NU Online News Service, July 13, 8:44 a.m. EDT

Reinsurers say companies worldwide have suffered intensifying weather-related losses in the past three years, but less than a third of them are actively responding to the risk—increasing the likelihood those companies will be unprepared to deal with the economic impact of more frequent and severe weather events.

“If we're not ready, we're in trouble,” says James E. Rogers, CEO of Duke Energy, relaying concerns that companies neglecting to incorporate changing environmental threats into their enterprise risk management (ERM) programs could end folding under the pressure of a volatile catastrophe climate.

According to Swiss Re, many businesses do not feel sufficiently informed to take action on climate change, so a group of cross-industry sector companies, including Swiss Re, Starbucks, Levi Strauss and Co., Calvert Investments, Earth Networks and Entergy, have created the Partnership for Resilience and Environmental Preparedness (PREP) program, headed by Oxfam America as secretariat.

PREP, a one-year pilot program addressing the potential impacts of climate change on businesses, their supply chains and their surrounding communities, has developed Business ADAPT, a five-step program to help the business community identify bottom-line threats and emerging climate-related market opportunities.

“Worldwide, as severe weather events increase in frequency and intensity, businesses must incorporate weather-related contingency plans throughout their value chains for improved response to severe events while ensuring business continuity, asset protection, and creating community and eco-system resiliency,” states Earth Networks President and Chief Executive Officer Bob Marshall.

“The Business ADAPT tool is the first of its kind to help companies across sectors as they begin to take action to address the impacts of climate change on their businesses,” says Amy Leonard, senior vice president of product Development, Levi Strauss & Co in a press release. “This tool helps companies like ours consider solutions that build resilience in addition to reducing harmful greenhouse-gas emissions.”

The Business ADAPT steps include:

Analyze the resilience of your business in the face of climate-related impacts.

Mobilize an internal-strategy team to address climate resilience.

Assess the risks of climate change, but also assess opportunities to build climate resilience or invest in emerging opportunities along business value chains.

Prioritize these actions to build climate resilience into the value chain.

Take the strategy from paper to board meeting, and evaluate and monitor climate change ERM efforts and accomplishments over time.

The strategy is meant to help businesses cope with future events on par with the 2010 heat wave in Russia that triggered wildfires costing approximately $15 billion, and the 2011 Texas drought that drained the U.S. agricultural sector of $7.6 billion and cut earnings for clothing manufacturers.

“Extreme weather puts the reliability of not only our distribution system at risk, but also our power generation and transmission systems,” says J. Wayne Leonard, chairman and CEO of Entergy Corporation. “Similarly, our customers and communities are ill prepared to respond to hazards of a magnitude and frequency that we have never seen before. We have to do a better job of working together to understand, prepare, manage and respond to these risks, and ultimately severe events.”

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