Most people recognize that the climate crisis is upon us. Yet there is still a lack of understanding of how to protect businesses and communities from the impacts of climate change. Climate change is increasing risks and impacts across the world, particularly in developing countries where there is less capacity to adapt. By 2030, studies suggest that the cost of making climate-vulnerable business sectors resilient is expected to be in the billions per year. Fortunately, there is a growing demand from the private sector for products and services to help various stakeholders better manage their exposure to climate risks. This demand is an opportunity for all firms not just to build resilience to climate risk but also to speed the recovery post-pandemic.
Demand for climate solutions from businesses is growing
Climate risk is driving a large and growing demand for private climate solutions. While relevant action is taking place, it is unclear how much, or whether it will be enough to avoid significant economic loss. The private sector is already providing many cost-effective climate resilience solutions that are practical and, in many cases, already in place across sectors such as agriculture and transportation. These solutions are helping to build resilience to better manage climate risks such as weather forecasting, flood control, irrigation strategies and infrastructure design and refitting services. Private solutions can both increase resilience and reduce the impacts of climate risks for many types of assets and businesses, and in turn strengthen the global response to climate change, while also generating economic opportunity and social benefits. Investors do not need to wait for a comprehensive global strategy to start addressing the effects of climate change – technologies and solutions exist and are ready for investment and scale up. Climate resilience requires markets to take a more system-wide and forward-looking perspective. Effective long-term adaptation to climate change will require extensive stakeholder engagement, higher levels of expertise and prioritization of proven resilience products and solutions to facilitate investment and move beyond project-based adaptation towards a more integrated systemic approach. Radical strategies will be needed to transform key economic systems to be more resilient and productive in the face of a changing climate.A new assessment sheds light on the associated risks and uncertainties to protect businesses and communities
A Private Markets for Climate Resilience (PMCR) assessment, funded by the IDB and the Nordic Development Fund (NDF), looks at how the private sector is addressing climate risk in the agriculture and transportation sectors in the following six developing countries, Colombia, South Africa, the Philippines, Nicaragua, Kenya and Vietnam. It provides an overview of the private market and innovation in climate resilience, identifies opportunities, highlights weaknesses inhibiting a market response and examines the role of policy. The (PMCR) is a pioneering effort and the first initiative by development institutions to better understand climate resilience solutions provided by the private sector. It examines current best practices and opportunities related to climate resilience, by identifying leaders that are shaping the national markets, highlighting products, services, tools and processes. The study found that smaller firms, including some microenterprises, are among the most innovative enterprises in climate resilience.
