Shareholders and boards are quite rightly asking the question as to whether their organisations are adequately considering business and asset resilience to climate change in their strategies.
Climate change will challenge organisations in a range of different ways:
- Where do you site new assets?
- Will staff be able to work safely in Safety in hot climates and how often?
- Will sea level rise affect fixed assets like ports?
- Are assets likely to be affected by flooding events
- Are people and assets likely to become affected by fire more frequently?
The big question though is, how do you make these long-term decisions?
There are several factors that make climate focussed asset decisions particularly vexed. To start with, the decision horizon is very long, the consequences of climate change far exceed the terms of the people making the decisions, and this will clearly colour their decisions, particularly if the consequences are not clearly laid out.
Secondly, current decision making is reliant on uncertain forecasts. Having high quality climate forecasts tied to scenarios around business decisions becomes a powerful way of considering how climate will affect an organisation and how to plan for that.
Until relatively recently, good climate forecasting has been difficult for several reasons:
- It requires huge volumes of data, particularly when modelling at a national scale. This means the data needs to be handled, modelled, and computed which is people intensive. New technology innovations have made this substantially easier
- High quality climate models are complex and need to be backed by good science and must be creditable
- Techniques for forecasting are required both across the climate models and for specific hazards
Signpost has access to high quality climate forecasts for decision making around climate resilience.
Our partners at CSIRO have developed a platform called Indra that combines large scale climate models with other data to provide modelling that can be decomposed down to local government areas. The team have built robust models that are used across a range of domains. Data can be provided at national scale or down to local government area and most importantly, it is backed by good science and provided by a highly reputable national science agency.
The big questions over the long term that need to be answered can be framed in three main considerations:
- Are current or future locations suitable?
- How vulnerable are assets to future climate events?
- Specific industry insights such as future product mix
When considering these framing questions, strategy decisions boil down to:
- Not under-investing – basis for decisions on investment in new assets versus maintenance of existing assets for a shortened asset life caused by climate change
- Not overinvesting – understanding the potential working life of an asset based on climate factors to prevent overspend
- Timing – maximizing returns on investment versus the cost of maintaining or rectifying an existing asset
- Community dependencies and license to operate will depend on demonstrating good ESG
- Business cases will increasingly need to demonstrate that climate change has been considered in the planning and costing phases
Climate resilience data can be used on it’s own for decision making or outputs can be used to develop Signpost scenarios. Either way, your organisation’s ability to make good decisions for the future can be seriously improved.
Get in touch to find out more about how Indra can help you make consistent and objective decisions.