A new report from the Risky Business project published on 24th June quantifies for the first time the risks of climate change for American businesses. It sets out clearly the economic consequences across the whole country, for “corn producers in Iowa, oyster growers in Washington State, and maple syrup producers in Vermont [who] are all observing climate-related changes that are outside of recent experience”.
The bipartisan project is co-chaired by Michael R. Bloomberg (Mayor of New York City, 2002-2013), Henry Paulson (US Treasury Secretary, 2006-2009), and Tom Steyer (California financier and environmental advocate). It is guided by a high-level Risk Committee comprised of politicians from across the political divide.
By using risk assessment as its method and the direct language of day to-to-day business to get across its messages, the report is beginning to capture the attention of business and industry leaders in the US and all over the world. The Financial Times described it as bringing a “valuable step forward”, its findings “impressive, particularly the carefully measured analysis that underpins it”.
The key message is simple. “Taking a classic risk assessment approach to climate change in the U.S. leads to the inescapable conclusion that if we continue on our current climate path, the nation faces multiple risks across every region. In short, we have a choice whether we accept the climate risks laid out above or whether we get on another path. This is not a problem for another day. The investments we make today—this week, this month, this year—will determine our economic future.”
Proper risk management dictates that businesses prepare for the most likely impacts and minimise their exposure to less probable but potentially more devastating risks. This is something that chief executives and managers do very adeptly in this country, so why not apply it today to dealing with climate change?
The project is the latest in a succession of strong analytical reports to be published in the US: the Third National Climate Assessment set out the likely impacts for the American public more plainly than ever before, whilst the Center For Naval Analyses was clear that climate change was a catalyst for conflict and should be high up the list of priorities for the armed forces. The independent New Climate Economy study, to be published in September, will complement these by exploring the global economic opportunities of climate change for businesses and governments.
The case for global action on climate change is growing and the world’s major emitters are increasingly taking action. The US Clean Power Plan, is further evidence that the Administration is serious about meeting its 2020 target and beyond.
On his visit to London in June, Chinese Premier Li Keqiang issued a joint statement with Prime Minister David Cameron pledging to “redouble their efforts on climate change”. And EU leaders, including the UK, Germany and France, support the proposal for 40% emissions reduction target by 2030.
These are positive developments but as the Risky Business Report makes clear, businesses as well as governments have a key role to play in making the ambitious international action we need to tackle climate change a reality.
Key Findings from the Risky Business Report
• Climate change is like an interest-only loan we are putting on the backs of future generations. They will be stuck paying off the cumulative interest on the greenhouse gas emissions we’re putting into the atmosphere now, with no possibility of actually paying down that “emissions principal.”
• Large-scale losses of coastal property and infrastructure. Based on the current path, by 2050 between $66 billion and $106 billion worth of existing coastal property (in the US) will likely be below sea level nationwide, with $238 billion to $507 billion worth of property below sea level by 2100.
• Extreme heat across the US —especially in the Southwest, Southeast, and Upper Midwest—threatening labour productivity, human health, and energy systems. By the middle of this century, the average American will likely see 27 to 50 days over 95°F each year—two to more than three times the average annual number of 95°F days we’ve seen over the past 30 years. Labour productivity of outdoor workers could be reduced by as much as 3%.
• Shifting agricultural patterns and crop yields, with likely gains for Northern farmers offset by losses in the Midwest and South. Extreme heat spreads across the middle of the country by the end of the century risk up to a 50% to 70% loss in average annual crop yields (corn, soy, cotton, and wheat). Conversely, in northern latitudes such as North Dakota and Montana, winter temperatures will likely rise, reducing frost events and cold-related deaths, and lengthening the growing season for some crops.