Failure to plan for climate change bad for bottom line

Businesses without risk management will suffer losses, advisory panel says

OTTAWA – Canadian businesses are putting their bottom line and the country’s economic health at risk by neglecting to prepare for anticipated effects of a changing climate, says a new report released Friday by a federal government-funded advisory panel.

The study, produced by the National Round Table on the Environment and the Economy, says that securities regulators also have a role to play in requiring better infor- mation from businesses for the public and investors.

“Despite guidance to the effect already issued by the Canadian Securities Administrators, climate-change risk disclosure in financial filings is limited, at best,” said the report, titled Facing the Elements: Business Resilience in a Changing Climate.

“Better enforcement of disclosure requirements is necessary, as are effective approaches for companies to demonstrate the value of climate-change risk management and adaptation actions to investors.”

Members of the panel, who were surprised to learn in the March federal budget that the government was shutting down their office, warned that while some large corporations are proactive in managing their risks, others that they met with for the study could face serious losses that could even lead to bankruptcy.

“The failure of businesses to adapt to future climate realities has implications for their bottom line, for their investors, customers, workforce, and ultimately, for our economy and society,” said the report.

The research, led by policy advisers Jimena Eyzaguirre and Suzanne Loney, noted that signs of climate change in Canada are already affecting the economy and will continue to do so in the future.

“The economic impacts of the mountain pine beetle in British Columbia, disruptions to Atlantic businesses from storm damages and drought losses in the Prairies show what can happen when weather and climate take us by surprise,” said the report.

“The reality is this: Due to past emissions, some degree of climate change is inevitable even if the globe drastically decreased greenhouse-gas emissions today, so businesses must plan now to adapt to those irreversible effects.

“Yet, relatively few companies are taking a structured and explicit approach to incorporating climate-change risk management into regular business activities.”

Some examples researched by the panel include oil and gas pipelines at risk from soil movements caused by flooding and overflowing rivers.

The panel also noted that risks to this and other infrastructure also affects insurance costs for businesses.

David Mclaughlin, the president and CEO of the panel, said the report is a warning to businesses that their “bottom line” is at stake.

“If not today, then some point in the future, so you should start to prepare for it.”

The report noted that there is also some confusion among businesses between balancing the need for policies to reduce emissions that contribute to a warmer planet, along with the policies needed to adapt to climate change.

It said that governments must play a supporting role in terms of research and providing relevant information to help businesses plan for the future.

“Climate change is global but climate impacts are local,” Mclaughlin said.

Prime Minister Stephen Harper’s government announced it was shutting down the panel’s operations in its 2012 budget in March, saving $5.2 million in annual costs, suggesting that its research was no longer necessary in the age of the Internet and a wide variety of skilled research organizations and environmental groups.