The adverse impact of climate change can be tackled through two main policy responses: #mitigation and #adaptation. Mitigation addresses the root causes, by reducing #greenhousegasemissions, while adaptation seeks to reduce the risks posed by the consequences of #climaticchanges. Broadly speaking, both approaches are essential, because even if emissions are dramatically decreased in the next decade, adaptation will still be required to deal with the #globalchanges that have already been set in motion.
The existing societies are experiencing climatic shifts in #temperature, #stormfrequency, #flooding and other factors, which has rendered many regions vulnerable to adverse #impactofclimatechange. According to #IPCC, vulnerability to climate change can be determined by three factors: exposure to hazards (such as reduced rainfall), sensitivity to those hazards (such as an economy dominated by rain-fed agriculture), and the capacity to adapt to those hazards.
Adaptation measures can help reduce vulnerability by lowering sensitivity or #buildingadaptivecapacity as well as allowing people to benefit from opportunities of #climaticchanges. Least-developed countries are prone to be more vulnerable to climate risks and some #adaptationmeasures in these countries can overlap with existing development programmes. But adaptation goes beyond just development to include measures to address additional risks specifically caused by climate change.
#ClimateChangeandSMEs
Climate change may result in adverse business outcomes for #SMEs which comprise bulk of all private businesses in almost all economies; are the economy’s largest employer and the largest contributor to #GDP. Moreover, SMEs play a significant role within #socioeconomicsystems: they provide #employment, goods and services and tax revenue for communities.
Enhancement of the adaptive #capacityofSMEs can better be facilitated by underlying contextual processes, which inter alia include: relationships between SMEs and support organizations; relationships within support organizations; the capacity of SMEs to use their resources to build resilience into business continuity; SMEs’ perceptions of climate risks; and power struggles between support organizations.
Adverse combinations of these processes entail the potential to limit the choices available to SMEs for responding to climate change and related threats. These processes which impact on SMEs operated largely at levels external to individual SMEs. They involved all three tiers of government and the relationships between various organizations whose role it is to support SMEs. Such contextual processes had been largely overlooked in formal programmes that aim to build business resilience.
It has often been observed that such programmes develop the tendency to be reactive and to focus on business recovery during and after disasters rather than on altering the vulnerability context of SMEs through anticipatory prevention and preparedness.
#RiskstoSMEs
The major risks to SMEs emanating from #climatechange are in terms of increased costs and loss of revenue. As governments around the #globedevelop and implement plans to address climate change, #energycosts are predicted to increase. Other increases may include rising insurance premiums, more expensive raw materials and supplies, and higher production costs, such as for #transportation. As the climate changes, there are increasing risks of blackouts and damage to property and inventory from #floods and #highwinds as a result of extreme weather events. In addition, #cropfailures from #drought will affect farmers.
Another business risk accruing from #climatechange for SMEs is customer preferences. Customers are becoming increasingly aware of the impacts of climate change. In light of this understanding, they may favour businesses that are #environmentally sensitive and that help customers reduce costs. Thus, risks can become opportunities for businesses that are addressing #climatechange.
Developing New Business
An assessment of exposure to climate change by SMEs can be helpful for them in adapting to the impacts of climate change on their businesses and then taking action to address these impacts. While locating away from disaster-prone areas, they can also develop new products and services that help others adapt to climate change.
By reducing both the #productionofgreenhousegases and the consumption of #fossilfuelbasedenergy, SMEs can help mitigate climate change. #Greenhousegasemissions can be reduced by implementing energy conservation measures, such as #energy efficient lighting and space heating, incorporating greater recycled content in products and selecting production processes that either emit or use less greenhouse gases.
Climate change can be turned into a revenue-generating opportunity by SMEs by developing technologies, products and services that help others reduce their greenhouse gas emissions and improve their resilience to the effects of climate change. Government and large #industry initiatives to reduce emissions will create new markets for such products and services, as will customer preferences for environmentally sensitive businesses. The results for SMEs that take action may include increased customer loyalty, new customers, cost savings and additional sources of revenue. The results of inaction may include increased operating costs, loss of business and even business failure.
Climate change can be addressed by the SMEs like any other business opportunity or challenge by setting goals, determining priorities, and then developing and implementing a plan to address the challenge.
Need for Business Leadership
With impact of climate change transcending geographical barriers, adapting to climate change is no longer an issue for governments to resolve alone. The private sector is also called upon to get involved in decision making. The globalization of markets and supply chains means that organizations of all sizes are increasingly interdependent, providing direct and indirect exposures and business opportunities. #Naturalresourceconstraints, manufacturing or logistical interruptions, and financial or economic crises have been driving the private sector to take action, independent of public sector commitments, or a global deal on climate change.
Under the prevalent scenario, role of the private sector is not just one of preparing its own assets and operations for anticipated climate; it can also provide solutions to the adaptation challenge. This cuts across from monitoring climate risks and planning adaptation response, to designing #disasterriskmanagement and financing vehicles, and innovating and deploying #newtechnologies.
Undoubtedly, corporations and businesses have responded to international and domestic pressures to curb their #CO2 emissions and invest in mitigation; nevertheless, they have been less engaged in building climate-resilient communities. They have little incentive to invest in an area that’s largely seen as a public good. Interestingly, some positive signs in this regard have started becoming discernible now.
SMEs are increasingly showing interest in #climatechangeadaptation and have a desire to protect their assets and #livelihoods from #climatechange and are willing, if finances are available, to spend money on goods and services that provide this protection. Businesses will respond with new products to meet market demand. These products, however, aren’t marketed as ‘#climateresilient’ and don’t come with an ‘#adaptationfriendly’ sticker. Still they provide adaptation benefits.
Bulk of action take by many SMEs on climate change has gone to ‘#climateproofing’ operations. Some companies have relocated buildings to low-risk areas, purchased weather insurance, and are engaged in reducing #water and #energyusage—which are all good practices that protect them against climate hazards. In some instances, such activities may even help vulnerable populations, as is the case when corporations climate-proof their supply chains.
Challenges Ahead
The SMEs are facing a variety of challenges when dealing with climate change impact. Tackling some of these challenges can contribute toward creating a better enabling #environment for the SMEs.
In the first instance, SMEs need better, more actionable information on climate change and its projected impacts. Levels of long-term uncertainty are difficult to take into account when making short-term investment decisions. Furthermore, scientific information about the climate system is difficult to decipher for many audiences, which compounds the challenge of making informed decisions on how to best respond. Businesses, therefore, need information from public and academic sources that help them make informed decisions on dealing with climate change impacts.
Secondly, while more and more corporations are investing in making their operations more climate-resilient, few SMEs are able to do so, due to lack of resources. They are unlikely to have in-house experts on climate change and sustainability, and their funds to bring in outside consultants are limited. SMEs, therefore, are less prepared for climate impacts and more likely to suffer from them. Besides, SMEs in developing countries often do not have key types of affordable financial products—such as loans and insurance — available to them. This lack of financial and technical resources makes it difficult for SMEs to invest in adaptation planning.
By understanding key limiting factors and acknowledging the current actions the privates sector is taking, one can ways that governments and the international community can support, encourage, and scale-up private sector adaptation actions and investments. Understanding the obstacles can help the public sector engage the private sector in making vulnerable communities more climate-resilient.
Scenario in India
Addressing climate change affords long-term growth opportunities for investors in India. India is a #lowcarboneconomy. However, it is also highly vulnerable to the projected impacts of #climatechange — especially with respect to #foodproduction, water availability and #coastalcities. India is the world’s fifth-largest emitter of CO2, though per capita emissions are approximately 25% of the global average.
As a developing country, it does not have any binding emission reduction targets. But India has pledged to keep its #carbonemissions per capita below that of developed countries. India’s emissions to date have been curbed largely by poverty and a suppressed demand for power. By 2030, the US Energy Information Administration expects India’s carbon intensity to show an annual improvement of 2.9%, outstripping the global average improvement of 2.1%.
India still relies heavily on non-marketed #energysources, including wood and #waste, for heating and cooking. In India, 87% of the #ruralpopulation uses such fuel for cooking and 50% of households do not have access to electricity. Regional economic development is likely to displace some of that use as incomes rise and marketed fuels become more widely accessible.
Much of the growth in world economic activity between 2006 and 2030 is expected to occur among the nations of non-#OECD Asia. India’s #GDP growth was expected to be 6.2% in 2009, with recovery to 8% in 2010. The country spends 2.6% of #GDP on #climatechangeadaptation.
The SMEs in India are required to keep in view the broad guidelines envisaged in the #NationalActionPlanonClimateChange (#NAPCC), which outlines existing and future policies and programs addressing climate change mitigation and adaptation. The plan, which runs through 2017, identifies eight core priorities or “national missions.” These eight national missions are: #SolarEnergy, #EnhancedEnergyEfficiency, #SustainableHabitat, #ConservingWater, #SustainingtheHimalayanEcosystem, Creating a “#GreenIndia”, #SustainableAgriculture and establishing a Strategic Knowledge Platform for Climate Change
The plan also includes a requirement that power utilities buy 5% of their power from #renewableenergysources which started in 2009. The #NAPCC plan offers tax incentives to encourage #industrialenergyefficiency, including differential rates for energy-efficient appliances. India’s #NationalBiofuelPolicy aims to promote private investment in the biofuels sector. The goal is to achieve at least 20% blending of biofuels by 2017. The policy also recommends 5% blending targets for #biodiesel.
India is the second-largest supplier of carbon credits under the #CDM. The country has 31% of the total projects registered with the #UNFCCC. Revenues are expected to be significant, with some estimating that India has the capacity to earn US$100b through Certified Emission Reductions (CERs). Approximately 930 carbon credit projects are underway in the country, while 160 to 180 such projects are likely to be added every year. Renewable projects (as of fall 2008) represented over half of all projects, including 241 wind projects and 106 hydro projects.
While inaugurating the ‘#IndiaCarbonMarketConclave 2012’ organised by FICCI and #EnvironmentMinistry in partnership with the #WorldBank and the German Environment Ministry in New Delhi on 12 September 2012, Environment Ministry Secretary T. Chatterjee stressed on the need to create win-win adaptation programmes to deal with climate change. He further added that India should encourage off-grid power generation systems especially by using #biodiesel from #slaughterhousewaste and #palmoilwaste.
While proposing that Research and #Development especially in terms of adaptation of technologies coming from developed countries should be taken up seriously, he mentioned that the best adaptation is robust #biodiversity and access and benefit sharing of biodiversity will have significant involvement of the corporate sector. He suggested considering the concept of ‘#GreenCredits’ for developing existing degraded lands and generating green certificates for forest development.
Conclusion
SMEs are destined to play pivotal role in climate change adaptation throughout the globe in general and India in particular. Broadly speaking, the reasons to deal with climate change are not just related to climate change impacts, but also related to #economicgrowth, #jobs, #energysecurity, #technology and #innovation. There is need to create a #carbonneutralworld.
It is noteworthy that the carbon market in Germany holds an important place and it has been using emissions trading since 2005. Almost 50 per cent of the emissions in #Germany are covered by emission trading. There is increasing need of cooperation amongst countries with respect to carbon markets and new market mechanisms, #NationallyAppropriateMitigationAction (#NAMAs) and sectoral approaches. A carbon-neutral-world is the best insurance against adverse impact of climate change.
By #DrArvindKumarPresidentIndiaWaterFoundation
