Military and Business Leaders Alike Cite Costs and Risks of Climate Change

Conservatives have been reluctant to talk about or acknowledge the actual cause of climate change, because they fear that doing so will lead to action that will cost money. But despite their efforts to cast doubt on the reality of the issue, awareness is steadily  growing that not only is climate change real, but that over time, the cost of not taking action will far exceed the cost of actions being proposed.

Red state politicians and talk radio hosts continue to press the denial agenda, but among the more respected leaders in traditionally conservative areas such as big business and the military, the tone has shifted considerably.

According to the Climate Disclosure Project (CDP), 60 major American companies from Google to Gap, have reported significant impacts to their business as the result of climate change. Business leaders are making strategic investments now, to reduce future risk. Says CDP President Tom Carnac, “Dealing with climate change is now a cost of doing business.”

Large companies with large supply chains are particularly vulnerable. In a new report entitled, “Major Public Companies Describe Climate-related Risks and Costs,” impacts are described confronting ten business sectors ranging from Consumer Discretionary, to Energy, to Industrial, to Health Care.
Over the three year period since the first report was issued, the average likelihood of physical risks, according to the companies responding, grew from 34% to 50%. And the fraction expecting to see impacts within the next 1-5 years also grew from 26% to 45%. Four of the top five assessed physical risk drivers remained the same over the three years. These were:

  • Changes in precipitation extremes and droughts
  • Major storms (hurricanes, cyclones,etc.)
  • Induced changes in natural resources
  • Uncertainty of physical risks

Sea level rise emerged as a top risk driver this year. The top 3 impacts also remained the same. These were:

  • Increased operational cost
  • Reduction/disruption in production capacity
  • Inability to do business

Other impacts included reduced demand for products and services, and increased capital cost.

Some specific examples include soft drink companies like PepsiCo and Dr Pepper Snapple Group stating concerns over changing temperatures, unreliable crops, uncertain water availability and surging energy costs disrupting business and putting US$2.5 billion of their sales costs at risk.

Data centers are becoming more expensive to cool as temperatures rise.

Floods and storms have disrupted all aspects of business and cost utilities like ConEd hundreds of millions of dollars Walmart is losing $20 million per year due to power outages and resulting food losses. Home Depot loses $50-100,000 per day per store in sales when forced to close by weather. In the retail clothing sector,  Gap is reporting increased costs for cotton due to changing rain patterns as well as drought in China.  Johnson Controls was forced to relocate a highly profitable operation after Hurricane Katrina at substantial cost in lost revenue. They also cite high volatility in raw materials adding to the cost of doing business as uncertainty mounts.

When storms hit, people stay home and don’t spend money, and then there is all that damage to repair.

Moving forward, companies will need to harden their assets and build in resilience. ConEd estimates that this could cost as much as $100 million for a transmission system, $10-50 million for each facility, plus enough $1-10 million to protect steam generation facilities from sea level rise. In other areas, like the Southwest, droughts could cause utilities to throttle back or shutdown if there is not enough water to run the cooling towers. Reduced precipitation in the Northwest led to decreased hydro-electric output resulting in higher costs.

Across each sector, these impacts take their toll in various ways.

At the same time a report by the CNA Military Advisory Board described heightened security concerns resulting from climate instability. Regional droughts are leading to conflicts over food and water in the Middle East and Africa. Flooding in low lying areas is producing waves of refugees putting additional strain on countries that host them.

Secretary of State Kerry is planning to make a speech this summer, illustrating the linkage between climate and security and presenting options. “We’re going to try to lay out to people legitimate options for action that are not bank-breaking or negative.”

Military policy is expected to change. John Conger, the Pentagon’s deputy under secretary of defense for installations and environment, said in a statement. “We are actively integrating climate considerations across the full spectrum of our activities to ensure a ready and resilient force.”

The Defense Department’s Quadrennial Defense Review called climate effects like rising sea levels and extreme weather patterns, “threat multipliers that will aggravate stressors abroad, such as poverty, environmental degradation, political instability and social tensions — conditions that can enable terrorist activity and other forms of violence.”

Last week’s National Climate Assessment pointed out, among other things, that numerous Naval bases will be at risk from rising sea levels in places like Norfolk, Virginia.

Unsurprisingly, Senator-skeptic James Inhofe scoffs at these reports, calling the authors, “desperate … to get the public to buy this.”

But as report author, retired Rear Admiral David Titley says, ““The ice doesn’t care about politics or who’s caucusing with whom, or Democrats or Republicans.”

History will not look kindly at these skeptics and the damage that resulted from their stubborn refusal to confront this threat. In the mean time, like the polar ice sheets, we are gradually reaching a tipping point that will raise the level of awareness and sweep those who hold back meaningful action, out of the way.

[Image courtesy of Oxfam International: Flickr Creative Commons]