The majority of the world’s major cities have disclosed that climate change presents a physical risk to the businesses operating in their cities and are taking concrete action in response, according to a new report from CDP.
Some cities already are achieving millions in annual savings from programs aimed at countering climate change. Portland, for example, reports that it saves $5.5 million each year from its City Energy Challenge program, resulting in cumulative savings of $42 million since the program’s inception in 1991.
The report, Protecting Our Capital, says that 207 cities including Johannesburg, London, New York, São Paulo, Sydney and Tokyo, have disclosed their climate change strategies and actions through CDP. This is nearly double the 110 cities that disclosed last year, perhaps demonstrating the increasing importance that city administrations place on their environmental accountability and performance monitoring.
Three-quarters of these cities disclose that extreme weather and other effects of climate change threaten the stability of their local economies, with damage to property and capital assets, transport and infrastructure destruction, and citizen well-being among the most commonly reported risks. However, more than three-quarters of cities see financial benefits from taking action on climate change.
The report also examines the data from 50 cities where 78 companies have reported that they expect climate change to have a physical effect. Cited impacts include drought, intense rainfall, storms, floods, heat waves and sea level rise. It establishes that both cities and companies are aware of the substantial financial values associated with climate-change impacts and that city action on climate change helps reduce those risks for businesses.
The City of Cleveland reveals that increasing cases of severe weather and diminishing water at Lake Erie put its $6.5 billion shipping industry at risk. Pittsburgh reports that some business owners are abandoning their investments because they are unable to seek compensation for losses incurred as a result of climate change.
Cities are largely aligned with companies on risk identification, the report says. They recognize 69 percent of the physical climate-change risks that businesses identify in those cities and are moving to address 66 percent of the company-identified risks.
Hong Kong energy provider CLP Holdings has suffered site damage and business interruption as a result of rising sea level. It has spent US$193,000 raising building floor levels and has invested a further US$516,000 to increase drainage capacity. The Hong Kong Drainage Services Department, meanwhile, has put US$2.7 billion toward flood defence infrastructure, including river widening and underground water storage.
To combat rising temperatures in London, financial advisor Morgan Stanley has spent $4.4 million upgrading air-conditioning at its data center. London is using its planning system to drive greater energy and cooling efficiency — ensuring property managers and developers contribute to a more climate resilient city. This alignment on risk identification is leading cities not only to invest in climate resilience but also to introduce policy designed to guide and enable the businesses to adapt.
There has also been a lot of climate change noise at the state level. Recently in California, more than a thousand business leaders urged the State to deny requests to exempt oil companies from its cap and trade program aimed at reducing greenhouse gas emissions.
One area where business and governments continue to lag is deforestation. Last year, CDP found that the business community remains largely unaware of the deforestation risks in their own supply chains, which threatens shareholder value.