‘When people do not dread authorities, then a greater dread descends’. The International Panel on Climate Change (IPCC) is all too familiar with this feeling Laozi describes in his Taoist studies. Over the past month, everyone has been shocked by Working Group 1’s Assessment Report. The cataclysm is not only real; it’s within reach. Business leaders have been caught off guard by the pace, intensity, and scope with which their activities will be challenged. Across the world, we’re seeing convergence towards one end goal: net zero. Whether it’s offsetting greenhouse gas emissions, decarbonising firm-wide activities, or reallocating capital, objectives align with the belief that the future is malleable, that exit paths exist, that climate change can be mitigated. The IPCC makes it clear – drastic lowering of emissions is the only means of limiting climatic-impact drivers in the long run. But one word in the report – of paramount importance – seems to still go unnoticed. That’s the word ‘irreversible‘.
Changes observed in oceans, in glaciers, and in sea levels are all going to intensify for centuries to millennia, whatever course we take. Those changes aren’t easily separable from temperature increases and alterations in the climate system; impacts are interdependent and exponential between one another. For example, ocean acidification and deoxygenation make the limitation of temperature increases – possible with emissions reduction – more difficult and costly over time. In any case, the irreversible nature of those changes means our framework for action is partly off the mark. We don’t just need to limit climate change, we need to control its impacts, those that are here now, tomorrow, and for the next century. Despite being more important in the short run, climate change adaptation is systematically relegated in international negotiations, business strategies, and financing mechanisms. Globally, 93% of public and private climate finance goes to mitigation.
Adaptation is essentially an infrastructure problem. Everything that supports the distribution and allocation of goods and services – roads, dams, bridges, railways, tunnels, sewers, ports, transmission cables and electricity grids, but also the institutional and social constructs that call for their existence – we built in an era of biospheric stability. Withstanding natural disasters and systemic destabilisation is a very new consideration that requires the upheaval of centuries’ worth of human ingenuity and organisation. The high costs now are nothing compared to the costs down the line should we allow the permeation of our infrastructural systems. Sea level rise alone, increasing the salience and frequency of floods across every single coastal region and island state, will overflow sewage systems and electricity transmission networks, on top of destroying human lives and homes. Hence the angst of insurance companies, whose very business model of protecting infrastructure relative to risk, becomes obsolete in a world where risk is symmetrical for all. When costs are just too high for people to get insurance, then what happens with the infrastructure? The same can be said for public stimulus packages, fiscal capacity, and international aid; all stakeholders will face enormous costs with few incentives on the other side.
Post-pandemic stimulus packages are a good indication of current trajectories. Carbon markets, renewable energy subsidies, and investments in low-carbon technologies have so far been these packages’ climate tenets. Joe Biden’s Infrastructure Plan allocates the highest proportion of spending to transport and grid electrification; in a country where transport accounts for 60% of emissions, and in which electricity demand will continue to grow until 2050, the logic might seem sound. But in gearing attention towards deploying cleaner products and infrastructure that connects them, it loses sight of the necessary protection of those legacy assets that will continue to be used for decades ahead.
The Greenness of Stimulus Index highlights the quasi-systematic absence of nature and biodiversity considerations from stimulus packages. This is concerning and reflects the second-in-line outlook on adaptation. Maintaining a healthy biosphere is a primary way of preparing our ‘grey’ infrastructure for weather and climate extremes. Functioning ecosystems both buffer climate change – serving as the best available carbon sequestration mechanism yet known to us – and act as protective barriers against its impacts, both temperature changes or natural disasters. Wetlands contain floods, mangroves limit erosion, and forests reduce landslides. Thus, these defensive structures are inherently infrastructure themselves, enabling the stability of economic processes. Soil biodiversity may just be the most important infrastructure of all, enabling the existence of land-based food production. Adaptation implies a reconsideration of what infrastructure is, and the mechanisms we need to protect it.
In a context of domestic investment, with renewed focus on localised action, adaptation strategies must nonetheless emphasise international climate resilience. Low-income countries, who will suffer the greatest toll of asymmetric climate impacts, require more adaptation assistance. This isn’t just a matter of solidarity or justice for their industrialised counterparts, but also the best way to limit disruptions to supply chains and migratory channels. With climate change and biodiversity loss, local resilience translates into global stability. Focusing solely on the protection or improvement of national assets and territories will have the inverse effect of jeopardising sovereignty in the long term. If to avoid further contestation from local populations frustrated with the piling costs of a net-zero transition, governments must incentivise public and private funds towards resilient supply chains, borders, and local economies.
Not enough is being done. The gap in adaptation finance is massive: we need US$140-300 billion per year by 2030 according to developing countries’ Nationally Determined Contributions (NDCs). Current sums stand at US$30 billion. Critically, private sources contribute just 1.6% of that. Yet corporations and financial institutions can derive significant benefit from adaptation and resilience. Climate change and ecosystem service loss both impose costs on business activities and infrastructure over time, and the more you wait, the more those costs balloon. Also, investments potentially damaged by climatic-impact drivers are high-risk and less likely to ensure returns. This is already becoming an existential threat for many asset classes.
For the most part, investment gaps can be traced to insufficient data on climate and especially nature risks, a lack of actionable targets and metrics by local governments, and the scarce corporate maturity of nature-based solutions. Moreover, low-income states often lack the regulatory and political coordination to provide the information and data required for investment. As a first major step, multilateral development banks, government agencies, analytics firms, and investors must work together to enhance the mainstreaming of reliable risk data. The EU’s Strategy for Climate Change Adaptation has been channelling knowledge and funds into ‘asset-level modelling‘; absent an understanding of climate-related risks and losses, investors will shy away from adaptation investment. The newly created Taskforce on Nature-Related Financial Disclosures (TNFD) can mainstream the use of data for corporate ecosystem management, orienting use towards restoration projects that serve adaptation purposes. Second, we need internationally agreed upon criteria regarding what constitutes adaptation finance, and private corporations to make adequate project labelling part of their disclosure.
We’re on the verge of total biodiversity collapse and devastating climate change; adaptation needs to have its place in the environmental agenda. The good news is that much of the resilience tools we need are here. Nature-based solutions don’t require the immense investments of emerging technologies, their effects are well-known, and they provide many other far-reaching social, economic, and medical benefits. Today, these practices drive just 1.5% of all climate finance. The link between nature-related risks and impacts, adaptation finance, and nature-based solutions needs to become clear to all stakeholders. The TNFD and the success of the IUCN World Conservation Congress have created momentum, and COP26 is the ideal point for these norms to converge. A revolution is at play in the relationship between nature and spatial organisation – let’s make it play in favour of international adaptation to climate change.