This is the second installment of WRI’s new blog series, Adaptation and the Private Sector. Each post explores ways to engage the private sector in helping vulnerable communities adapt to the impacts of climate change. These pieces build up to the event Climate Finance and the Private Sector: Investing in New Opportunities, hosted in Songdo, the Republic of Korea on December 5, 2013.
Multinational companies (MNCs) typically have operations and supply chains in many parts of the world. The way they respond to climate change, therefore, can affect many populations, including poor communities in developing countries, where many people are especially vulnerable to heat waves, sea level rise, and other climate change impacts. MNCs sometimes find themselves in tension with local groups and the environment, but they can also play an important role in making these communities more climate-resilient.
Here are three ways that MNCs can contribute to climate change adaptation in developing countries:
1) Building a Resilient Workforce
As MNCs begin addressing climate risk in their operations and supply chains, many risk reduction measures can benefit low-wage workers in developing countries. These measures can make companies more climate-resilient, but they can also make people and their communities more climate-resilient. Examples include: teaching farmers how to use less water in water-scarce regions; making anti-malaria medicine available to those working in rainy, damp locations; installing drainage corridors for fields that flood; and teaching emergency response and evacuation procedures to urban workers.
Some companies are already helping workers in their supply chains become more climate-resilient. Starbucks is giving trainings to coffee farmers in Indonesia, helping them learn composting, pruning, and shading techniques that help protect coffee plants from rising temperatures. Levi’s is teaching rain-harvesting techniques to cotton farmers in Brazil, Pakistan, India, and West Africa so they can conserve water in dry regions. By helping workers learn to adapt to current and future climate conditions, as well as assisting them in responding to disasters, MNCs can make both their own supply chains and communities more resilient.
2) New Goods and Services
Climate change poses an opportunity for MNCs to create new climate-resilient goods and services. Some individuals, households, and businesses will demand products that protect assets against climate change. MNCs—with their financial, technical, and human resources—are in a good position to respond to this demand.
Insurance companies are already responding with new insurance products that address future climate risks and reach vulnerable populations. Munich Re offers micro-insurance schemes aimed at disaster-prone regions in developing countries, while ACA developed a dengue-fever health insurance plan in Indonesia, which covers a disease that will likely become more prevalent in a warmer world. Numerous examples in other industries also exist:
- WSP Group has developed sustainable infrastructure and flood defenses for urban areas.
- Ignita AB offers weather-monitoring services for West Africa.
- Maplecroft produces the Climate Change and Environmental Risk Atlas that informs organizations of areas that are very exposed to climate change.
- BASF produces drought-tolerant corn varieties.
- Greenfield Hydroponics Systems created a portable greenhouse that can control sunlight and water flows, which can be used in areas where the weather is expected to become more erratic.
- Tourist resorts that rely on seasonal weather or picturesque landscapes are offering hurricane guarantees, which allow vacationers to re-use their vacation package in the event of a hurricane.
3) Redesigning Current Products
Besides developing new goods and services, MNCs can redesign current products to be more climate-resilient. Products that use a large amount of electricity, water, timber, or other natural resources can be made more efficient, as these resources may become scarcer or more degraded in the future.
For example, OMO, a laundry detergent produced by Unilever and sold all over the developing world, has been used by millions of low-income consumers for years. Recently, Unilever redesigned OMO, coming up with a newer version called "One Rinse" that requires less water for laundry and is targeted at people that wash garments by hand. The company estimates that the new detergent can save 30 liters of water per wash – especially beneficial to populations facing future water shortages. Other ways to redesign products include creating energy-efficient appliances or improving the efficiency of wood-intensive products, such as stoves, to decrease deforestation.
Businesses can also update their services to include those related to climate change adaptation and natural resource management. For example, microfinance banks can provide financial services for adaptation practices.
While many MNCs know that climate change impacts will affect their inputs and outputs, many still are moving forward slowly with building a resilient workforce and developing adaptation goods and services. Policymakers may be able to help MNCs speed up their action through smart incentives and programs, something we examine in the fourth and fifth blog posts in this series. By tackling climate change the right way, companies can reduce their risk, find new markets, and help build the resilience of communities.
- LEARN MORE: Read the first installment of this blog series, Adapting to Climate Change: The Private Sector's Role