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You are here: Home / Archives for Governance

1 July 2015 By David McEwen

Legal innovators profit from changing climate

JusticeThe legal fraternity is often good at spotting opportunity. So it comes as no surprise that innovative practices are developing practice specialities around carbon markets and climate change, appealing both to major greenhouse gas emitters and the parties that are affected by their emissions.

According to DLA Piper, for example, climate legal risk accompanies a decision that is either affected by climate change, or a decision that will affect climate change.

We’ve identified a number of opportunities for legal services in this area and predict there are plenty of fees to be made over the next couple of decades. For example:

  • Helping corporates around compliance with carbon mitigation legislation such as emissions reduction and trading schemes (as such policies are applied in different jurisdictions) and carbon footprint reporting obligations.
  • Supporting insurers and other aggrieved parties launching legal actions against governments (or corporates) for failing to adapt their infrastructure to deal with extreme weather events that are becoming more frequent/severe as a result of climate change. An early example was a suit by a U.S. Insurer against Cook County municipalities for failing to take action that would have reduced flooding around Chicago in April 2013 (later retracted, but an interesting PR exercise none the less).
  • Plaintiff and defendant representation as individuals and companies face property devaluation or other costs due to governments’ actions or inaction around preparing for sea level rise. There are potentially good fees from well heeled coastal property owners attacking new development restrictions aimed at reducing the risk of property damage from coastal inundation as well as from local governments attempting to defend such regulations.
  • A nascent class action market against persistent GHG emitters, particularly those found to have actively funded the climate denial campaign or hindered the enactment of sensible legislation to avert CC. Low lying island states whose very sovereignty is at risk from rising sea levels are one such example. One group has recently won a court action against the Netherlands Government for its failure to do enough in terms of emissions reduction.
  • Actions by investors against companies (particularly in the resources sector) in the event that valuations fall due to legislation aimed at limiting their ability to exploit fossil fuel reserves. A similar risk may apply to credit ratings agencies whose assessments fail to take account of the possibility of stranded assets.

Talk to Adaptive Capability to find out how your business may be affected by climate risks and where the opportunities lie.

Filed Under: Climate Change Adaptation, Governance, Legal Services, Risk assessment, Risk management, Strategic Adaptation, Uncategorized

23 April 2015 By David McEwen

#SydneyStorm a wake up for a global city

#SydneyStorm a wake up for a global cityWhat are the implications of a new climate normal? Sydney, Australia has just been pounded by what has been hailed by some as the storm of the century. Three days of heavy rain and sometimes cyclonic strength winds, produced by a low pressure system off the East coast of the continent, has caused damage and disruption over a 300km section of coastline centred on the global city. Coming in mid April it was unseasonably early for this type of event. With the full damage bill still to be counted and hundreds of thousands of homes and businesses still without power, the insurance industry is already bearing the brunt with tens of thousands of claims amounting to hundreds of millions of dollars. While the level of damage is small compared to some recent weather related catastrophes, it nevertheless provides a salutary reminder of the types of events, which globally are expected to become both more frequent and more intense over the coming decades*, as shown in the illustrative figure below: Physical effects of climate change There are several initial take-aways from the recent storm when considering the business impacts of future events:

  1. Coastal property is exposed. A government wave buoy off Sydney recorded the largest off-shore wave in the area since such record-keeping began, at 14.9 metres. The winds whipped up a storm surge, which encroached to near record levels in some areas, coming within metres of homes. The level of beach and dune erosion increases the risk of property damage from the next storm. Increasingly, councils and insurers will be forced to reassess the risks of further coastal development, putting values at risk.
  2. At some point governments may also take action on flood plain exposures. Properties on flood plains were literally swept away causing tragic loss of life, with images reminiscent of the Lockyer Valley tragedy in 2011.  In that case the community chose to rebuild on higher ground. As the Brisbane floods showed, however, thousands of homes and businesses are built on exposed land, significantly increasing damage and disruption levels.
  3. Major cities are far from immune. Considerable surface-flooding was experienced in several parts of Sydney, with road closures and dozens of vehicle rescues. Ageing storm water infrastructure needs to be expanded significantly to cope with extreme precipitation events, a process municipalities such as Chicago, Illinois and Miami Beach, Florida have already commenced following major or repeated inundations.
  4. Disaster response, hazard reduction and recovery is a growing business opportunity. For example, disaster warning aggregator, Aeeris (AER.AX) floated on the Australian Exchange in late 2014. While its debut has been modest it is a sign of growing innovation and demand in the sector.
  5. More storms equals lower business productivity. For example, to ease the stress on the transport system the state Premier urged employers to show flexibility and allow employees to stagger their commutes or go home early. Multi-day electricity supply disruptions are also taking their toll on businesses.

Global environmental shifts are disrupting business-as-usual, with a range of direct and indirect impacts. Talk to Adaptive Capability today to find out how to manage these risks and identify value creation opportunities for your business.

*Note: it is not yet clear whether the particular East Coast Low conditions responsible for this week’s storm will in future lead to an increase in the frequency or severity of such events. Future climate predictions exhibit a high degree of regional variation and further research is required. This link provides further discussion of some of the forecasting challenges.

Image credit: Prudkov/ShutterStock

Filed Under: Climate Change Adaptation, Governance, Risk assessment, Risk management, Strategic Adaptation

22 April 2015 By David McEwen

Healthcare to feel the Heat

Healthcare to Feel the HeatWith growing evidence that our climate is changing, we predict the key health challenges arising from a warmer climate:

  • Heat related illnesses and mortality from exposure to extreme temperatures. This will particularly impact on people who work outdoors or in non-air conditioned environments, plus infants, older people, the ill and obsese, who are more susceptible to heat stress and dehydration. Heatwaves are already a leading cause of death compared to other types of natural disasters (particularly in developed nations where preparedness levels for violent storms and earthquakes generally lead to significantly fewer fatalities than those affecting developing nations). For example, excess mortality of up to 70,000 people was associated with the severe European heatwave of 2003. More broadly, higher temperatures may also provide excuses for some people to exercise less, potentially increasing rates of health conditions associated with a more sedentary lifestyle.
  • Water supply contamination during extreme precipitation and flood events.  Flooding in Brisbane in 2011 led to the temporary closure of one of the main water treatment plants as the incoming water was too muddy to be treated. On that occasion water supply interruptions were avoided on that occasion by re-routing supply from other treatment plants and implementing demand reduction strategies. However, there are likely to be increasing situations where extreme weather jeopardises fresh water supplies or people are otherwise forced to drink untreated water, potentially leading to a range of illnesses.
  • Exposure to flood waters and the after-effect of floods. It is not uncommon in many areas for sewage systems to overflow during significant flooding, raising infection rates. Receding flood-waters can become breeding grounds for mosquitos and other potentially harmful insects. Mould in buildings resulting from exposure to flood waters can in turn cause a variety of health conditions. And of course the murky and often fast moving water presents public safety issues for people unfortunate or unwary enough to find themselves trapped or engulfed.
  • A rise in the frequency and/or intensity of extreme weather events may also result in greater injuries / illnesses and demand for emergency services.
  • The spread of tropical, insect-borne diseases to areas in higher altitudes and higher latitudes as it becomes warmer.  Insect carriers of such diseases thrive in the tropics because it is warm overnight and all year round, meaning no die off in cooler months as is common in temperate climates. Meteorologists are already observing milder winters and warmer nights in many areas as the atmosphere retains more heat.
  • Additional health risks arise from the greater expected incidence of bush fires (not to mention an increase in lightning strikes). For example, during the summer of 2010 an estimated 55,000 people died in Russia from a combination of a severe heat wave and respiratory illnesses exacerbated by a resultant series of major bush fires.

Given these challenges, risks abound in the healthcare and public safety arena, but so do opportunities. Throw in our ageing and growing population plus the increase in non-communicable diseases and it seems that growth in demand for healthcare services is assured, though affordability may be a key consideration given reduced public sector capacity.

Key opportunities to reduce these impacts include:

  • Prevention:
    • training and education of at risk groups;
    • risk assessments;
    • preventative pharmaceuticals and related interventions;
    • water purification;
    • waste water infrastructure;
    • specialist clothing;
    • air filtration and cooling systems;
    • personal and networked health monitoring technologies;
    • other hazard reduction.
  • Relief:
    • increasing demand for existing and new drugs and forms of treatment for conditions related to heat, water contamination and tropical diseases and other exposures.
  • Health Infrastructure:
    • increasing demand for health professionals and emergency workers;
    • associated infrastructure, hospital beds;
    • education;
    • hospitals located in regions exposed to extreme weather will need to be made more resilient.
  • Sustainability:
    • sustainable medical procurement;
    • medical waste recycling;
    • energy and water efficiency improvements in medical practice;
    • other technologies and innovations to reduce environmental impact of healthcare.

On the flip side, there are a number of significant health benefits associated with a switch from fossil fuel dominated energy systems to renewables, principally a likely reduction in a range of respiratory illnesses given reduced particulate matter pollution. Given a warming climate, less severe winters in some regions may also reduce cold-related morbidity.

Adaptive Capability assists businesses in and servicing the healthcare sector to assess the risks and opportunities arising from climate change and environmental issues. We help our clients position their businesses to capture sustainable growth over the medium to long term. Our unique diagnostic tool, the AdaptiveCMM, baselines your organisation’s capabilities and delivers a roadmap of initiatives to control risks and identify new or enhanced revenue streams.

Talk to Adaptive Capability today to future proof your business.

Image credit: Rob Bayer/ShutterStock

Filed Under: Governance, Healthcare, Operational resilience, Risk assessment, Risk management, Strategic Adaptation

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