[Opinion] The opportunity to adapt today
hace 3 year
By: Pia Zevallos - Libélula's General Manager
COP27 in Egypt put adaptation at the center of the climate discussion, and the private sector has an essential role to play.
Carbon neutrality targets must be complemented by adaptation targets to ensure business resilience in the face of the climate crisis. The average temperature has increased by 1.1°C compared to pre-industrial times, and all indications are that the safe threshold of 1.5°C will be exceeded between 2030 and 2052. The annual conference on climate change (COP27) closed this year with two historic milestones: the creation of a fund to finance losses and damages caused by climate change; and the launching of a global adaptation agenda with 30 targets including the adoption of sustainable agricultural practices, the implementation of early warning systems and the protection of vulnerable ecosystems. It also included the goal of mobilizing up to US$300 billion for adaptation.
Adaptation represents an opportunity for innovation and the creation of new businesses.. The World Economic Forum has estimated that $1.8 trillion of investment could generate 7.2 trillion net benefits by 2030. In terms of employment, new developments in mobility, infrastructure and climate-resilient urban construction could generate 11 million jobs in Latin America and the Caribbean (IDB Invest, 2022). Adaptation also poses the challenge of scaling up financial prevention instruments such as insurance. For Peru, it has been calculated that for each sol invested, 10 sol would be saved (MINAM). So how do we seize opportunities and reduce business risks through adaptation?
First, by analyzing climate change scenarios and establishing adaptation goals and strategies. Companies must integrate adaptation into their strategies and investments to understand and manage their risks, while ensuring their own economic growth and that of their environment. Sectors such as mining, agriculture, infrastructure and the financial sector must analyze the physical risks to which they will be most exposed. It is estimated that the 50% of global copper production today is already concentrated in areas of high water stress (McKinsey).
Second, understanding that greater private sector participation in adaptation is a catalyst for investment to reduce vulnerability and generate market opportunities with sustainable business models. Technological solutions such as automated early warning systems and ancestral practices such as planting and harvesting water must be scaled up to achieve effective adaptation.
Finally, designing innovative financial instruments and mechanisms to take advantage of the growing flows of international financing for adaptation and to reduce investment risks.
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