Climate Resilience Needs New, Innovative Approaches

December 22, 2023

2023 will likely be the hottest year on record in human history.

Rising temperatures negatively impact vulnerable communities around the globe and compromises economic productivity, labor capacity, and consumer purchasing power while also disrupting supply chains. Swiss Re, a Swiss insurance firm, estimates that global economic output is expected to decline between 4% and 18% by 2050, depending on the temperature rise scenario considered. Public and private sector assets, consumer bases, and supply chains are at enough risk without considering the devastating toll thi phenomenon will take on vulnerable global communities. For example, Vanuatu lost 60% of its GDP from Cyclone Harold in 2020 when schools, crops, and homes were destroyed

Beyond Carbon

It's time to go beyond carbon and emissions reductions to improve adaptation and climate resilience of the communities and labor forces most affected by climate change, many of whom create products, provide critical supplies and inputs, and make up global consumer bases. And while COP28’s agenda included pathways and models to fund climate resilience, there is a growing call to create clear and actionable frameworks that demonstrably improve resilience in communities, supply chains, and countries globally. Additionally, demand for “carbon plus” assets in the carbon markets has also demonstrated willingness to fund verified social impact; a recent study by Ecosystem Marketplace revealed that 78% to 86% of voluntary offset transactions received a premium for credits that had robust co-benefits or advanced the UN Sustainable Development Goals

Building Resilience

Building climate resilience will not only require a multi-dimensional approach to increasing the capacity of communities to adapt and withstand climate shocks from social, human, natural, physical and financial perspectives – it will also “require innovative, scalable financing solutions.” If we can unlock these needed sources of capital and leverage innovative financing mechanisms that foster scalable and equitable innovation, these adaptation and resilience investments could yield up to $10 in social value and reduced economic losses for every $1 invested.

What is happening now to address climate resilience?

Many applaudable initiatives have been launched since COP 26, including the Race to Resilience and the Sharm El-Sheikh Adaptation Agenda, which lay out ambitious targets to protect 4 billion people from the impacts of climate shocks by mobilizing adaptation outcomes in  Food and Agriculture Systems, Water & Nature Systems, Human Settlement Systems, Coastal & Ocean Systems and Infrastructure Systems. Another important initiative is Global Innovation Fund’s Innovating for Climate Resilience, which is investing in innovations in waste management, sustainable agriculture, geographic information systems, and water utilities that have the potential to scale and protect the world's poorest and most vulnerable to the impacts of climate change. Global Advisory Firms like BCG are developing AI-enabled risk analysis tools to help governments and corporations develop strategies and identify solutions to mitigate or in some cases even prosper from investing in climate resilience and adaptation

What’s next for Climate Resilience and CGM?

The time and opportunity to drive innovative funding approaches to protect livelihoods, economic productivity, and supply chains while advancing the Sustainable Development Goals and helping to build the necessary evidence base of effective climate adaptation and resilience programs is now. New, market-based strategies that can offer responses and solutions to climate change impacts where aid, philanthropy, and traditional risk-focused corporate action fall short. 

Go Deeper 

If you’d like to learn more about how to participate in an innovative, game-changing climate resilience initiative in 2024, please get in touch with us.