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 programs could end up 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 diverse group of 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.
PREP, a one-year pilot program addressing the potential impact 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 while ensuring business continuity, asset protection, and creating community and eco-system resiliency," Earth Networks President and Chief Executive Officer Bob Marshall says in a statement.
"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.
"This tool helps companies like ours consider solutions that build resilience in addition to reducing harmful greenhouse-gas emissions," she adds.
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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