Business on the Edge 2024

Moving beyond this analysis, the second chapter of this report looks at the degradation of Earth systems facing irreversible tipping points.8 Five of these Earth systems may have already reached a point of no return,9 presenting a more severe outlook for the frequency and severity of climate hazards with a direct impact on business and societies regionally and globally.10, 11 Even in a world of Paris Agreement-aligned emissions cuts, the natural sources of emissions locked into soil, frozen ground, the ocean and forests continue to be released, adding greater momentum to the nature and climate crisis. The third chapter explores the broader risks these climate hazards pose within the context of five socio-economic systems relating to food, the built environment, health, technology and financial services. Guidance is offered across these five systems, showcasing solutions-orientated strategies and recommendations to help business leaders and C-suite executives integrate them into routine decision-making to enhance resilience, adapt to capitalize on opportunities and shape collaborative outcomes that benefit investors, economies and societies alike. Definitions BOX 1 Mitigation The intervention by humans to reduce emissions or enhance the sinks of greenhouse gases. Resilience The ability of a system and its component parts to anticipate, absorb, accommodate or recover from the effects of a dangerous event in a timely and efficient manner. Adaptation The process of adjusting to the actual or expected climate and its effects, to moderate harm or exploit opportunities. Foundational actions to enable resilience and adaptation Without climate resilience and adaptation, businesses will face disruption and, ultimately, redundancy. Conversely, the business case for investing in adaptation is increasingly clear. The framework presented in the World Economic Forum’s January 2023 white paper, Accelerating Business Action on Climate Change Adaptation, highlights how business leaders need to focus on enablers for adaptation. The analysis on value at risk in this report spotlights two further actions: integrating climate change adaptation with net- zero transformation and mainstreaming climate risk considerations into business decision-making. Every business leader should be activating the following array of enablers within the next 24 months to drive better C-suite decision-making: –Conduct a detailed audit of core capabilities and processes to ensure climate resilience and adaptation percolates to every level of the organization and its ecosystem partners. –Master the data and strategic intelligence to understand the materiality of new risks and opportunities presented by the climate crisis. Invest in the required skills, technology and responsible use of AI to accelerate insights and decision-making. –Tie climate risk into every capital maintenance and investment decision, building resilience criteria with cost-benefit analyses to taper stranded asset risk while prioritizing socio-economic opportunity in existing communities across the value chain. –Sponsor and integrate evolving scientific insight with commercial models to improve the quality of analysis and interpretation, shaping strategic and operational decisions to account for cascading exogenous shocks. Work in partnership with the scientific community to develop more useful insights into potential local impacts in key regions. With increasingly visible signs of disruption across global value chains, much can be done to prepare now for growing risks in the future. Indeed, the gift that science affords us is time. Science helps us understand what is happening now and why, warns us of what is to come and helps us to cultivate opportunities to innovate and build resilience. Today, bold partnerships are needed across the value chain and with local communities to embed resilience and adaptation to withstand growing climate hazards. Companies will be required to reinvent core products and services and build optionality into supply chains, while supporting a just and inclusive transition for local actors affected by emerging risks. Collaboration to improve foresight of localized risks and their implications on global supply chains will support strategic planning as disruptions gain pace. In light of a growing nature and climate crisis – and the results of this report – forward-thinking businesses will need to accelerate their learning journey and act on these recommendations today. Bold partnerships are needed across the value chain and with local communities to embed resilience and adaptation to withstand growing climate hazards. Business on the Edge: Building Industry Resilience to Climate Hazards 6