Business on the Edge 2024

The fallout from the nature and climate crisis is evident all around us - and growing. Biodiversity loss, Earth system degradation and extreme weather events threaten the health of humans and other species, as well as the proper functioning of our economies and societies. For businesses too, the tangible costs are rising. The Intergovernmental Panel on Climate Change (IPCC) states in its Sixth Assessment Report12 that human-caused climate change has increased the frequency and intensity of extreme weather events globally. A 2023 study estimated the cost of extreme events partly or wholly attributable to climate change at $143 billion per year over the past two decades.13 In the United States, the cost of large-scale climate disasters has climbed steadily from $21.8 billion per year in the 1980s to $123.2 billion per year over the past five years.14 In Europe, economic losses from climate-related extremes totalled approximately half a trillion euros over the past 40 years.15 In Africa, GDP is already 2-5% lower on average every year than it could be due to climate-related hazards.16 Climate science is complex and involves many interconnected components, making it challenging to translate its implications into business impacts. The basic dynamics are as follows: Earth’s climate responds to increasing greenhouse gases in the atmosphere with changes to Earth systems; these systems support natural ecosystems that provide services, such as climate regulation, that allow societies and economies to flourish. As human production and consumption activities drive greenhouse gas emissions up, Earth systems are pushed closer to collapse, exacerbating climate hazards and placing the entire cycle at risk. A climate hazard is a climate condition with the potential to harm natural systems or society.17 To help business leaders understand the tangible risks the nature and climate crisis poses to their operations, this report focuses on seven climate hazards related to extreme weather (see Figure 1). $143 billion – the cost, every year over the past two decades, of extreme events linked to climate change. Seven climate hazards FIGURE 1 Extreme heat Prolonged period of excessively hot weather above the average high temperature for a particular region for that time of year, often combined with high humidity. Coastal flooding A result of storm surges and high winds coinciding with high tides. Occurs when dry and low-lying land is submerged by seawater. Fluvial flooding Surface water drained from a watershed into a stream or river that exceeds the channel’s capacity, overflowing beyond banks and inundating adjacent low-lying areas. Tropical cyclone Rapidly rotating storm (cyclone, hurricane or typhoon) that begins over tropical oceans, with violent winds and torrential rain that can be accompanied by thunderstorms. Drought A period of abnormally dry weather sufficiently prolonged for the lack of water to cause serious hydrologic imbalance in water tables and across landscapes. Water stress A combination of reduced freshwater availability from reduced rainfall and/or growing demand. Wildfire Unplanned, unwanted and uncontrolled fire that burns in a natural area such as a forest, grassland or prairie. Sources: US Federal Emergency Management Agency (FEMA), US Cybersecurity & Infrastructure Security Agency (CISA), World Meteorological Organization (WMO). Note: More detail on how climate hazards are defined is available here.18 8 Business on the Edge: Building Industry Resilience to Climate Hazards