A recent report by the Business Council for Sustainable Development Australia (BCSDA) has said Australian companies must adapt to climate risk or face dire consequences.

The report, Business Climate Resilience: Thriving Through the Transformation (full report here), said there was a great need for both the government and private sectors to respond to the climate emergency. It stated that urgent action by these sectors to mitigate the effects of the climate emergency would require a complete re-prioritizing of the economy.

“There is an urgent need for governments and the private sector to take bold climate action. This is a critical necessity to reduce emissions drastically, and to make the transition to a net-zero emissions world that is aligned with the 1.5°C scenario of the Paris Agreement,” the report stated.

Showing resilience to survive

The report stated that only those businesses that can adapt and show resilience to the changing climate will survive. However, it found that, if such business policies were implemented, they would result in avoided losses, as well as economic, social and environmental benefits.

The Council proposed three key areas where companies can focus on building their resistance to a changing climate.

Develop and maintain ambitious mitigation efforts. Adapt to ensure business continuity in the face of climate-related physical risks. Assess the connections, dependencies and value to society and nature.

The importance of the business sector in adapting to climate change

BCSD Australia CEO, Andrew Petersen, highlighted the importance of the business sector in adapting to change and providing economic resilience to climate change.

“The delivery of the Paris Agreement objectives and the Sustainable Development Goals depends on the ability of businesses to connect climate, nature and people to assure a resilient future for business and society,” Petersen said.

“In response [to the economic transformation] Australian companies will need to adopt resilience strategies that include ambitious mitigation measures to adapt to climate change impacts, as well as steps to strategically transform so that they can benefit from new opportunities and address unprecedented risks.”

Reserve Bank warns of risks associated with climate change

The report comes as the Reserve Bank — Australia’s central bank — warned of the risk of climate change to investors and insurers.

“An increase in the frequency and severity of natural disasters will increase the incidence of damage to, or destruction of, physical assets that are insured or used as collateral,” the RBA said in a statement.

It went on to highlight the risk of a changing climate to the business sector.

“Assets that are exposed to increasing physical risk – such as property located in bushfire-prone or coastal areas – could decline in value, particularly if these risks become uninsurable.

The RBA added that climate change “could also reduce certain types of business income that is used to service loans.”

The examples it gave include changing rainfall patterns that result in lower or less predictable income from agriculture, more frequent storms disrupting supply chains and therefore sales, and damage to natural assets that reduce tourism income.”