More robust planning to manage climate-related impacts is crucial to prevent the systemic impact of COVID-19 happening again.
Over the next 18-24 months all organisations will go through the phases of Reaction – Resilience – Recover – New Reality, learning from the experience of COVID-19 to embed and think about risk in the right way. Businesses and organisations need to consider two approaches simultaneously:
- Disaster response planning: How do you respond to future shocks? The early stages of the pandemic have shown that there is a disadvantage and more severe impacts seen by the countries who appeared to “under” respond. In the short-term this can be seen in the case rate in countries such as the US vs the numbers seen in South Korea or Hong Kong. It is worth noting however, that the long-term metrics haven’t been seen yet. Unemployment rate or economic recovery, as 2 examples, are likely to be exacerbated by a delayed recovery in the health system. Therefore, having a robust crisis response plan that allows early implementation when crisis hits is key.
- Proactive risk mitigation and adaptation: How do you mitigate future shocks? Developing robust mitigation measures will help minimise impacts of future risks. This is particularly relevant when looking at climate risks, which are much slower to impact and result from compounding localised actions. Compared to pandemics where it’s more difficult to predict when and where they will originate and how they will manifest, we know some of the key drivers and causes of climate change, and their resulting consequences, so we can start mitigating these risks now.
For a lot of companies, climate related risks are unlikely to be standalone principle risks, instead being one of the key causes of principle risks that already exist. If the impacts of climate change are not taken in to account when considering the impact and likelihood of the principle risks then the quantification of the principle risks is likely to be understated – and the strategic response not adequate.
We recommend that companies use the guidance set out in the Task Force on Climate-related Financial Disclosures (TCFD) recommendations to ensure that there are appropriate levels of governance in place around climate risks and opportunities; that appropriate metrics and targets are set to measure the company’s ability to respond to the risks and opportunities identified; and that controls are put in place to ensure the appropriate monitoring and reporting of climate related risks and opportunities throughout the organisation.
Read the next section: How do you put climate risk at the top of your organisation’s agenda?
Read the previous section: Why is COVID-19 an opportunity to better understand the risks and opportunities related to climate change?
Download our report : COVID-19: key lessons for climate change