Module 3

Module: 3: Managing Climate Risks
Climate change preparedness and Business sector,
Economic risk of climate change,
Climate Adaptation and Resilience,
Crisis Management and Communication.

Managing Climate Risks
Climate risk is associated with the direct impact of climate change

on business operations and business assets.
Driving factors are increased flooding or increased insurance

losses, damage or loss to individuals, organizations, or society.
Climate change preparedness and Business sector
1. Avoid economic losses

2. Protect local communities
3. Create new revenue streams.
Types of Climate Risks
1. Physical risks - such as extreme weather events or sea level rise, heat
waves, droughts, coastal flooding etc. can cause damage to
infrastructure, disrupt supply chains, and impact bottom lines.
2. Transition risks - Shifting towards a low-carbon economy and the policy,

technological, shifts in market preferences , and related reputational
changes.
Interconnected elements of climate risks .
1. Regulatory and Policy Risks - stricter energy efficiency standards,
carbon pricing, and emissions disclosure requirements to avoid non-
compliance with legislation or additional fees.
2. Supply Chain Disruption Risks - Extreme weather events, such as
hurricanes, floods, and droughts, can disrupt production,
transportation, and distribution networks.
3. Physical Asset Risks - such as commercial real estate, facilities, and
manufacturing equipment. Industries reliant on natural resources,
such as agriculture, forestry, and tourism, are particularly vulnerable
to climate-related risks.
4. Reputation and Brand Risks: Consumers and stakeholders are becoming
increasingly environmentally conscious. Such as businesses are forced to address their
carbon footprint risk damaging their brand reputation and losing customer trust and loyalty.
5. Investor Risks: Environmental, social, and governance (ESG) factors are
becoming critical factors in investor decision-making. Larger carbon footprints can deter
potential investors, leading to restricted access to capital, higher borrowing costs, and
diminished market value.
6.Market Risks: Changing consumer preferences and demand for sustainable
products and services, impacting market share and competitiveness.
7. Operational and Cost Risks: Transitioning to a low-carbon economy involves
investments in renewable energy, energy-efficient technologies, and infrastructure
upgrades.
8. Litigation and Legal Risks: The impacts of climate change becoming more
apparent, businesses face an increased risk of climate-related litigation.
Economic risk of climate change
• The state of the economy is referred to as the economic climate.
• The economic climate describes the overall economic conditions in a
given country or region.
• This includes various factors such as inflation, unemployment rate,
consumer spending, or GDP growth rate.
• Climate change due to rising temperature and changing patterns of
monsoon rainfall in India could cost the Indian economy 2.8 percent
of its GDP and depress the living standards of nearly half of its
population by 2050 as per RBI's Department of Economic and Policy
Research (DEPR).
Past events
Climate change can cause significant economic harm. Some examples of
the economic impact of climate change include:
•2011 floods in Thailand: Damage amounted to around 10% of
Thailand's GDP
•2018 wildfires in California: Total costs were up to $350 billion.
Economic risk of climate change
• Climate change can push more people into extreme poverty or keep
people poor, especially through particularly climate-sensitive sectors
such as agriculture and fisheries. Climate change may also increase
income inequality within countries as well as between them,
particularly affecting low-income groups.
Ways businesses can prepare for climate change
• Understand the impacts: Climate change and extreme weather can
impact businesses, employees, supply chains, and related activities.
• Adapt: Adapt businesses for resilience.
• Preparation for extreme events: like storms, floods, and bushfires.
• Develop a business continuity plan: It can help small businesses
identify risks specific to their business.
• Educate employees: Create awareness among employees about the
impacts of climate change and how they can help mitigate it.
• Encourage sustainable practices: like recycling, reducing paper use,
and incentivizing public transportation or carpooling.
• Temperature has been found to affect income via agricultural yields,
the physical and cognitive performance of workers, demand for
energy, as well as the incidence of crime, unrest, and conflict.
• The potential future effects of global climate change include more

frequent wildfires, longer periods of drought in some regions, and an
increase in the wind intensity and rainfall from tropical cyclones.
• Sectors most dependent on natural resources and climate such
as energy, water, agriculture and food production, tourism, transport,
public services and industries.
• More frequent and intense drought, storms, heat waves, rising sea
levels, melting glaciers and warming oceans can directly harm
animals, destroy the places they live, and wreak havoc on people's
livelihoods and communities.
Managing Climate Risks
India's power sector is the largest emitter of greenhouse gases (GHG),

accounting for 37% of total emissions. The agricultural sector is next at
21%, followed by manufacturing at 17%, and transportation at 9%
India's climate change action plan, announced at COP 26 in Glasgow, is
to reduce the emissions intensity of its GDP by 45% by 2030, from the
2005 level. The government is also introducing policy frameworks to
promote growth and investments in sectors like renewable energy and e-
mobility.
The GOI launched National Action Plan on Climate
Change (NAPCC) on 30thJune, 2008
8 National Missions on climate change
1.National Solar Mission
2.National Mission for Enhanced Energy Efficiency
3.National Mission on Sustainable Habitat
4.National Water Mission
5.National Mission for Sustaining the Himalayan Eco-system
6.National Mission for a Green India
7.National Mission for Sustainable Agriculture
8.National Mission on Strategic Knowledge for Climate Change
The Department of Science & Technology, Ministry of Science &
Technology coordinating two out of the eight national missions
on climate change
1.National Mission for Sustaining Himalayan Ecosystem

(NMSHE)
2.National Mission on Strategic Knowledge for Climate
Change (NMSKCC)
NMSHE focuses to develop a capacity to scientifically assess the vulnerability of
the Himalayan region to climate change and continuously assess the health status
of the Himalayan ecosystem.
NMSKCC focuses on building human and institutional capacities in climate change
and developing strategic knowledge in the key areas of climate change science,
adaptation and mitigation.
India's climate actions have focused on the energy and
transportation sectors and transitioning to low-carbon resilient
pathways for other sectors like
1. Agriculture
2. Water resources
3. The Himalayan region
4. Coastal regions
5. Health and disaster management
Climate resilience
• A climate-resilient business is less exposed to climate change impacts
and can quickly recover and grow after extreme climate events.
Climate-resilient business involves:-
• understanding the impacts of climate change and extreme weather on
business premises, supply chains, activities and employees.
• Adapting business to be more resilient.
• Prepared for extreme events such as bushfires, storms and floods.
• Supporting employees and developing networks for information and
rescue support.
Preparation for climate change
• Creating back-up processes and resources, investigating new
technology, or diversifying your products and services.
• An emergency plan to cover insurances, work health and safety
planning and allow for supply chain disruption.
• Establishing research networks and encouraging research in the areas
of climate change impacts on important socio-economic sectors
like agriculture, health, natural ecosystem, bio-diversity, coastal zones,
• India's environmental policy centers on protecting regional glaciers,
reducing plastic use, producing clean cooking fuel and making the
railway system more sustainable.
Sectors most vulnerable to climate change
• Agriculture.
• Conventional energy.
• Heavy industry and manufacturing.
• Transport.
• Construction.
• Under 4°C warming, the west coast and southern India are projected to
shift to new, high-temperature climatic regimes with significant
impacts on agriculture.
• The built-up urban areas rapidly becoming “heat-islands”, urban
planners need to adopt measures to counteract this effect.
• India’s domestic policy on climate and environmental action includes
protecting regional glaciers , greening the railway system , reducing
single-use plastic and producing clean cooking fuel .
• India aims to reach net zero by 2070 and has been able to decouple its
economic growth from its emissions.
Causes for rising emissions
• Burning coal, oil and gas produces carbon dioxide and nitrous oxide.
• Cutting down forests (deforestation).
• Increasing livestock farming.
• Fertilizers containing nitrogen produce nitrous oxide emissions.
• Fluorinated gases are emitted from equipment and products that use
these gases.
Company initiatives
• Kaiser Permanente, pledged to have net zero carbon emissions by
2050.
• Patagonia - transformed their business model to respond the climate
crisis
• Apple - committed to becoming carbon neutral by 2030 and making
every product with clean energy.
• Global climate finance is heavily focused on mitigation.
• Key sectors for investment have been renewable energy, energy
efficiency and transport.
• There has also been an increase in international climate finance
towards the 100 billion target.

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Module: 3: Managing Climate Risks

Climate change preparedness and Business sector,

Economic risk of climate change,

Climate Adaptation and Resilience,

Crisis Management and Communication.

Climate risk is associated with the direct impact of climate change

Driving factors are increased flooding or increased insurance

1. Avoid economic losses

2. Transition risks - Shifting towards a low-carbon economy and the policy,

• The potential future effects of global climate change include more

India's power sector is the largest emitter of greenhouse gases (GHG),

1.National Mission for Sustaining Himalayan Ecosystem

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