4.3 The warming climate is creating a market for adaptation solutions As climate impacts intensify, governments and businesses are increasingly turning to adaptation solutions to protect communities, infrastructure and supply chains. These solutions range from building seawalls and reinforcing infrastructure to withstand floods and storms, to creating climate-resilient supply chains and improving water management with smart irrigation and recycling technologies. For example, to instil rural resilience, Timor-Leste has built flood protection structures, including roads, bridges and drainage systems, to withstand extreme weather events such as floods and landslides. Similarly, community-based resilience initiatives, such as wetland restoration and urban green spaces, also help protect neighbourhoods, assets and operations. China’s Sponge City Program helps cities manage floods by allowing excess water to be absorbed naturally, reducing the burden on drainage systems. Certain companies are positioning themselves as climate change winners by developing innovative solutions to help mitigate climate risks in their value chains, unlocking new markets along the way. The World Economic Forum’s 2023 report Accelerating Business Action on Climate Change Adaptation,59 highlighted examples in a variety of sectors: Energy: –Schneider Electric partnered with AiDash in 2023 to launch a service that helps utilities build climate-resilient electrical grids by forecasting storm- and wildfire-related outages and damages. Construction materials: –Vetrotech by Saint-Gobain produces hurricane- and fire-resistant glass, offering additional resilience against such hazards. –Holcim’s Hydromedia, a permeable concrete, enables construction of a water management system combining concrete with advanced drainage technology to reduce the risk of flooding by absorbing rainwater from streets, parking lots and structures, driveways and walkways. Food and beverages: –OCP Group is encouraging farmers to transition to regenerative agriculture practices, thereby improving soil health and water retention while boosting yields and building resilience against climate change. This initiative leverages carbon credit markets to incentivize smallholders to make this transition and provides advanced technology for rigorous monitoring, reporting and verification of credit quality. –John Deere’s production and precision agriculture unit is developing technologies that help farmers adapt to changing climate conditions and improve yields by optimizing water use and reducing soil erosion. In 2023, the unit generated $27 billion in net sales, up 22% from the previous year. Financial services and insurance: –Swiss Re has launched a parametric insurance solution to protect coral reefs in Mexico’s Yucatán Peninsula. Developed in collaboration with The Nature Conservancy and local governments, this policy provides pay-outs when hurricane wind speeds exceed set thresholds, enabling rapid ecosystem recovery efforts. Certain companies are positioning themselves as climate change winners by developing innovative solutions to help mitigate climate risks in their value chains, unlocking new markets along the way. The Cost of Inaction: A CEO Guide to Navigating Climate Risk 35

The Cost of Inaction 2024