In the first half of 2019, 950 climate-related disasters had already been recorded in 102 countries and territories and nearly 11 million people had been displaced, seven million displacements of which were caused by natural disasters mainly in Africa and Asia. The Internal Displacement Monitoring Centre says that this was the highest number of climate-related displacements ever reported and investment bank Morgan Stanley estimates that climate-related natural disasters have cost the world close to $650 billion over the last three years. Beyond the immediate devastation, natural disasters also have long-term effects on people, the environment and business, which are especially devastating in low-income countries that do not have climate adaptation and disaster management strategies in place.
Businesses are feeling the impact of climate change. Food producers increasingly contend with extreme weather conditions. In 2019 Australian farmers reported a loss of $72 million and 43 000 cattle due to droughts and floods, in the United States poultry producers struggled to keep up with the cost of feed after rainfall and flooding impacted grain prices and, in South Africa, drought-imposed irrigation restrictions significantly impacted farming profits.
According to a KPMG International report, chief executive officers (CEOs) and investors’ views on climate change as a top risk have aligned. CEOs are recognising that a sustainable future for their businesses is heavily reliant on the transition away from a coal- based to a low-carbon and clean economy.
Armed with its own comprehensive cyclone response system which included solar-powered radios, a warehouse stocked with emergency supplies and an evacuation boat, Mozambican non-profit organisation, AJOAGO, was among the first to respond when Cyclone Idai hit the city of Estaquinha in Mozambique in early 2019. Drawing from this experience, executive director, Jose Mucote, used the UN Climate Action Summit 2019 platform to call for low-income countries to be assisted with adequate resources to implement climate adaptation strategies.
Research from the Global Commission on Adaptation, which seeks to accelerate adaptation action and increase political support for building climate resilience, found that a global investment of $1.8 trillion from 2020 to 2030 could generate $7.1 trillion in total net benefits by future-proofing countries with early warning systems, climate-resilient infrastructure, improved dryland agriculture, mangrove protection, and making water resources more resilient.
In addition to financial investment, proactive measures include ensuring the availability of adequate data to account for damage caused and inform relief efforts. Most countries use satellite imagery for mapping, to inform policy development. In the case of a disaster, this technology can be leveraged to track people and facilitate evacuations. On a larger scale, the Weather, Climate & Catastrophe Insight: 2018 Annual Report recommends that the insurance industry begin to develop comprehensive risk insurance schemes for governments.
Disparities in reporting on and responding to disasters
Wealthy economies accelerate climate change through their production processes and emissions, while poorer economies suffer the consequences due to their lack of adaptability and infrastructural resilience. A 2015 World Bank report estimated that climate change could push more than 100 million people in developing countries below the poverty line by 2030 and a 2019 Stanford University research paper, titled Global warming has increased global economic inequality, says that climate change will continue to exacerbate economic inequality. South Africa, for example, has become between 10% and 20% poorer over the last two decades due to climate change.
Not all disasters receive equal media coverage. It took the news of Cyclone Idai hitting Mozambique, Zimbabwe and Malawi four days to make headlines. While lack of coverage can be directly attributed to a lack of newsroom resources, in times of disaster media houses can team up with aid agencies to ensure that adequate information is widely shared. This lack of reporting is part of the reason that just 23% has been raised of the total $390 million needed for immediate response to one of the worst natural disasters to hit the southern hemisphere, affecting nearly three million people.
A lack of resources is not the only stumbling block when it comes to reporting on climate-related issues. Media houses are also not speaking the same language. According to Nationalizing a global phenomenon: A study of how the press in 45 countries and territories portrays climate change, media in wealthy countries frame climate change as an issue of domestic politics, whereas media from “poorer nations tend to focus more on the international relations and natural impact aspects of climate change”. This is important because, until we have a shared global understanding of and plan to address this crisis, the situation will continue to worsen.
Local companies should align with the SADC disaster preparedness and response strategy
As more companies commit themselves to the interlinked UN Sustainable Development Goals (see How companies can help create a more sustainable planet on page 178) which emphasise action against climate change, at a regional level the Southern African Development Community (SADC) Secretariat for disaster risk reduction also emphasises business responsibility in disaster management and risk reduction. The SADC developed a disaster preparedness and response strategy for the period 2016–2030, which speaks to four areas of competence in managing climate- related disasters in the region. This strategy, which calls for proactive public-private partnerships, highlights the need for SADC member states to develop standard operating procedures and guidelines, build capacity within industries, contribute to disaster management funding, and develop sustainability plans.
The points that follow illustrate how companies in the region can support this strategy:
- The development of standard operating procedures and guidelines requires in-depth risk analysis, using data to map risk hotspots. For this, greater investment in education, research and risk analysis is needed on how climate-related issues will affect all stakeholders, including business, at micro and macro levels.
- Building capacities in vulnerable areas involves companies mitigating and preventing disasters in the societies in which they operate, by partnering with government to facilitate and disseminate disaster information and material. The private sector could use its agility and access to technical and financial resources to play a more significant role in supporting efforts for climate change adaptation and resilience. Resilience building could be as simple as the construction of gabions or more complex, including investing in research projects and training volunteers.
- Business can strengthen disaster preparedness by contributing to the SADC disaster fund. Companies can also partner with government to explore the use of risk transfers to protect the economies that they operate in through insurance. For example, the African Development Bank approved the Africa Disaster Risks Financing (ADRiFi) Programme in 2018 for its member states. The ADRiFi is a climate risk management programme which will promote swift insurance responses and financial support when disaster strikes.
- The private sector’s proactive investment into a sustainability plan could ensure that the burden of reconstruction is minimal and that the next disaster is less devastating. Response and reconstruction are usually very expensive, especially for governments that do not have disaster relief funds allocated in their budgets. Furthermore, a lack of data on how disasters affect different communities also impacts the quality and turnaround time of responses. Insurer, African Risk Capacity, for example, offers disaster risk management and financing at country level. The company provides capacity building and innovative solutions around weather risks on the continent. It also offers protection of food security and livelihoods of vulnerable populations.
In addition to these four pillars, companies should examine how their own core business competencies can be leveraged for disaster preparedness and response work. For example, technology companies can assist with mapping, warning and response systems; food companies can ensure the provision of food; and insurance and financial services companies can drive risk mapping, preparedness and insurance against disasters.
How Santam is helping to build resilient communities
Through its operations Santam has learnt valuable lessons about the risks that vulnerable communities face, and where they lack capability and resources. The company uses its business skills to find innovative solutions to empower and mobilise communities through a holistic implementation of disaster and risk-reduction initiatives. Furthermore, by assisting vulnerable communities to manage and mitigate their risk, Santam is able to collect research data and minimise its own business risks.
The National Disaster Management Centre categorises municipalities into three groups: well functioning, functioning but vulnerable, or dysfunctional. Drawing from this data, Santam, through its Partnership for Risk and Resilience programme, consults and collaborates with municipalities in the second category. The programme has five focus areas: to drive community risk awareness, to build and increase the capacity for disaster response and relief, data mapping in municipalities, exploring and providing alternative energy sources, and identifying fire hotspots. Not all focus areas are implemented in all municipalities.
Through the programme and in coordination with organisations such as the South African Red Cross, Santam provides fire and flood risk management training to municipal staff and community volunteers. To further mitigate risk, the company installed smoke detectors and early detection devices in fire hotspots. In some cases, firefighting equipment was also distributed.
A key priority in this programme is an inclusive, multi- stakeholder, community-driven process. To achieve this, all disaster risk reduction planning and projects are designed around the needs and priorities of communities, often as articulated in their Integrated Development Plans. Importantly, disaster risk management is prioritised at a local government level. This provides a welcome space for Santam to enter into strategic partnerships with local government disaster response units, as well as to collaborate with non-profit organisations and intermediaries.