@Risk

A report released yesterday reveals that nearly all (91%) of electric companies studied realize that they are at risk from climate change. Yet, there is little evidence that these companies are taking action to manage these risks and become climate change resilient.

The 32-page report, “Building Business Resilience to Inevitable Climate Change,” was sponsored by IBM and prepared by Acclimatise. It’s the second in a series of four reports that offer insights into how companies around the world are assessing and managing both the risks and opportunities brought about by climate change.

The data used in the report is derived from responses to the 2008 Carbon Disclosure Project (CDP) Information Requests. Last year, the Information Request was sent to more than 3,700 global corporations, and this latest report specifically analyzes the responses obtained from 88 of the world’s largest electric utilities.

According to the report, the global electricity sector faces a long list of varied challenges over the next several decades. This list includes:

• national energy security concerns
• supply reliability
• increase in global demand for energy
• high rate of asset retirement
• development of new assets with new technologies
• lead time for new assets
• reducing GHG emissions
• increasing urbanization
• scarce water resources
• the prospect of a prolonged global recession
• current financing difficulties that decrease power-sector investment
• lack of certainty regarding national government policy
• new regulatory landscapes

I’ve posted about the importance of climate change adaptation before, and it’s becoming increasingly clear that successful companies will start recognizing challenges like these today, so that they can begin developing adaptive, integrated strategies to mange the risks and capitalize on available opportunities.

As the report states, “The successful electricity companies of the future will be those that act now upon the clear signals that climate change is underway. They will have a fully integrated approach to the challenge of the strategy revolution, reducing emissions and adapting to climatic change.”

Wondering how can you begin developing your adaptation strategies?

Acclimatise and IBM included a set of  10 questions to help electricity companies become climate change resilient. Although specific to the electricity sector, most of this checklist can easily be applied to other industries. So, if you haven’t started to consider how climate change risks are going to affect your business, these thought-provoking questions are a good place to begin.