Thinking
about our addiction to carbon reminds me of the king of Phrygia and his request
to the Greek god Dionysus. King Midas asked that whatever he touched turn into
gold. His wish was granted. But the king soon realized that it was a curse.
The industrial revolution, powered by fossil
fuels has granted our wishes for health, wealth and power on a scale that now
threatens to transform our planet into something profoundly inhospitable,
especially for posterity. Climate change caused by our insatiable appetite for
carbon and its impact – current and projected – is now almost incontrovertible.
There is compelling scientific evidence that
climate change is a serious existential issue, which demands urgent action to
forestall the risk of damaging and potentially irreversible impacts on
ecosystems, societies and economies.
Nicholas Stern, author of “The Economics of Climate Change”, popularly
known as the Stern Review, described climate change as “the greatest market
failure the world has seen”.
It is widely acknowledged that climate change
will have a broad-ranging impact on economies and financial markets over the
coming decades. The impact of climate change has been accentuated by the tens
of billions of dollars in losses due to recent climate-related natural disasters
such as the floods and wildfires in Australia, Pakistan and Russia; droughts
the Sahel and the Horn of Africa. A new draft federal report on the current and
anticipated impacts from greenhouse-driven global warning admits, “Climate
change is already affecting the American people”.
The evidence for climate change driven resource
constraints is compelling. Climate change induced constraints such as water
scarcity will have direct local impacts. National, regional and global impacts will
be propagated through supply chains and through second order effects such as
increased food prices and instability. Moreover, rising global temperatures
and extreme weather events that are likely to become more frequent and severe
are testing the Earth’s resilience. Put simply,
resilience is the capacity to adapt to change, withstand or recover from shock
while still maintaining critical structures and performing essential functions.
The Global
Risks 2013, a report of the World Economic Forum, identified failure of climate
change adaptation and rising greenhouse gas emissions as among those global risks
considered to be the most likely to materialize within a decade. The limitations in our ability to transform our production and
consumption patterns will have a far more severe impact on our lives than
climate change, especially given the strong positive correlation between
greenhouse gas emission and economic growth.
Global economic output and gains in human
wellbeing is driven by big industry – heavy manufacturing and agribusiness –
and the allied services that drive their global supply chains. Similarly,
Africa’s private sector business accounts for 65-85% of the continent’s annual
GDP growth. According to the Kenya Joint Assessment Strategy 2007-2012, the
private sector accounts for more than 80% of GDP and most government revenues.
Climate-smart and resilient business must
therefore be a key plank in Africa’s climate change adaptation strategy. However,
conversation on climate change has been limited to resilience and adaptive
capacity for smallholder farmers. Colossal diplomatic capital has been expended
on how to protect vulnerable agricultural and pastoral communities in Africa. I seldom hear global conversations
about how climate change will affect Africa’s business sector or how to
“climate proof” Africa’s business.
Do not get me
wrong. This is not to suggest that smallholder agricultural and pastoral
communities do not matter. They matter hugely. But smallholders thrive when
they are nested in supply and value chains of medium and large business, which
are climate compatible. The resilience and adaptive capacity of private sector
businesses is inextricably bound to that of vulnerable smallholder farmers and
pastoral communities.
Climate
change will have impacts on companies’ financial and social performance, with
huge implications of their ecological footprint. However,
very little attention has been given to understanding what climate change means
for long-term investment risks and opportunities in the context of strategic
asset allocation, financing for investment and national economic growth. Very few private
sector businesses in Africa, particularly those that are in climate sensitive
sectors, have the capacity and resources to produce such evidence.
Multilateral
organizations, which move large capital for private sector investment in Africa
such as International Finance Cooperation (IFC) should work with local
universities and policy research organizations to develop methods for
evaluating climate risk and adaptation needs and responses, both policy and
technical, for the private sector.
Resilient Dynamism is the theme for this year’s World Economic Forum. In a world
fraught with change and uncertainty, vital institutions such private business
must marshal prudent agility to build resilience to the impacts of climate
change.
Every business minded people or entrepreneurs should be aware with what is going on with World Economic Forum. Building resilience can really bring an impact to your business.
ReplyDelete-Hugh Parizeau