- Joint Program Report
Abstract: Climate change poses both risks and opportunities for business, now and in the future. However, investors, lenders, and insurers currently lack quantitative tools to view which companies will endure or flourish, and which companies are resilient or not. Measuring, managing, and reporting environmental impacts is not only important for the planet and the communities in which we work, but also essential for the future growth of our businesses. Among the key climate-related risks to society and business in particular are hydroclimatic risks (i.e., flood and drought). Projecting change in these risks are essential for the design, operation and management of public and private infrastructures. This is particularly true for large multi-national enterprises where their infrastructure and supply chains are located and connected across a wide-range of hydro-climatic zones. For the most part, public infrastructure in the industrial nations and private multinational production facilities have been designed to address current hydroclimatic risks. Regardless of these measures, we are faced with an unavoidable changing environment, which will alter hydro-climatic extremes and risks.
In light of these considerations, the primary objectives of this endeavor are to assess the change in hydro-climatic risks to the global landscape of a corporation’s infrastructure by providing: (1) weather and climate-induced impacts across the global hydrologic and water resources system; (2) conditions leading to weather, climate, and hydrologic extremes and their resultant hazards; and (3) risk-based projections of these changes for a selection of key facilities and supply-chain junctures.
The analysis presented is performed on the actual global facilities of an anonymous global corporation, which hereafter will be referred to as GloCorp. A risk-based Indicator framework is developed. The framework utilizes an ensemble of hybrid frequency distribution (HFD) climate scenarios from the MIT Earth Systems Model with an enhanced version of the World Bank’s Climate Risk Hydro Indictors. The results suggest that by 2030, 61% of all facilities face a Medium or High Climate Risk. However, as climate change intensifies over the coming century, the impact on GloCorp’s facilities increases. By 2050, it is projected that 90% of all facilities face a Medium or High Climate Risk.