Making Climate Your Business: Private Sector Adaptation in Southeast Asia

Climate change is here. The present and future implications of a warming climate are becoming clearer, thanks to a growing body of scientific evidence devoted to the topic. Most of society now recognizes the importance of dealing with the problem, which will include not just warmer temperatures in many regions and sea level rise, but also changes in weather patterns that produce more intense and frequent tropical storms, flooding, and drought. While much of the climate change debate has historically centered around how to prevent additional warming, efforts at halting climate change are no longer sufficient. We have passed the point of preventing all climate change effects: adaptation to inevitable impacts–including more natural disasters–is now equally critical to minimize the harm that these impacts cause across society.

Businesses need to adapt. Many businesses have no choice about whether to respond to climate change impacts: climate change will force itself upon them. Their choices now come down to:

1. When to respond. Should they act in anticipation of climate impacts or wait until they have no choice but to act?
2. How to respond. Should they upgrade their facilities? Change the standards for the businesses they finance? Alter their product line? Enter new markets? Do nothing?

What any given business chooses to do will depend upon the type of business, its place in a larger economic, political, and social context, and the unique ways that climate change affects its work. Climate change may affect a business through a number of possible pathways. It could, for example, affect:

• Supply chains
• Employees
• Customers
• Distribution networks
• Finance options
• Insurance costs, and
• The macroeconomic environment

Companies in Southeast Asia are at particular risk. This region is likely to experience a combination of more frequent and severe floods, droughts, and cyclones. With its extensive coastlines, Southeast Asia is also significantly exposed to sea level rise. Though many of these countries and their businesses are accustomed to dealing with a challenging climate, climate change will present new difficulties, especially when added to ongoing environmental degradation, widespread poverty, and, in some cases, political and economic instability. Businesses with interests in the region will likely experience repercussions of climate change through at least one of the pathways listed above.

Business actions have consequences for the vulnerable populations in this region. Southeast Asia is home to some of the populations most vulnerable to climate change in the world. In many of these countries large portions of the population live in poverty, and are particularly vulnerable to climate change, as they lack the resources necessary for many types of adaptive actions. Moreover, ongoing social and environmental challenges in the region – notably growing income inequality, rising food prices, and widespread deforestation – contribute to social vulnerability and make climate change more likely to bring significant harms. Businesses may not typically focus much attention on assuring that the poorest populations around them can adapt to climate change. However, the private sector will play a substantial role in determining the level of adaptation success achieved across Southeast Asia. This report will emphasize possible “win-win” opportunities in this context – e.g. providing goods and services needed to aid adaptation across society, or contracting with government to deliver expertise or services that help broader segments of the population adapt – where business incentives may align with the needs of the poor, vulnerable populations of the region. The paper will also note where business actions might undermine adaptation among the poor.

Business is behind. While governments and non-profits in the region are busy tackling climate change with the help of funding from abroad, the business sector is notably behind. Now is a particularly opportune moment for the private sector in the region to catch up: doing so will allow business to keep a competitive edge by accounting for emerging climate risks and opportunities. Quick action will also help these businesses to team up with government and civil society to promote adaptation among the most vulnerable segments of the population – and make a profit while doing so.