience must come from sources other than the public sector. While public sector funding must continue to be a crucial pillar of investments in a resilient future, it cannot and should not attempt to cover all of the investment requirements for climate resilience. A top emphasis should be given to extending and consolidating the pool of funding sources capable and eager to contribute to climate resilience. This calls for a variety of incentives that help firms generate money to invest in resilience, well-designed legislation to allow investment in all regulated industries, and enhanced incentives and knowledge to allow families to participate in their own climate resilience.[ii]
The state of private sector involvement in adaptation activities
In ZCA’s top 5 trends for 2023, we commented that an increased global focus on adaptation would begin to impact private enterprises. The opportunity for climate adaptation is vast and expanding. By 2026, according to the WEF, the market could be worth $2 trillion annually, and as the prevalence of climate impacts increases, so too will the demand for adaptation solutions. Almost every sector will be affected by climate risks, which include damage to real estate assets, decreased agricultural productivity, increased risk for financial institutions, and even potential threats to internet access. The market for adaptation is lucrative because damages from climate change-related disasters, such as wildfires, water shortages, and stronger storms, are projected to amount to billions per event.[iii] With business never able to exist in a vacuum, it is in its interest to engage to the extent of its capacity in adaptation activities. Engaging in such activities will result in a net gain for all, including private enterprises.
Cost and benefits of investments in adaptation
Source: Global Commission on Adaptation
Despite the clear case for the economic benefits of adaption, private sector investment still lags behind public investment. According to the Climate Policy Initiative, global adaptation spending from public and commercial sources increased from roughly US$23 billion per year in 2015–2016 to US$30 billion per year in 2017–2018. The latter represents less than a quarter of all climate financing throughout that time. About two-thirds of the total adaptation funding flows went to developing nations. The private sector provided only roughly $500 million (1.6%) of the total adaption financing. The lack of disclosure of climate-related risk data to inform capital investment planning in the public and private sectors is considered a significant factor in the relatively low level of investment in adaptation and resilience-building.[iv]
Mobilising the private sector to ramp up adaptation efforts
The question remains how can the private sector increase its role within adaptation activities? An example of the use of public-private partnerships to achieve adaptation objectives is the Partnership for Central America (PCA). The PCA is a non-profit, non-partisan, non-governmental organisation that collaborates with a global alliance of private groups to increase economic opportunity for underprivileged people in El Salvador, Guatemala, and Honduras. In order to expand economic opportunity, solve pressing climate risks, enhance education and health initiatives, and encourage long-term investments and workforce capability.[v] Whilst some of these objectives may seem external to adaptation in terms of the climate crisis, factors like economic opportunity, health and education all feed into the concept of vulnerability that makes individuals more at risk from the climate crisis and, as such, can be considered adaptation activities.[vi]
The PCA has seen success, such as the provision of broadband to over 2 million people; as such, the WEF outlined four factors that help to ensure the efficacy of such public-private initiatives that engage with developing nations and communities.
- Establish an independent entity to coordinate partners as a shared services provider
- Formalize stakeholder buy-in from day 1
- Leverage data and advanced analytics to inform strategic planning
- Focus on women to scale your impact and invest in communities[vii]
[i] CCC- Investment for a well-adapted UK
[iii] WEF- Climate adaptation: the $2 trillion market the private sector cannot ignore
[iv] World Bank Group- Enabling Private Investment in Climate Adaptation & Resilience
[vi] IPCC- Climate Change 2022: Impacts, Adaptation and Vulnerability
[vii] WEF- Public-private partnerships: lessons on tackling socio-economic challenges in Central America
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