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1、Business on the Edge:Building Industry Resilience to Climate HazardsI N S I G H T R E P O R TD E C E M B E R 2 0 2 4In collaboration withAccentureImages:Getty Images,UnsplashDisclaimer This document is published by the World Economic Forum as a contribution to a project,insight area or interaction.T

2、he findings,interpretations and conclusions expressed herein are a result of a collaborative process facilitated and endorsed by the World Economic Forum but whose results do not necessarily represent the views of the World Economic Forum,nor the entirety of its Members,Partners or other stakeholder

3、s.2024 World Economic Forum.All rights reserved.No part of this publication may be reproduced or transmitted in any form or by any means,including photocopying and recording,or by any information storage and retrieval system.ContentsForeword 3Executive summary 51 The nature and climate crisis will h

4、it fixed assets and threaten profits 71.1 Climate hazards are forecast to increase fixed asset losses 101.2 Extreme heat is the most potent climate hazard affecting 11 fixed assets across all regions 1.3 Telecommunications,utilities and energy companies face 13 steepest fixed asset losses in next de

5、cade 1.4 Climate-driven fixed asset losses pose a growing threat 14 to corporate profitability 1.5 Utilities,travel and telecommunications sectors face the 14 highest potential earnings shocks 2 Earth systems on the brink of tipping beyond the point of no return 162.1 Our planets life-support system

6、s are severely threatened 172.2 Five Earth systems are at imminent risk of tipping today 172.3 Over 20 other Earth systems could be destabilized 242.4 Economic models fail to encompass the full scope 24 of Earth system tipping point risks 3 How climate hazards threaten socio-economic systems 253.1 F

7、ive socio-economic systems:building blocks 26 ofa prosperous and inclusive world 3.2 Agriculture,food and beverages socio-economic system 273.3 Built environment socio-economic system 303.4 Technology socio-economic system 333.5 Health and well-being socio-economic system 363.6 Financial services so

8、cio-economic system 40Conclusion and recommendations 45Annexes 48A1 Industry briefs 48A2 Fixed asset loss quantification method 63Contributors 67Endnotes 70Business on the Edge:Building Industry Resilience to Climate Hazards2A stroke can change the course of a lifetime and hits in less than a minute

9、.In geological terms,the last 100 years is equivalent to a single minute in an average human lifetime.The“stroke”that has hit our planet has heated,polluted and destabilized Earth systems on which our economies and societies depend.Earths coldest climates are transforming rapidly due to atmospheric

10、heating,with global implications.Polar,glacial and ocean destabilization are cascading risk in the form of climate hazards from extreme weather to deadly heatwaves,droughts and floods.As with any stroke patient,our planet requires emergency care delivered with evidence-based accuracy.The urgency and

11、 quality of our response today will determine the immediate and long-term outlooks for economic,social and planetary stability.It may well determine human survivability too.Short-term global temperatures have breached the 1.5C warming limit for the first time,a critical threshold outlined both in th

12、e Paris Agreement and by Earth system scientists.This is a physical boundary beyond which we exit a safe operating space,not a political target to be negotiated.Despite ardent efforts from companies such as those in the Alliance of CEO Climate Leaders,who recently reported a 10%reduction in aggregat

13、e absolute emissions1 from 2019 to 2022,global emissions trajectories are not slowing down.In December 2024,the Alliance published The Cost of Inaction:A CEO Guide to Navigating Climate Risk highlighting that businesses tend to underestimate the financial impact of inaction in the face of physical a

14、nd transition risk and showcasing the imperative for action from CEOs.Indeed,corporates will increasingly grapple with significant balance sheet costs and supply chain disruptions that inhibit their ability to function as they have in the past.Corporate leaders will simultaneously need to deliver on

15、 rapid decarbonization together with bold civic,political and economic collaboration to support societal and economic resilience and adaptation on a global scale.Companies are in a unique position to lead the transition to net zero alongside the development of more robust and resilient economies.Inv

16、estors,consumers and the communities they serve will ultimately reward them for it.An effective response to the nature and climate crisis is in the best interests of far-sighted corporates and the societies in which they operate.Enabled by sound government policy,corporate resilience benefits from c

17、lose collaboration with experts,local innovators,communities,youth and Indigenous Peoples.These individuals and groups are at the ForewordGill Einhorn Head,Innovation and Transformation,Centre for Nature and Climate,World Economic ForumJohan Rockstrm Director,Potsdam Institute for Climate Impact Res

18、earch;Professor in Earth System Science,University of PotsdamGim Huay Neo Managing Director and Head,Centre for Nature and Climate,World Economic ForumToby Siddall Managing Director,Sustainability Strategy Lead,AccentureBusiness on the Edge:Building Industry Resilience to Climate Hazards December 20

19、24Business on the Edge:Building Industry Resilience to Climate Hazards3forefront of this crisis and have precious local understanding to support cost-effective and locally tailored solutions.Companies that fail to build resilience stand to lose their ability to compete,as the consequences of the cri

20、sis shift markets and fracture supply chains,degrading and stranding physical infrastructure and compromising lives and livelihoods.This report is the first of its kind and is mandatory reading for business leaders,boards,risk experts,strategists and investors seeking to understand emerging supply c

21、hain risks and best-in-class responses.It builds a bridge between the latest scientific evidence and the direct implications on business costs,supply chain risk and societal disruption.We outline clear actions to safeguard revenue,reduce maintenance and operating costs and protect workforces and loc

22、al communities while supporting the ecosystems on which our economies and societies depend.The report builds on the findings of the World Economic Forums January 2023 white paper,Accelerating Business Action on Climate Change Adaptation,and its climate adaptation framework2 to enhance resilience,cap

23、italize on opportunities and shape collaborative outcomes.Business on the Edge:Building Industry Resilience to Climate Hazards4Executive summaryCompanies are grappling with the implications of the nature and climate crisis.As tangible business risks rise,they need to make better-informed decisions t

24、hat safeguard corporate supply chains and secure industries and societies.The stakes are high:a recent study suggests that emissions already in the atmosphere today will lower global GDP per capita by between 11%and 29%by 2050.3 But where should business leaders and investors focus their attention a

25、nd resources today?The urgency to decarbonize is clear.However,to date,little work has been done to connect climate science with even more immediate business risks and the pressing need for resilience and adaptation.4 This report fills that gap-offering a tangible assessment of climate hazards(speci

26、fically extreme heat,wildfires,drought,water stress,tropical cyclones,coastal flooding and fluvial flooding)and the risks they pose to companies fixed assets(property,plant and equipment)across 20 industries globally.Economies and societies are dependent on these assets to generate returns anddrive

27、societal value.The headlines are stark.Climate hazards could drive$560-610 billion of fixed asset losses per year across listed companies by 2035,depending on the emissions scenario,rising as high as$1.1 trillion by 2055.5 Without evidence-based resilience strategies,this equates to a drop of betwee

28、n 6.6%and 7.3%in average company earnings every year by 2035.6 As a comparator,S&P 500 profit margins declined by 15.3%during the depths of the Covid-19 pandemic but quickly recovered thanks to significant government investment and policy interventions.7 By contrast,recurring annual losses on the sc

29、ale identified in this report would cause performance shocks that would become increasingly challenging to safeguard against through insurance and offsets.Associated impacts could include lower company valuations,disruption to the financial systems we rely on for trade and investment and ultimately,

30、reduced global social and economic prosperity.The nature and climate crisis poses a growing threat to business profitability,supply chains and societal stability.This report shows how business leaders can adapt and build resilience.Fixed asset losses across listed companies by 2035 equate to a drop

31、of 6.6-7.3%in average company earnings every year.Summary of estimated annual fixed asset losses TABLE 1Total estimated annual fixed asset losses($billion,all companies)Annual fixed asset losses (%EBITA,average per company)Emissions scenario Low High2035 20452055Sources:S&P Global Sustainable1,Accen

32、ture analysis.The first chapter of this report explores how seven climate hazards affect fixed assets held by listed companies around the globe.The analysis reveals that extreme heat accounts for 72-73%of the potential losses accruing to these fixed assets over the next decade.These losses are likel

33、y to manifest in the form of business interruption,higher repair and operating costs,and lower employee productivity.The most exposed industries-telecommunications and utilities-face losses equivalent to a drop in yearly earnings of more than 20%by 2035.Moreover,given the focus on fixed assets only,

34、and the fact that commercial and scientific climate risk models do not fully account for the scale and scope of cascading threats,the total costs facing businesses from climate hazards are likely much higher.5606.67.38.110.19.912.86106808508301,070Business on the Edge:Building Industry Resilience to

35、 Climate Hazards5Moving beyond this analysis,the second chapter of this report looks at the degradation of Earth systems facing irreversible tipping points.8 Five of these Earth systems may have already reached a point of no return,9 presenting a more severe outlook for the frequency and severity of

36、 climate hazards with a direct impact on business and societies regionally and globally.10,11 Even in a world of Paris Agreement-aligned emissions cuts,the natural sources of emissions locked into soil,frozen ground,the ocean and forests continue to be released,adding greater momentum to the nature

37、and climate crisis.The third chapter explores the broader risks these climate hazards pose within the context of five socio-economic systems relating to food,the built environment,health,technology and financial services.Guidance is offered across these five systems,showcasing solutions-orientated s

38、trategies and recommendations to help business leaders and C-suite executives integrate them into routine decision-making to enhance resilience,adapt to capitalize on opportunities and shape collaborative outcomes that benefit investors,economies and societies alike.DefinitionsBOX 1MitigationThe int

39、ervention by humans toreduce emissions or enhance the sinks of greenhouse gases.ResilienceThe ability of a system and its component parts to anticipate,absorb,accommodate or recover from the effects of a dangerous event in a timely and efficientmanner.AdaptationThe process of adjusting to the actual

40、 or expected climate and its effects,to moderate harm or exploit opportunities.Foundational actions to enable resilience and adaptationWithout climate resilience and adaptation,businesses will face disruption and,ultimately,redundancy.Conversely,the business case for investing in adaptation is incre

41、asingly clear.The framework presented in the World Economic Forums January 2023 white paper,Accelerating Business Action on Climate Change Adaptation,highlights how business leaders need to focus on enablers for adaptation.The analysis on value at risk in this report spotlights two further actions:i

42、ntegrating climate change adaptation with net-zero transformation and mainstreaming climate risk considerations into business decision-making.Every business leader should be activating the following array of enablers within the next 24 months to drive better C-suite decision-making:Conduct a detaile

43、d audit of core capabilities and processes to ensure climate resilience and adaptation percolates to every level of the organization and its ecosystem partners.Master the data and strategic intelligence to understand the materiality of new risks and opportunities presented by the climate crisis.Inve

44、st in the required skills,technology and responsible use of AI to accelerate insights and decision-making.Tie climate risk into every capital maintenance and investment decision,building resilience criteria with cost-benefit analyses to taper stranded asset risk while prioritizing socio-economic opp

45、ortunity in existing communities across the value chain.Sponsor and integrate evolving scientific insight with commercial models to improve the quality of analysis and interpretation,shaping strategic and operational decisions to account for cascading exogenous shocks.Work in partnership with the sc

46、ientific community to develop more useful insights into potential local impacts in key regions.With increasingly visible signs of disruption across global value chains,much can be done to prepare now for growing risks in the future.Indeed,the gift that science affords us is time.Science helps us und

47、erstand what is happening now and why,warns us of what is to come and helps us to cultivate opportunities to innovate and build resilience.Today,bold partnerships are needed across the value chain and with local communities to embed resilience and adaptation to withstand growing climate hazards.Comp

48、anies will be required to reinvent core products and services and build optionality into supply chains,while supporting a just and inclusive transition for local actors affected by emerging risks.Collaboration to improve foresight of localized risks and their implications on global supply chains wil

49、l support strategic planning as disruptions gain pace.In light of a growing nature and climate crisis and the results of this report forward-thinking businesses will need to accelerate their learning journey and act on these recommendations today.Bold partnerships are needed across the value chain a

50、nd with local communities to embed resilience and adaptation to withstand growing climate hazards.Business on the Edge:Building Industry Resilience to Climate Hazards6The nature and climate crisis will hit fixed assets and threaten profits1As fixed asset losses rise across industries,company earning

51、s could suffer.Business on the Edge:Building Industry Resilience to Climate Hazards7The fallout from the nature and climate crisis is evident all around us-and growing.Biodiversity loss,Earth system degradation and extreme weather events threaten the health of humans and other species,as well as the

52、 proper functioning of our economies and societies.For businesses too,the tangible costs are rising.The Intergovernmental Panel on Climate Change(IPCC)states in its Sixth Assessment Report12 that human-caused climate change has increased the frequency and intensity of extreme weather events globally

53、.A 2023 study estimated the cost of extreme events partly or wholly attributable to climate change at$143 billion per year over the past two decades.13 In the United States,the cost of large-scale climate disasters has climbed steadily from$21.8 billion per year in the 1980s to$123.2 billion per yea

54、r over the past five years.14 In Europe,economic losses from climate-related extremes totalled approximately half a trillion euros over the past 40 years.15 In Africa,GDP is already 2-5%lower on average every year than it could be due toclimate-related hazards.16 Climate science is complex and invol

55、ves many interconnected components,making it challenging to translate its implications into business impacts.The basic dynamics are as follows:Earths climate responds to increasing greenhouse gases in the atmosphere with changes to Earth systems;these systems support natural ecosystems that provide

56、services,such as climate regulation,that allow societies and economies to flourish.As human production and consumption activities drive greenhouse gas emissions up,Earth systems are pushed closer to collapse,exacerbating climate hazards and placing the entire cycle at risk.A climate hazard is a clim

57、ate condition with the potential to harm natural systems or society.17 To help business leaders understand the tangible risks the nature and climate crisis poses to their operations,this report focuses on seven climate hazards related to extreme weather(see Figure 1).$143 billion the cost,every year

58、 over the past two decades,of extreme events linked to climate change.Seven climate hazardsFIGURE 1Extreme heatProlonged period of excessively hot weather above the average high temperature for a particular region for that time of year,often combined with high humidity.Coastal floodingA result of st

59、orm surges and high winds coinciding with high tides.Occurs whendry and low-lying land is submerged by seawater.Fluvial floodingSurface water drainedfrom a watershed into a stream or river that exceeds the channels capacity,overflowing beyond banks and inundating adjacent low-lying areas.Tropical cy

60、cloneRapidly rotating storm(cyclone,hurricane or typhoon)that begins over tropical oceans,with violent winds and torrential rain that can be accompanied by thunderstorms.DroughtA period of abnormallydry weather sufficiently prolonged for the lackof water to cause serious hydrologic imbalancein water

61、 tables andacross landscapes.Water stressA combination of reduced freshwater availability from reduced rainfall and/or growing demand.WildfireUnplanned,unwanted and uncontrolled fire that burns in a natural area such as a forest,grassland or prairie.Sources:US Federal Emergency Management Agency(FEM

62、A),US Cybersecurity&Infrastructure Security Agency(CISA),World Meteorological Organization(WMO).Note:More detail on how climate hazards are defined is available here.188Business on the Edge:Building Industry Resilience to Climate HazardsCompanies can face heavy losses and damage from climate hazards

63、.When multiple businesses are hit simultaneously-a common occurrence during extreme weather events-the ramifications extend far beyond individual organizations,cascading through entire industries and regions.The interconnected nature of the global economy means volatility ripples across markets and

64、sectors.This threatens economic downturns and instabilities in financial markets that could culminate in broader economic and financial global crises.These economic impacts are underpinned by social and natural structures,which climate hazards influence both directly and indirectly.Although the casc

65、ading economic and societal risks for business are complex and interconnected,they can be understood in three ways to guide appropriate and credible responses:Direct operational costs:The impact of climate hazards on fixed assets(property,plants and equipment)is the most direct risk businesses face.

66、This report explores the scale and magnitude of associated fixed asset losses in the period 2025-2055.The knock-on impact on company earnings is already alarming,but may well be a conservative estimate given the analysis focuses on fixed assets only and did not incorporate emerging Earth system tipp

67、ing-point science(see Annex 2:Limitations to theapproach).Supply chain disruption:Climate hazards disrupt every stage of supply chains,from sourcing to processing,distribution and consumption patterns.The section on value chain and societal losses explores the broader business risks through the lens

68、 of five key socio-economic systems.This section also illustrates how companies are addressing these risks and offers concrete recommendations for building supply chain and societal resilience.Instability in nature and society:The vitality of businesses and economies is closely tied to the stability

69、 of societies and the natural environment in which they operate.Figure 2 illustrates how the impact of climate hazards on people and nature at local,regional and global levels can disrupt business operations,for example,via working hours lost due to employee health issues or resource shortages.These

70、 systemic risks should be incorporated into company resilience solutions.The pace of the climate crisis today means the current temperature statistics in this report will likely be outdated in a year or two.It is critical,therefore,as climate hazards become more frequent and more severe,that busines

71、s leaders recognize risks not as isolated incidents but as integral components of a complex and moving system that can disrupt economic stability on a macroeconomic scale.Direct and indirect consequences of climate hazards on economies and societiesFIGURE 2Sources:Accenture analysis,World Economic F

72、orum Global Risks Report 2024.Climate hazards hit businesses in three ways:direct operational costs,supply chain disruption and instability in nature and society.LocalRegionalGlobalClimate hazardsStrain on company earningsHigher repair or replacement costsStranded assetsHigher operational costsLost

73、revenuesDecreased productivityLabour shortagesNatural resource shortagesWorkforce health declineCivil disorderHuman rights violationsUnemploymentMisinformation&disinformationEconomic downturnReduced economic outputFalling retail salesChanges in consumer behaviourLoss of competitivenessSalary freezes

74、Rising unemploymentSupply chain disruptions&supply shortagesInflationary pressureForced migrationDeepening social inequalitiesUnequal access to resources resulting in conflictsFood insecurityWater insecurityInfectious diseasesHumanitarian disastersFinancial market instabilityDeclining GDPHigh market

75、 volatilityReduction of investment expendituresDecreased investor confidenceLower stock prices&reduced capital inflowsHigh loan defaultsReduced credit ratingStrained insurance sector due to increased insurance lossesBiodiversity loss&ecosystems collapseChronic health conditionsSocietal polarizationB

76、reakdown of trust in institutionsLoss of intellectual propertyGeoeconomic confrontationGeopolitical risksCyber insecuritySocietal and naturalEconomicBusiness on the Edge:Building Industry Resilience to Climate Hazards91.1 Climate hazards are forecast to increase fixed asset losses Climate hazards ca

77、n damage fixed assets or prevent them from working efficiently.Consider factories losing their water supply,data centres which struggle to cool,offices under water or fields hit by floods and drought.Such events are likely to raise business costs through,for example,additional repairs,orders that ca

78、nnot be fulfilled and less productive workers.Given the strong positive relationship between capital investment and productivity,19,20 this is consequential not just for companies themselves but for wider economic and societal prosperity.Combining data on the fixed assets held by 5,736 large,listed

79、companies with climate risk metrics from the S&P Physical Risk Financial Impact database provides insight into the exposure of businesses at a granular level(see Box 2).The analysis suggests that fixed asset losses driven by climate hazards could reach$560-610 billion per year by 2035,depending on t

80、he emissions scenario.This climbs to$680-850 billion by 2045 and$830 billion-$1.1 trillion by 2055(see Figure 3).For context,global foreign direct investment totalled$1.3 trillion in 2023.21Estimating fixed asset lossesBOX 2Using the Coupled Model Intercomparison Project 6(CMIP6)climate models,the S

81、&P Global Sustainable Climate Risk Model dataset provides climate hazard exposure scores across different IPCC future climate-change scenarios.It covers more than 3 million corporate assets,with asset type-specific sensitivity to quantify financial losses associated with each hazard.Costs include th

82、ose stemming from increased direct operational expenses,revenues lost to business interruption,repairs to physical damage and lower employeeproductivity.Fixed asset loss risk is aggregated at the company level as a weighted average of all assets mapped to the company of interest.The analysis combine

83、s these individual,aggregated company scores across three emissions scenarios-High:SSP5-8.5,Medium-High:SSP3-7.0(labelled as Medium in this analysis for simplicity)and Low:SSP1-2.6-with estimations of the value of fixed assets held by each of 5,736 large,listed companies(from S&P Capital IQ).This fi

84、gure is then extrapolated to 55,515 listed companies using revenue data to estimate the annualized global financial impact of physical climate hazards in US dollars.The estimated impact represents a conservative baseline forthree major reasons:Risk metrics do not include emerging tipping pointscienc

85、e.Non-listed companies are excluded due to dataavailability.Climate hazards beyond the seven considered increase risks(see Figure 1).For the full methodology,including approach limitations and sources,see Annex 2:Quantifying the impact of the nature and climate crisis on business.Fixed asset losses

86、driven by climate hazards could reach$560-610 billion per year by 2035.Business on the Edge:Building Industry Resilience to Climate Hazards10Total estimated fixed asset losses for listed companies under three emissions scenarios($billion per year,2025-2055)Total estimated fixed asset losses for list

87、ed companies under low and high emissions scenarios,by climate hazard($billion per year,2035-2055)FIGURE 3FIGURE 42004006008001,0001,200$billion/yr2025203520452055Low emissions scenarioMedium emissions scenarioHigh emissions scenario 0$560-610 billion$680-850 billion$830-1,070 billionExtreme heatWat

88、er stressFluvial floodingDroughtTropical cycloneWildfireCoastal floodingLow$billion/year HighLowHigh448876567220811462476160978120352055404Total 830Total 560Total 1,070Total 6106379Note:High emissions scenario=SSP5-8.5,Medium emissions scenario=SSP3-7.0,Low emissions scenario=SSP1-2.6.Sources:S&P Gl

89、obal Sustainable1,Accenture analysis.Sources:S&P Global Sustainable1,Accenture analysis.1.2 Extreme heat is the most potent climate hazard affecting fixed assets across all regions Corporate fixed assets are likely to be hit primarily by extreme heat.By 2035,this climate hazard alone is expected to

90、drive annual losses of$404-448 billion across all listed companies(72-73%of total estimated losses),depending on the emissions scenario,rising to$476-672 billion by 2055 although declining as a proportion of the total to 57-63%(see Figure 4).Water stress is forecast to be the next most potent climat

91、e hazard,driving fixed asset losses of$63-87 billion by 2035 and$160-208 billion per year by 2055.Fluvial flooding($97-114 billion)and droughts($62-81 billion)are also set to pose serious threats to the efficiency of fixed assets by 2055.Business on the Edge:Building Industry Resilience to Climate H

92、azards11Although businesses across the world are exposed to climate hazards,there is some variation by region.Extreme heat is the number one risk across all regions,followed by fluvial flooding(see Table 2).Water stress ranks next highest in Africa,the Middle East,Asia-Pacific,Latin America and the

93、Caribbean and Europe.Tropical cyclones rank third in Canada and the United States.Top five climate hazard risks under a high emissions scenario(by region,2035)TABLE 2Sources:S&P Global Sustainable1,Accenture analysis.Canada and USLatin America and CaribbeanEuropeAfricaMiddle EastAsia-Pacific1 Extrem

94、e heat Extreme heat Extreme heat Extreme heat Extreme heat Extreme heat2 Fluvial flooding Fluvial flooding Fluvial flooding Fluvial flooding Fluvial flooding Fluvial flooding3 Tropical cyclone Water stress Water stress Water stress Water stress Water stress4 Water stress Wildfire Wildfire Drought Co

95、astal flooding Wildfire5 Wildfire Tropical cyclone Drought Wildfire Wildfire DroughtBusiness on the Edge:Building Industry Resilience to Climate Hazards121.3 Telecommunications,utilities and energy companies face steepest fixed asset losses in next decadeIndustries that provide the plumbing for the

96、modern economy face the sharpest climate hazard risks,according to the analysis(see Figure 5).The average company in these sectors faces the following fixed-asset losses per year by 2035,ranged from low to high emissions scenarios:Telecommunications$518-563 million/year Telecommunications companies

97、face the highest level of risk,due principally to the sensitivity of data centres and network infrastructure to extreme heat and restricted water access.Utilities$204-233 million/yearEnergy$115-135 million/yearFixed asset losses for the average listed company under low and high emissions scenarios,b

98、y industry($million per year,2035)FIGURE 5TelecommunicationsLowHighUtilitiesEnergySoftware&platformsTravelBankingRetailAutomotiveMediaLife sciencesNatural resourcesInfrastructure&transportation servicesHigh-techAgribusinessIndustrial equipment&machineryInsuranceFood&beveragesNon-food consumer goodsC

99、hemicalsCapital markets5632331351331171009068626059535245454443424132518204115124110918462595652504942434039383041Low emissons scenarioHigh emissons scenario(additional losses)$million/year TelecommunicationsLowHighUtilitiesEnergySoftware&platformsTravelBankingRetailAutomotiveMediaLife sciencesNatur

100、al resourcesInfrastructure&transportation servicesHigh-techAgribusinessIndustrial equipment&machineryInsuranceFood&beveragesNon-food consumer goodsChemicalsCapital markets5632331351331171009068626059535245454443424132518204115124110918462595652504942434039383041Low emissons scenarioHigh emissons sce

101、nario(additional losses)$million/year Sources:S&P Global Sustainable1,Accenture analysis.Business on the Edge:Building Industry Resilience to Climate Hazards131.4 Climate-driven fixed asset losses pose a growing threat to corporate profitability1.5 Utilities,travel and telecommunications sectors fac

102、e the highest potential earnings shocksThe scale and ubiquity of such figures tends to mask the need for individuals and businesses to act.The picture becomes clearer when translating losses down from the aggregate to the scale of an individual company.To assess business viability in different emiss

103、ions scenarios,the impact of fixed asset losses was set against company profitability.The analysis finds that for the average listed company,climate-driven losses equate to a drop in earnings of 6.6-7.3%per year by 2035,depending on the emissions scenario,accelerating to 8.1-10.1%by 2045(see Figure

104、6).For comparison,the profit margins of S&P 500 companies declined by 20.0%between Q3-2008 and Q2-2009 through the financial crisis.Profit margins dropped 15.3%in the four quarters to Q2-2020,encompassing the depths of the Covid-19 pandemic.However,these are imperfect comparisons.The banks were reca

105、pitalized during the financial crisis and corporate profit margins had broadly recovered by Q2-2010.Similarly,S&P 500 profitability rebounded to pre-pandemic levels by Q1-202122 as successful Covid-19 vaccine rollouts ended the cycle of lockdowns and governments spent heavily to support citizens and

106、 economies.By contrast,the complexity and scale of Earth system tipping points are of a different order of magnitude.By definition,once you pass a tipping point,there is no going back.The damage done is both binding and growing.No financial stimulus or vaccination programme will quickly solve them.T

107、he inference is that the risk to company earnings from climate hazards on fixed assets alone may soon rival a global recession or pandemic a risk that will hit every year with increasing severity.For the average listed company,climate-driven losses equate to a drop in earnings of 8.1-10.1%per year b

108、y 2045.Fixed asset losses per year as a proportion of EBITA under low and high emissions scenarios(2025-2055)FIGURE 620252035204520554.8%4.6%7.3%9.9%6.6%8.1%10.1%12.8%Low emissons scenarioHigh emissons scenario%EBITANote:Average for 5,043 companies with available data;average EBITA 2021-2023.See met

109、hodology at Annex 2 for further detail on 2025 estimate.Sources:S&P Global Sustainable1,Accenture analysis.The threat to profitability from climate hazards is even steeper in some industries.Again,the impact is likely to be highest in utilities(20.7-23.6%under low and high emissions scenarios)and te

110、lecommunications(20.3-22.1%),where the scale of fixed asset losses equates to a drop in earnings of more than a fifth over the next decade(see Figure 7).Travel(20.2-21.6%)faces a similar level of risk.Despite having large stocks of fixed assets,on average,energy companies face a more moderate risk(2

111、.9-3.4%)because their average earnings today are among the highest of industries analysed.However,as energy transition risks amplify over time,potential earnings shocks will likely rise.23 Business on the Edge:Building Industry Resilience to Climate Hazards14Fixed asset losses per year as a proporti

112、on of EBITA under low and high emission scenarios,by industry(2035)FIGURE 7Low emissons scenarioHigh emissons scenario(additional losses)UtilitiesTelecommunicationsTravelRetailAgribusinessMediaInfrastructure&transportation servicesAutomotiveIndustrial equipment&machineryChemicalsNatural resourcesFoo

113、d&beveragesSoftware&platformsHigh-techEnergyLife sciencesNon-food consumer goods20.7%20.3%20.2%9.8%8.9%7.3%6.9%6.3%6.0%5.4%5.2%4.6%4.3%4.2%2.9%2.9%2.0%23.6%22.1%21.6%10.4%9.5%7.7%7.3%6.9%6.2%5.9%5.8%4.9%4.7%4.5%3.4%3.1%2.1%LowHigh%EBITANote:Industry average for 5,043 companies with available data;av

114、erage EBITA 2021-2023.Sources:S&P Global Sustainable1,Accenture analysis.The scale and magnitude of fixed asset losses should concern business leaders.However,the World Economic Forums Alliance of CEO Climate Leaders highlights that companies that make adaptation and resilience investments report a

115、very positive business case,ranging from$2 to$19 for every$1 invested across sectors.24 This prompts an important question as companies consider how fast to adapt:with rising climate hazards threatening to drive fixed asset losses and depress earnings,can they afford not to respond urgently and appr

116、opriately now?Moreover,this analysis paints an incomplete picture of the climate threats facing companies.For one thing,climate hazards pose risks to other areas of business activity such as the supply chain,employee well-being and consumer spending (see Chapter 3).Additionally,the data does not ful

117、ly account for the increased frequency and severity of climate hazards as tipping points cascade.This report is accompanied by a series of Industry briefs that provide a more detailed view on the implications and recommendations for some of the most-impacted industries:utilities,telecommunications,t

118、ravel,retail,agribusiness,media,infrastructure and transportation services.Business on the Edge:Building Industry Resilience to Climate Hazards15Earth systems on the brink of tipping beyond the point of no return2Five Earth systems are at risk of tipping,triggering higher emissions,global heating,se

119、a-level rise and food insecurity.Business on the Edge:Building Industry Resilience to Climate Hazards162.1 Our planets life-support systems are severely threatened2.2 Five Earth systems are at imminent risk of tipping today While some effects of the nature and climate crisis are already apparent tod

120、ay,other more serious consequences are on the horizon.The science is clear that risks are mounting but the precise timing and magnitude of the impending changes are difficult to specify,given the complexity and interdependencies of Earth systems and their tipping points.A tipping point is a critical

121、 threshold that,when reached,leads to a significant change in the state of the system that is typically irreversible.25 Given their scale,the degradation and tipping of Earth systems pose grave threats to the future of our species,affecting liveability and survivability in many geographies around th

122、e world.Crossing an Earth system tipping point“will severely damage our planets life-support systems and threaten the stability of our societies”,according to the authors of the Global Tipping Points Report 2023.26 At present levels of global heating,five Earth systems are close to crossing tipping

123、points:27 Greenland ice sheet collapse West Antarctic ice sheet collapse Warm-water coral reef die-off Labrador&Irminger Seas convection collapse Boreal permafrost abrupt thaw28 Land ice on the Greenland and West Antarctic ice sheets melting rapidly and close to crossing tipping points represents 10

124、 metres of sea-level rise29 with unavoidable rises already locked in.30 Communities around the world are experiencing the effects of coastal erosion,flooding and storm surges.Some 630 million people live on land lying below projected annual flood levels for the end of the century.31 The displacement

125、 of so many people could lead to a global security crisis,with increased competition for freshwater,land and otherresources.For more information on risks to land ice,the chain of geographic reactions unlocked when it melts and the global consequences of its decline and tipping,refer to Figure 8.Sea

126、ice is showing marked signs of deterioration.Regardless of emissions scenarios,there is likely tobe at least one sea-ice-free summer in the Arctic before 2050.Decreased sea ice extent creates a feedback loop that amplifies warming,because darker water absorbs a greater amount of solar radiation comp

127、ared with reflective,white sea ice.Amplified Arctic warming destabilizes the polar jet stream which could lead to increased temperature extremes at lower latitudes.For more information on risks to sea ice,the chain of geographic reactions unlocked when it melts and the global consequences of its dec

128、line and tipping,refer to Figure 9.The Greenland and West Antarctic ice sheets close to crossing their tipping points represent 10 metres of sea-level rise with unavoidable rises already locked in.17Business on the Edge:Building Industry Resilience to Climate HazardsIn the ocean,the Atlantics domina

129、nt heat-transferring current,known as the Atlantic Meridional Overturning Circulation(AMOC),has slowed by 15%since 1950 and is in its weakest state for more than a millennium.32 It is showing signs of destabilization on a trajectory towards collapse,partly due to the weakening of the Labrador&Irming

130、er Seas convection current,itself part of the wider North Atlantic Subpolar Gyre and a driver of the bigger AMOC.This vast AMOC current can be likened to an air conditioning system for the planet.It has collapsed in the past.If it were to collapse again,a cold spot in the North Atlantic would emerge

131、 while the remainder of the Atlantic Ocean heated.One effect would include shifting the rain belt back to the equator.Tropical forests reliant on this rain would experience unprecedented droughts.As many tropical forests have not evolved the capacity to deal with systemic droughts and their conseque

132、ntial fires,forest systems like the Amazon would be at risk.For more information on risks to Atlantic Ocean circulation,the chain of reactions its failure would unlock geographically,and the global consequences of their decline and tipping,refer to Figure 10.At 1.5C of global heating,99%of the world

133、s coral reefs will experience heatwaves that are too frequent for them to recover from.33 Coral reefs offer an effective barrier to extreme weather from coastal storm surges so the loss of these ecosystems propels higher costs from extreme weather for many seaboard towns and cities.As a quarter of a

134、ll marine life are dependent on coral reefs at some point in their life cycle,their loss also affects the composition of ocean ecosystems and coastal food security.Coral reef die-off impacts the livelihoods and food security of half a billion people dependent on the ocean for readily accessible prot

135、ein.34 For more information on risks to coral reefs,the chain of reactions their destruction unlocks geographically and the global consequences of their decline and tipping,refer to Figure 11.Permafrost could be considered the climate crisis wildcard.By definition,permafrost is ground that remains c

136、ompletely frozen(0C or less)for at least two years in a row.Permafrostaccounts for nearly half of all organic carbon stored within the planets soil.35 Northern permafrost soils contain approximately twice as much organic carbon as is currently contained in the atmosphere today.36 With heating in the

137、 Arctic,these landscapes are thawing releasing carbon dioxide andmethane into the atmosphere.Permafrost emissions could be anywhere from 30-150 billion tonnes of carbon by 2100 with upper estimates on a par with cumulative emissions from the US economy at its current rate.37 These“natural”emissions

138、speed up global warming.For more information on risks to permafrost,the chain of reactions its thawing unlocks geographically and the global consequences of its decline and tipping,refer to Figure 12.The figures in this chapter offer briefs for business on the dynamics at play in five critical lands

139、capes:land ice,sea ice,ocean circulation,coral reefs and permafrost.The briefs include:definitions,Earth system tipping points,the way warming leads to climate hazards,select implications,future projections,shocking scientific facts and socio-economic consequences.Inevitably,these briefs simplify th

140、e complex nature of Earth systems and the interdependencies between them to explain the primary drivers of relevant tipping points to non-technical readers.They do not aim to be exhaustive.However they do give corporate decision-makers a sense of the scale of emerging and cascading risks involved,as

141、 well as primary considerations to inform credible and appropriate responses,in light of those risks.At 1.5C of global heating 99%of the worlds coral reefs will experience heatwaves that are too frequent for them to recover from,impacting the food security of half a billion people.Business on the Ed

142、ge:Building Industry Resilience to Climate Hazards18What is it?The Greenland and Antarctic ice sheets store approximately 99%of the Earths land ice and have a profound impact on global climate,sea levels and ecosystems.Ice sheets are in danger of collapsing in response to both atmospheric and oceani

143、c warming,which affect their surface mass balance andicedynamics.Mountain(extrapolar)glaciers are receding rapidly due to rising temperatures,diminishing snowfall and increased meltwater runoff.The Himalayan glaciers are invaluable sources of freshwater for approximately 800 million people.What are

144、the implications?Loss of land ice results in sea level rise,which leads to coastal floods,coastal erosion and saltwater intrusion into groundwater.Melting of mountain glaciers causes moraine dams to fail,leading to glacial-lake outburst floods(GLOFs).Subsequent glacier retreat reduces river flows an

145、d worsens downstream droughts.Increased freshwater from land ice enters the oceans and disrupts global ocean circulation and salinity.Temperature scenarioGreenland ice sheet collapse*West Antarctic ice sheet collapseEast Antarctic ice sheet collapseExtrapolar glacier retreat Scientific confidenceRel

146、ated Earth system tipping pointsWhere does it occur?0.8 3.0C1.0 3.0C5.0C1.5 3.0CHighHighMediumMediumGreenland ice sheet lossExtrapolar glacier loss(Alps&Caucasus)Extrapolar glacier loss(Hindu Kush Himalaya)Extrapolar glacier loss(Rockies)Extrapolar glacier loss(Andes)West Antarcticice sheet lossEast

147、 Antarctic ice sheet lossShocking scientific factSome of the latest estimates suggest that 630 million people may live on land below projected annual flood levels for the end of the century.The displacement of so many people could lead to a global security crisis,with increased competition for fresh

148、water,land and other resources.What could happen?Accelerated sea level riseIPCC sea level rise projections by 2100:0.28 0.55 metres(RCP2.6*scenario).0.61 1.10 metres(RCP8.5 scenario).These do not account for the full range of possible ice sheet instabilities,which could add centimetres to metres of

149、sea level rise by 2100 and multi-metre increases towards 2300.*RCP2.6 is the IPCCs lowest-emissions/warming scenario;RCP8.5 is the highest-emissions/warming scenario.*See endnote on Greenland ice sheet.38Socio-economic consequences1 Sea level rise acts as a threat amplifier for extreme weather event

150、s in coastal areas.It could damage coastal infrastructure,compromise port operations,contaminate farmland and groundwater,and lead to increased coastal erosion.Sea level rise is among the most costly and permanent future consequences of climate change.2 Latest estimates suggest that 630 million peop

151、le may live on land below projected annual flood levels for the end of the century.This could lead to displacement,loss of property and other socio-economic challenges.3 Loss of glaciers will lead to greater water stress during droughts,with implications for downstream communities municipal,industri

152、al and agricultural sectors that rely on those water sources.4 Glacial-lake outburst floods destroy settlements and infrastructure in mountain regions,including hydroelectric power installations and transport links.Increased GHGsGlobal warmingLand ice lossIce sheet destabilizationIncreased influx of

153、 freshwater from melting iceMountain glaciers meltingSea level riseOcean circulation disruptionCoastal erosionChanges in rainfall patternsNetwork diagramIncreased water levels and fluvial floods The majority of Himalayan glaciers are losing mass at an accelerating rate.Peak water is likely to be rea

154、ched in the Ganges,Indus,Tarim and Brahmaputra rivers by 2050.The frequency and magnitude of glacial lake outburst floods(GLOFs)are expected to increase in the future due to climate change.Breaches of ice or moraine dams;flooding of glacier-fed riversProgressive reduction in water volumes of glacier

155、-fed riversLand iceRelated climate hazardsFluvial floodingWater stressCoastal floodingFIGURE 8|LANDSCAPE BRIEFBusiness on the Edge:Building Industry Resilience to Climate Hazards19Shocking scientific factRegardless of emissions scenarios,there is likely tobe at least one sea-ice-free summer in the A

156、rctic before 2050.What is it?Sea ice is frozen sea waterthat floats on the surface of the polar oceans.It reflects solar radiation and moderates heat exchange to maintain Earths temperature balance.It also provides habitat for marine organisms fostering biodiversity and affects ocean circulation and

157、 carbon and nutrient cycles.As air and ocean temperatures rise,sea ice thins,covers a smaller extent and becomesmore vulnerable to storms and waves.What are the implications?Decreased sea ice extent creates a feedback loop that amplifies warming at the poles,due to darker water absorbing a greater a

158、mount of solar radiation.Amplified Arctic warming destabilizes the polar jet stream which could lead to increased temperature extremes at lower latitudes.Changes in polar ecosystems threaten livelihoods of Arctic people and unique species(e.g.seals,walrus,polar bears)that depend on sea ice as a prim

159、ary habitat.Temperature scenarioArctic summer sea ice collapse*Arctic winter sea ice collapse Barents Sea ice abrupt loss*Scientific confidenceRelated Earth system tipping pointsWhere does it occur?1.5 2.0C6.0C1.5 1.7CHighHighLowSea iceRelated climate hazardsBarents sea ice abrupt lossArctic winter

160、sea ice collapseArctic summer sea ice collapseIce-free summer in the Arctic Regardless of future emissions,there is likely to be at least one sea-ice-free summer in the Arctic by 2050.The Arctic Ocean is expected to remain ice-covered in winter throughout the century,but the ice will become thinner

161、and more vulnerable to storms and waves.*Not expected to show tipping behaviour but can trigger tipping events in the ocean-atmosphere-cryosphere system.Socio-economic consequences1 Thawing Arctic permafrost and melting sea ice will cause extra economic losses.2 Amplified Arctic warming could alter

162、the jet stream and increase the frequency and intensity of extreme weather events,including heatwaves in North America and cold winter extremes in the northern continents.These changes may lead to more persistent and prolonged adverse weather patternsglobally.3 Sea ice loss can have a profound impac

163、t on Indigenous communities in the Arctic,affecting their traditional ways of life and making it harder for them to access food.4 The extent and seasonality of Arctic sea ice determines the viability of shipping routes as well as oil and gas exploration and exploitation.Concerns about associated geo

164、political tensions and conflicts over access to more economic shipping routes and offshore hydrocarbons have been raised.Network diagramContinuation of sea ice declineFuture projections under the IPCCsemission scenarios:assume a continuation of sea ice decline.project an ice-free-year-round Barents

165、Sea by the end of this century.What could happen?Increased GHGsGlobal warmingOcean circulation disruptionSea ice lossDecreased reflection of solar radiationLoss of Arctic speciesAmplified warmingChanges to heat and nutrient distributionExtreme heatDroughtCoastal floodingWildfireFeedback loopFIGURE 9

166、|LANDSCAPE BRIEFBusiness on the Edge:Building Industry Resilience to Climate Hazards20What is it?Deep ocean currents are driven by differences in the density of ocean water.This is controlled by temperature and salinity.The input of freshwater from melting land ice,the reduction in sea ice extent an

167、d the warming of ocean waterall change the density of ocean water,affecting the rate at which deep ocean water circulates.The Labrador-Irminger Seas convection is at particular risk of collapse due to warming polar regions.If global temperatures continue to increase,the Atlantic Meridional Overturni

168、ng Circulation(AMOC)will also be atrisk of collapse,with global implications.What are the implications?Increased frequency and intensity of extreme weather events in Europe.Drop in temperature in northern Europe,but extreme heat elsewhere.Possible disruption of precipitation patterns,which have an i

169、mpact on food productivity(e.g.in India,South America,West Africa).Rising sea levels on the eastern coast of North America,leading to coastal flooding.Temperature scenarioLabrador&Irminger Seas convection collapseAtlantic Meridional Overturning Circulation(AMOC)collapseScientific confidenceRelated E

170、arth system tipping pointsWhere does it occur?1.1 3.8C1.4 8.0CHighLowLabrador&Irminger Seas convection collapseAMOC cessationShocking scientific factWhat could happen?Further currents weakening Under continued high emissions,the AMOC would decline 74%by 22902300,with a 44%likelihood of outright coll

171、apse.This would amplify regional consequences,such as sea level rise,disruption of rainfall patterns,increased storms and temperature drops.Shift of the rainfall zone Major rainfall zones would shift due to AMOC collapse,leading to less rainfall over Europe,North and Central America,North and Centra

172、l Africa and Asia,causing drought conditions.AMOC collapse would return the rain belt to the equator,causing droughts and fires in tropical forests.Socio-economic consequences1 A weak AMOC will not only affect food security but also the livelihoods of communities dependent on these industries.AMOC c

173、ollapse will therefore lead to a substantial reduction in global economic output and exacerbate global economic inequalities.2 Instability of the AMOC would have a huge impact on agriculture,especially in Europe.If the AMOC weakened or collapsed in the coming decade,Europes seasonality would strongl

174、y increase.This,in turn,would lead to harsher winters,and hotter and drier summers.This shift in Europes climate is projected to reduce agricultural productivity and render most land unsuitable for arable farming.3 In the tropics,collapse of the AMOC would cause a shift of the monsoon rains in centr

175、al/southern America,West Africa,South Asia and India.This will have major impacts on vegetation productivity,including crop productivity,with significant decreases in these regions.Increased GHGsGlobal warmingLoss of underwater speciesChanges to heat,water and nutrient distributionIncreased influx o

176、f freshwater from melting iceDisruption of precipitation patternsSea level riseCoastal erosionNetwork diagramOcean circulationRelated climate hazardsExtreme heatDroughtWildfireCoastal floodingFluvial floodingWater stressThe circulation of the Atlantic Ocean is heading towards a tipping point:AMOC ha

177、s declined 15%since 1950 and is in its weakest state in more than a millennium it has the potential to collapse,with catastrophic consequences.Sea ice lossDisruption of Atlantic Ocean circulationLand ice lossIce sheet destabilizationOcean warmingFIGURE 10|LANDSCAPE BRIEFBusiness on the Edge:Building

178、 Industry Resilience to Climate Hazards21Shocking scientific factApproximately one quarter of all marine species depend on coral reefs in some way,making these ecosystems cornerstones of marine biodiversity.What is it?Coral reefs are underwater ecosystems,which serve asnatural barriers against storm

179、 surges and extreme wave events.Reefs are threatened by multiple stressors at a range of scales.Local human impacts on reefs include overfishing and destructive fishing,nutrient pollution and urban runoff,and coastal development.On a global scale,climate change threatens coral reefs via marine heatw

180、aves(which cause coral bleaching),tropical storms(which damage coral structure)and ocean acidification(which reduces coral growth).Ocean warming has already triggered multiple global coral bleaching events and it is estimated that 50%of coral cover has already been lost.What are the implications?Los

181、s of coral reef 3D structure could lead to increased coastal erosion and damage from tropical storms,particularly as sea levels rise.The loss of reef-building corals could lead to the collapse of marine ecosystems,significantly impacting food security.Temperature scenarioWarm water coral reef die-of

182、fScientific confidenceRelated Earth system tipping pointsWhere does it occur?1.0 1.5CHighWarm water coral reef die-offWarm water coral reef die-offWarm water coral reef die-offWhat could happen?Severe coral reef loss At 1.5C of warming 99%of the worlds reefs will experience heatwaves that are too fr

183、equent for them to recover from.70%90%loss of tropical and subtropical coral reefs at 1.5C.Near total coral reef loss at 2C.Flooding risk amplification Future sea level rise paired with coral reef loss will amplify flooding risks.By 2100,land flooded under a 100-year storm event increases by 64%unde

184、r continued high emissions with no reef loss.In the same scenario with a 1m loss in reefs,land flooded increases by 116%.Coral reefsRelated climate hazardsCoastal floodingSocio-economic consequences1 One billion people globally live within 100km of a coral reef and depend on coral reefs for their fo

185、od and livelihoods.This includes one quarter of small-scale fishers globally.2 Shorelines would be vulnerable to erosion,while rising sea levels would push coast-dwelling communities out of their homes.3 From the Great Barrier Reef to the Caribbean Sea,coral reefs attract tourists to over 100 countr

186、ies and territories worldwide.Coral reef tourism is estimated to generate$36 billion in economic revenue per year,from both on-reef(e.g.diving)and reef-adjacent activities(e.g.hotel stays).Each hectare of coral reef habitat also provides an average of$350,000 in ecosystem services per year.4 By rese

187、arching corals natural chemical defences,scientists are able to develop medicines to treat all sorts of human diseases,from cancer and arthritis to Alzheimers and heart disease.Network diagramIncreased GHGsGlobal warmingElevated sea temperaturesLoss of underwater speciesSpread of coral diseasesCoral

188、 bleachingCoral reef die-offLoss of coastal protectionMore powerful storm surges and wavesBreaking or displacing coral coloniesOcean acidificationHindering coral calcification and growthFIGURE 11|LANDSCAPE BRIEFBusiness on the Edge:Building Industry Resilience to Climate Hazards22What is it?Permafro

189、st is named after permanently frozen land.It is ground that remains completely frozen(0C or less)for at least two years in a row.Itaccounts for nearly half of all organic carbon stored within the planets soil.Arctic permafrost is a home to 5 million inhabitants.As the climate warms permafrost begins

190、 to thaw,resulting in number of socio-economic consequences.What are the implications?When permafrost begins to thaw,carbon dioxide andmethane are released into the atmosphere.This could further speed up global warming and permafrost thawing.Thawing permafrost causes softening of the frozen landand

191、its erosion.This eventually causes the ground to move,leading to slumping,landslides and damage to local infrastructure.Ancient bacteria and viruses,as well as toxic waste hidden in the ice and soil,are released when permafrost thaws.These newly-unfrozen microbes could unleash major disease outbreak

192、s.Temperature scenarioBoreal permafrost abrupt thawBoreal permafrost collapseScientific confidenceRelated Earth system tipping pointsWhere does it occur?1.0 2.3C3.0 6.0CMediumLowBoreal permafrost abrupt thawBoreal permafrost abrupt thawShocking scientific factPermafrost emissions could consume 25-40

193、%of our remaining carbon budget within the next 80-100 years.What could happen?Loss of near surface permafrost High emissions scenario leads to the cumulative release of tens to hundreds of billions of tonnes of permafrost carbon as CO2 and methane to the atmosphere by 2100.If the climate were stabi

194、lized at 2C warming,40%of near-surface permafrost area would be lost.However,stabilizing the climate at 1.5Cwarming would save approx.2 million km2 of permafrost.Damage to infrastructure An estimated 70%of infrastructure in the Arctic,particularly oil&gas-related,is located in areas where thawing of

195、 permafrost is expected to intensify by 2050.Risk of damage to infrastructure is especially pronounced in Russia,which produces 80%of its natural gas in the Arctic.PermafrostRelated climate hazardsWater stressWildfireExtreme heatCoastal floodingSocio-economic consequences1 Thawing permafrost has led

196、 to slumping ground,which damages infrastructure.2 Toxic industrial contaminants,which include lead,mercury and arsenic,could be released from thawing permafrost.3 Permafrost thaw is a challenge for many of the 907 Arctic communities living on permafrost.Impacts include destabilization of infrastruc

197、ture,reduction in food accessibility and declining human health.4 A 2015 study found that greenhouse gas emissions from thawing Arctic permafrost could result in an additional$43 trillion in economic impacts by 2200.5 Permafrost is a potential reservoir of pathogens.Permafrost thaw could lead to the

198、 release of viruses and microorganisms that may be harmful to humans,animals and plants.Network diagramIncreased GHGsGlobal warmingLand slumpsToxic waste releaseCoastal erosionFrozen viruses release(zombie viruses)GHG releasePermafrost thawFeedback loopFIGURE 12|LANDSCAPE BRIEFBusiness on the Edge:B

199、uilding Industry Resilience to Climate Hazards232.3 Over 20 other Earth systems could be destabilized The demise of these five Earth systems will have a knock-on effect on over 20 others.For instance,three Earth systems become vulnerable to tipping at 1.5-2.0C of 10-year average warming:boreal fores

200、ts,mangroves and seagrass meadows,and the Amazon rainforest.39 Boreal forestsBoreal forests form a ring around the North Pole,just south of the Arctic circle.As up to 80%of boreal forests are underlaid with permafrost,40 they are particularly prone to the effects of permafrost thaw,drought and fires

201、.Boreal wildfires are also a driver of permafrost thaw.41 Some fires burn through the year.Known as“zombie fires”they emit carbon from boreal forests in the summer and go underground in winter,thawing permafrost.42 Mangroves and seagrass meadowsMangroves and seagrass meadows are breeding and nursery

202、 grounds for sea life.They trap organic matter,preventing its decomposition and allowing for the long-term storage of carbon in the ocean.Their health is compromised by rising ocean temperatures.In some regions,the health of their ecosystems is also dependent on coral reefs.43Amazon rainforestRisks

203、to Earth systems do not only come from higher temperatures.For example,the savannization of the Amazon rainforest is likely to be triggered by the compound impacts of both global heating and deforestation.As outlined above,the Amazons future is also contingent on the positioning of the tropical rain

204、 belt which could shift towards the equator due to disruption of the Atlantic Oceans circulation systems.2.4 Economic models fail to encompass the full scope of Earth system tipping point risksEarth systems operate on a planetary scale and their degradation is unfolding at unprecedented rates.This m

205、akes it difficult to estimate precisely the full scope of shifts and their reverberating impacts.44 Some scientific models only account for temperature impacts,not volatility of temperatures or reinforcing impacts such as nature loss.45 Most models are not sufficiently able to incorporate the non-li

206、near processes and existential shocks that are characteristic of Earth system tipping points.46 Many do not account for the latest peer-reviewed observational science,which reveals worrying trends that standard models fail to predict.47Meanwhile,economic models often fail to accurately encompass the

207、 full scope of climate risks.48 They tend to focus primarily on the most likely climate scenarios and exclude significant parts of the economy from their estimates,thereby underestimating the potential for systemic shocks.49 This exclusion leads to a disconnect between the models and the real-world

208、economic risks posed by Earth system tipping points.50Despite the shortcomings in scientific and economic models,it is clear that impacts are likely to accelerate.This places additional responsibility on business leaders to move beyond rapid decarbonization.Successful business leaders will increasin

209、gly need to implement appropriate risk management and resilience strategies whilst investing in nature and the foresight tools that enable an evidence-based and real-time response to hazards as they emerge.Those ahead of the game will have a unique and long-lasting comparative advantage.As up to 80%

210、of boreal forests are underlaid with permafrost,they are particularly prone to the effects of permafrost thaw,drought and fires.Many models do not account for the latest peer-reviewed observational science,which reveals worrying trends that standard models fail to predict.Business on the Edge:Buildi

211、ng Industry Resilience to Climate Hazards24How climate hazards threaten socio-economic systems3Systems highly impacted by the climate crisis include agriculture,built environment,technology,health and financial services.Business on the Edge:Building Industry Resilience to Climate Hazards253.1 Five s

212、ocio-economic systems:building blocks ofa prosperous and inclusive worldThis section illustrates the direct consequences of seven climate hazards across five socio-economic systems that businesses globally contribute to and depend on.The consequences are clearly visible in the value chain of any bus

213、iness engaged in each of these systems and extend beyond fixed asset losses.The five socio-economic systems are:Agriculture,food and beverages Built environment Technology Health and well-being Financial servicesThe societal implications of climate hazards are far-reaching,affecting economies,busine

214、sses and communities on a global scale.Climate hazards disrupt operations and essential services,damage infrastructure,increase costs across industries,trigger jobs and income losses,and threaten workforce health and productivity.These disruptions extend beyond businesses,undermining societal well-b

215、eing by causing direct physical health impacts and jeopardizing essential services such as healthcare,housing,food and water.The mental health toll is significant,as communities face the stress of environmental instability,displacement and the uncertainty of future climate risks.As ecosystems degrad

216、e and climate risks escalate,social inequalities widen,with marginalized communities often facing the worst impacts.The compounded effects of climate hazards make it clear that business resilience and long-term economic prosperity are deeply intertwined with the health and well-being of the communit

217、ies in which they operate.Businesses large and small will face growing consequences from climate hazards in the form of supply chain costs and reduced financial performance,economic instability,and risks to societal well-being and cohesion.A recent study quantifying the impact of global heatwaves on

218、 health,labour productivity and other indirect supply chain losses,including crop failures,projected net economic losses of between$3.75 and$24.7 trillion by 2060,depending on the emissions scenario studied.51Extreme heat is expected to lead to decreased worker productivity in heat-stressed zones,wi

219、th certain occupations especially vulnerable due to outdoor exposure and significant physical exertion for example,growing and harvesting crops,hauling and building with heavy materials for construction,and unloading crates for shipping.52 In 2022,heat exposure resulted in an estimated 490 billion l

220、ost labour hours,nearly 42%higher than losses in the 1990s.53 This corresponded to$863 billion in potential loss of income,with agriculture most severely affected.54 The World Economic Forum estimates that heatwaves alone will depress productivity by$7.1 trillion by 2050.55Investing in climate adapt

221、ation not only protects business assets but also helps sustain the societal systems that underpin stable and thriving economies.The following sections in this chapter provide high-level recommendations for each of the five socio-economic systems,building on the framework introduced in the Forums Jan

222、uary 2023 white paper,Accelerating Business Action on Climate Change Adaptation.Climate hazards disrupt operations and essential services,damage infrastructure,increase costs across industries,trigger jobs and income losses,and threaten workforce health and productivity.26Business on the Edge:Buildi

223、ng Industry Resilience to Climate HazardsData overview agriculture,food and beverages systemBOX 33.2 Agriculture,food and beverages socio-economic systemGlobal food productionIncreased 54%from 2000-2021 and grew 29%faster than the number of people in the world.56Single largest cause of biodiversity

224、loss on land.Major driver of greenhouse gas emissions.Food systemsCause 80%of deforestation.57Use around half of all habitable land and consume over 70%of available fresh water.Drive one-third of all human-made greenhouse gases58 of which half attributed to livestock and fisheries.59Global agrifood

225、marketEmploys 40%of the worlds workers.Accounts for 12%of global GDP.60Projected to be worth$12 trillion by 2027.61Drought weakens crop yields andsupply chainsDroughts typically impact crop yields more severely than other climate hazards,due to their direct effect on soil moisture and plant health.O

226、ver 34%of crop and livestock production losses in low and middle-income countries can be traced to drought,costing the sector$37 billion overall.62 Moreover,prolonged lack of water can hinder global supply chains.The Panama Canal,crucial for 5%of global maritime trade,experienced more than a 30%decr

227、ease in rainwater during the rainy season of 2023 compared to the usual average.63 Daily access restrictions have resulted in delays that particularly affect perishable goods,causing food losses and driving material commodity priceinflation.Tropical cyclones cause crop andlivestock lossesHigh winds

228、and flooding from tropical cyclones cause crop and livestock losses and the destruction of food processing and distribution facilities.Soil degradation,higher insurance premiums and insufficient resourcing of disaster responses all damage food security and livelihoods.Extreme storms cost billions of

229、 dollars in crop and livestock losses globally.64 Cyclones can also damage energy grids and water systems.Power shortages at processing plants after a storm hit Texas in 2021 forced dairies to dump 14 million gallons of milk,causing a breakdown in supply.65Extreme heat affects cold chains,staples an

230、d fishExtreme heat impacts the continuity and effectiveness of cold chains,66 increasing energy costs and food waste.In India,where only 6%of food is managed through cold chains,up to 35%of harvested food is lost due to inadequate storage and refrigeration.67 Globally,failure to provide appropriate

231、temperature conditions results in the loss of 12-13%of the food supply,valued at approximately$379 billion annually68 enough to feed around 1 billion people;more than the 750 million suffering from hunger in the world today.69,70Warming temperatures diminish the efficiency of key staple foods,such a

232、s rice a vital carbohydrate source for over half the global population which can lose yield with a night-time temperature increase.71 Similarly,higher ocean temperatures are harming fish populations,causing shifts in species distribution and reproductive challenges,further undermining food security.

233、By 2050,ensuring access to nutritious and affordable diets will be a major challenge,as extreme weather events heighten the risks of malnutrition72 and exacerbate social inequalities.Business on the Edge:Building Industry Resilience to Climate Hazards27Consequences of climate hazards to the agricult

234、ure,food and beverages systemFIGURE 13Combined climate impacts on agriculture and food securityThe combined impacts of droughts,floods and heatwaves damage crops,reduce yields and disrupt the growing season.These hazards cause food waste and insecurity as well as economic losses,driving up prices an

235、d disrupting supply chains worldwide.In Honduras in 2020,a combination of drought,excessive rainfall and flooding caused catastrophic crop losses with a 50%drop in agricultural output.This led to increased food insecurity and compelled many people to migrate within and outside the country.73Due to i

236、ts significance and scale,the agriculture,food and beverages system has great potential to influence sustainable development on many levels,if it is resilient and effectively adapted to climate hazards.Supporting resilient food systems can help eliminate hunger,regional nutrient deficiencies and nat

237、ure degradation.Annual financial losses caused by climate hazards on agricultural land in one of the worlds largest food producers,Brazil,could reach$23.3 billion by 2035,rising to$42.8 billion in 2055 under a high emissions scenario.74Extreme heatWildfireTropical cycloneCoastal floodingFluvial floo

238、dingWater stressDroughtSourcingFormulation,processing&packagingLogistics&distributionSales&consumer preferencesLand maintenance for crops,horticulture,cattle farming,animal welfare and productivity,fisheries and water sourcingIndustrial food and beverage formulation,processing and packagingTransport

239、ation models and infrastructureRetail and consumer choiceDominant hazards Crop lossesDamage to production infrastructure&machineryCold chain disruptions&food lossesDamage of physical assetsLivestock exhaustion&lossesWater shortages&treatment interruptionsLivestock exhaustion&lossesReduced access to

240、foodFish&seafood lossesHigher energy use for coolingTransport disruptionReduced nutritional qualitySoil degradationSupply chain delaysReduced labour productivityIncreased toxins in perishable goodsThreats to worker safety,health&well-beingFood wasteReduced pesticide effectivenessChanges in formulati

241、on due toreduced availability ofingredients,materials&resourcesDeterioration of packaging qualityWater scarcityIncreased demand for beveragesFeed shortages for livestockChanging consumer preferencesBusiness on the Edge:Building Industry Resilience to Climate Hazards28Recommendations to build industr

242、y and societal resilience in the agriculture,food and beverages systemThe following recommendations give agriculture,food and beverages companies an array of solutions where they can take the lead and manage growing risks from climate hazards in agriculture,food and beverages supply chains:Integrate

243、 local business continuity and crisis management planning to mitigate exposure to extreme weather events Develop five-and 10-year strategies for locations and commodities at high risk from climate hazards,including operational resilience and recovery planning at key processing and production facilit

244、ies.Invest in new agriculture techniques,climate-resilient crop variations,diversifying supply chains,securing physical infrastructure and mitigating water stress.Reinvent core products and packaging for flexible ingredient and raw material formulations Rethink product design to allow for flexible s

245、ourcing of raw materials and new formulations to incorporate more resilient and climate-adapted ingredients.Engage with consumers to raise awareness and promote sustainable consumption preferences Shape demand by engaging with consumers tocreate new markets for innovative,sustainable and climate-sma

246、rt products ataffordable price points.Collaborate across the value chain to improve productivity per hectare and water efficiency Agriculture systems need investment in regenerative practices to increase capacity without consuming more land and to build long-term resilience to climate hazards.Depend

247、ing on the location and specific needs,these interventions could include topsoil regeneration,enhancing local biodiversity,intercropping and agroecology.Additional practices like minimizing soil disturbance,rotational grazing and cover cropping are crucial to restoring soil structure and vitality.By

248、 investing in regenerative methods,companies not only protect their supply chains but also enhance ecosystem services,sequester carbon and contribute to biodiversity conservation that builds societal resilience.Business will need to work with local government and financial institutions to de-risk th

249、e transition of farming communities to new production methods.Adaptation case studies in the agriculture,food and beverages systemFIGURE 14Sources:Unilever,Cargill(press release),Cargill(website),Bayer,Louis Dreyfus Company.1 UnileverUnilever expects typhoons and floods to disrupt operations,so they

250、 partnered with renewable energy developers to install solar plants at six Indian factories.2 CargillCargill is working to help scale and support farmer adoption of regenerative agriculture,with a vision of making regenerative agriculture common place across the companys global supply chains.This in

251、cludes a commitment to advancing regenerative agriculture practices across 10 million acres of North American agricultural land by 2030.Regenerative farming practices focus on building resilience and delivering positive outcomes such as improved soil health and water quality,enhanced biodiversity,an

252、d increased productivity.3 BayerBayer developed the Arize hybrid rice variety,which is disease-resistant,high-yielding,and more tolerant to salty water.This innovation helps farmers in Vietnams Mekong Delta protect their rice harvests from reduced rainfall and rising sea levels pushing saltwater fur

253、ther inland.They build strong partnerships with governments,foundations,institutes and NGOs to address rice production challenges with innovative and sustainable solutions.The company is also working on developing new parental lines with greater tolerance to extreme temperatures.4 Louis Dreyfus Comp

254、any Louis Dreyfus Company(LDC)grants LDC Climate Resilience Prize of CHF 100,000 cash award for startups enhancing climate resilience in agriculture and food value chains.LDC aims to support sustainable solutions through its corporate venture capital program which invests in early-stage companies wi

255、th transformative products and technologies.Business on the Edge:Building Industry Resilience to Climate Hazards293.3 Built environment socio-economic systemData overview built environment systemBOX 4Cities support over 80%of global GDP and house 56%of the global population.75Physical investment and

256、 economic activities in cities account for 70%of global GHG emissions.76Buildings and transport are among the largest emitters.77By 2050,built environments are set to double in size.14 of the worlds 17 largest cities are coastal.Built environments are predicted to double in size by the middle of thi

257、s century and climate-driven migration will further intensify urbanization.78 With such high demand and increasing pressure on resources,79 cities will struggle to provide adequate living conditions for expanding and shifting populations.Climate hazards threaten the construction,use and lifetime val

258、ue of built environments.As extreme weather events such as tropical cyclones,wildfires and floods intensify,the costs to build,maintain and recover infrastructure rise.80 These hazards have direct financial consequences,including supply chain disruption and material scarcity,declining net asset valu

259、es,increased costs,revenue losses and higher capital expenses,all of which undermine long-term returns.Consequences of climate hazards to the built environment systemFIGURE 15Extreme heatWildfireTropical cycloneCoastal floodingFluvial floodingWater stressDroughtMaterials,manufacturing&logisticsConst

260、ructionUsage,maintenance&renovationInsurance&reinsurance,financingEnd of useMaterials extraction,processing and production;collaboration with suppliers,equipment arrangementConstruction processUsage,maintenance and renovationPurchasing insurance and acquiring fundsReuse,redesign,recycling,incinerati

261、on,landfillDominant hazards Disturbance of raw materials extractionSupply chain&logistics delaysPhysical damage to property&infrastructureReduced insurance coverage or refusal to insureIncreased risk of damage&collapseRaw materials scarcityDirect damages to equipment&construction sitePower outages H

262、igher insurance premiumsHigher waste-management costsDisruption of raw materials processingIncreased risk of construction disasterIncreased energy demand&inefficiencyReduced funds Transportation disruption due to physical obstaclesImpaired performance of building materialsHigh maintenance frequency&

263、repair costsHigher interest ratesThreat to workers safety,health&well-beingThreat to workers safety,health&well-beingThreat to residents safety,health&well-beingIncreased risk of default or insolvencySupply chain&logistics delaysProperty devaluationBusiness on the Edge:Building Industry Resilience t

264、o Climate Hazards30Tropical cyclones and floods threaten infrastructureTropical cyclones and flooding pose a significant and growing threat to life and infrastructure.High winds from cyclones can destroy buildings,kill thousands and cause massive economic losses.Hurricane Katrina,one of the most dev

265、astating US disasters,led to nearly 2,000 deaths and the destruction of over 200,000 homes.81 Elevated rainfall can trigger fluvial and pluvial flooding,82 damaging property,cutting off utilities and even causing hidden landslides.The after-effects,such as weakened foundations and costly repairs,can

266、 push communities into financial crises long after the water recedes.83 Annual financial losses accruing to retail properties from climate hazards across China could reach$21 billion by 2035,rising to$33.7 billion by 2055 under a high emissions scenario.84Coastal hazards threaten 14 of the worlds la

267、rgest citiesCoastal cities are particularly vulnerable to climate hazards.Fourteen of the worlds 17 largest cities are coastal,85 making them susceptible to rising sea levels,intense storms,storm surges and erosion.86 Additionally,continued seaside development weakens natural defences such as mangro

268、ves and coral reefs,exacerbating the risk from extreme weather.87Extreme heat will affect eight times more urban residents by 2050Urban areas face escalating risks from extreme heat.Urban heat islands,caused by heat-absorbing surfaces,elevate temperatures in cities and other built-up areas.88 The nu

269、mber of cities experiencing extreme heat will nearly triple,exposing eight times more people to the impacts.89 By 2050,1.6 billion urban residents will be more vulnerable to heat-related illnesses.90 Furthermore,high temperatures can reduce the efficiency of power transmission lines and transformers

270、,leading to power outages.91 Extreme heat can cause roads to buckle,rail lines to warp and runways to soften or melt.92 It can also cause bridge materials to expand,leading to dangerous conditions and transport disruptions.93Climate hazards drive up cost of insuranceClimate hazards are driving up th

271、e cost and availability of insurance and financing.Extreme weather events can reduce the availability of funds or lead to higher borrowing costs due to increased risk of default or insolvency.94 Insurance becomes less accessible and more expensive,with insurers withdrawing from high-risk areas.95 Th

272、is trend is creating“insurance deserts”,96 further threatening the economic stability of affected communities.97Business on the Edge:Building Industry Resilience to Climate Hazards31Recommendations to build industry and societal resilience in the built environment systemThe following recommendations

273、 give built environment companies an array of solutions where they can take the lead and manage growing risks from climate hazards in the built environment:Integrate local climate risk analysis into capital maintenance and investment decisions,while supporting societal transitions Develop a process

274、and a partner ecosystem to map climate risks at the asset level.Invest in the necessary nature and climate expertise,data,skills and technology to support better decision-making and maintain the expected return on invested capital in the face of evolving local risks.In the event that investments in

275、high-risk locations no longer remain viable,allow for long-term planning with local and regional stakeholders and safeguards to ensure a just and fair transition for communities mostaffected.Invest in resilient materials design and nature-based solutions to withstand and maintain efficiency through

276、extreme weather Create building,factory and asset designs thatcan endure extreme weather events.Invest research and development into more resilient raw materials that support energy and water efficiency,to help avoid operational shocks and overheads.Avoid further habitat conversion and leverage natu

277、re-based solutions to contribute to natural resilience against hazards such as coastal and fluvial flooding.Foster cross-sector collaboration on mutual recovery programmes to build regional resilience Establish mutual recovery and assistance programmes with operators of comparable infrastructure fac

278、ing common climate threats.Form alliances to boost shared resources,expertise and recovery capabilities in the event of extreme weather or natural disasters,reducing downtime and expediting recovery.Adaptation case studies in the built environment systemFIGURE 16Sources:World Economic Forum,CEMEX,Ex

279、elon.1 HitachiHitachi collaborates with Japanese local governments to develop smart sewer systems to prevent flooding during periods of intense rainfall.Using AI,they automate decisions for pumping stations that manage rainwater flow into rivers.The AI predicts inflow amounts based on rainfall data

280、and pipe water levels,then creates operation plans for rainwater pumps.2 CEMEXCEMEX promoted their permeable concrete PERVIA for infrastructure resilient to extreme weather events.Partnering with the Water Utility Company in Bogota,PERVIA was applied for pedestrian paths near wetlands prone to flood

281、ing.Digital simulations and on-site tests demonstrated its effectiveness in permeating rainwater while providing a durable surface.This initiative led to replacing asphalt with permeable concrete,securing benefits like flood protection and recreational use,and cost savings.3 ExelonExelon is enhancin

282、g adaptation planning to build resilience against changing weather patterns by investing in maintaining infrastructure,such as poles and vegetation trimming,and conducts storm drills.They participate in mutual assistance programmes for quicker power restoration post major storms.Business on the Edge

283、:Building Industry Resilience to Climate Hazards323.4 Technology socio-economic systemLithium and copper extraction consumed over 65%of local water supply in Salar de Atacama,Chile,depriving Indigenous farming communities of resources on which their livelihoods depended.Demand for computing power is

284、 doubling every three to four months.In 2027,global AI demand could lead to withdrawal of 4.2-6.6 billion cubic metres of water about half UKs annual withdrawal.70%of critical mineral extraction may be exposed to droughts by 2050.Global market for AI expected to expand by 169%in the next three years

285、,with AI data centre capacity growing at 40+%a year.Majority of mines and production sites for lithium and copper are concentrated in areas facing water stress(50%and 80%,respectively).Data overview technology systemBOX 5Telecommunications,internet and digital devices have changed the way the world

286、works and interacts.Today,there are more mobile phones than people98 and two-thirds of the worlds population has access to the internet,93%of whom use social media every month.99 As global living standards rise and innovation continues at pace,a continued surge in demand for devices and connectivity

287、 is likely.However,communications and digital technologies are resource-and fixed asset-intensive to develop and operate.With innovations such as generative AI,the demand for computing power is doubling every three to four months.100Due to the reliance on fixed assets and complex networks,climate ha

288、zards threaten the stability and continuity of the technology socio-economic system.Hardware manufacturers,telecommunications providers and data centre operators rely on capital-intensive fixed assets that can be difficult to relocate.These facilities are integral to corporate operations,yet they ar

289、e highly vulnerable to climate hazards such as floods,tropical cyclones and extreme heat,which pose risks to service delivery and operational continuity.Heatwaves themselves have a profound impact on the lifespan of electronic devices and components as well.For example,cell phones with lithium-ion b

290、atteries stop working above 35C to avoid overheating,while exposure to prolonged extreme temperatures above 30C can cause premature lithium-ion battery degradation,accelerating depleting corrosion reactions.This is particularly important for electric vehicles,as degraded batteries can cause cars to

291、lose up to 20%of theirrange.101Extreme heat and tropical cyclones threaten infrastructure and devicesBusiness on the Edge:Building Industry Resilience to Climate Hazards33Consequences of climate hazards to the technology systemFIGURE 17 The impact of extreme heat on data centres already installed in

292、 London could result in annual financial losses of$472 million by 2035,rising to$695 million by 2055 under a high emissions scenario.102Water stress impacts mining and manufacturingThe technology sector is also exposed to concentrated supply chains for scarce resources.As much as 70%of critical mine

293、ral extraction may be exposed to droughts by 2050.103 The majority of mines and production sites for lithium and copper are concentrated in areas already facing water stress(50%and 80%,respectively).Methods used to mine critical minerals require huge amounts of water for separating,cooling machinery

294、 and controlling dust.A severe drought in Taiwan in 2021 jeopardized nearly two-thirds of the worlds semiconductor manufacturing capacity,leading to increased costs and extended lead times for vital components across various tech sectors.104 Water scarcity will become a threat not only to manufactur

295、ers but to all stakeholders.History demonstrates how conflicts over water resources can disadvantage local communities in places like Chiles Salar de Atacama,where lithium and copper extraction consumed over 65%of the local water supply and deprived local Indigenous farming communities of resources

296、that their livelihoods depended on.105AI data centres drive up water demandThe rapid growth of AI amplifies pressure on clean energy and water sources.Over the next three Extreme heatWildfireTropical cycloneCoastal floodingFluvial floodingWater stressDroughtRaw materials extractionHardware operation

297、sTechnology end-user productsData centres and AIConnectivityMining,extraction and separation of raw metals&minerals and rare earth elementsProduction,assembling and transport of electronic devices,EVs,renewable energy technology,batteries and semi-conductorsElectronic devices,EVs,renewable energy te

298、chnology,batteriesOperation and maintainance of data transfer and storage infrastructureInfrastructure:base transceiver stations(BTS),baseband units(BBU),submarine communication cablesDominant hazards Lack of water for extractionPower outagesOverheating of electronic devicesOverheating of data centr

299、esInfrastructure damageConflicts over water supplyInfrastructure damageReduced battery efficiencyIncreased demand for water for coolingService interruptionsThreats to worker safety,health&well-beingLack of water for productionBattery degradationConflicts over water supplySpills of hazardous wasteLos

300、s of valuable materials from e-wasteCompetition for renewable energy resourcesDanger to hazardous waste-management infrastructure Severe drought in Taiwan in 2021 jeopardized nearly two-thirds of the worlds semiconductor manufacturing capacity,leading to increased costs and extended lead times for v

301、ital components.Business on the Edge:Building Industry Resilience to Climate Hazards34Sources:Huawei,AVEVA,Cisco.years,the global market for AI is expected to expand by 169%,driving AI data centre capacity to grow at over 40%a year.106 This demand for data centres not only increases the need for rel

302、iable and renewable energy but also puts a strain on local water supplies,including potable water.Water is used in data centres both to generate power and as a liquid coolant.In 2021 data centres were already ranked in the top ten water-consuming industrial and commercial sectors of the United State

303、s.107 The largest data centres in development today could use up to 600 million litres of water a year.In 2027,global AI demand could lead to the withdrawal of 4.2-6.6 billion cubic metres of water about half the annual withdrawal of the UnitedKingdom.108The power of AI to accelerate solutions the w

304、orld needs is increasingly clear but competition for limited resources in local communities underscores the need for the technology sector to continue to innovate on efficiency,resilience and adaptation strategies.For example,through energy efficient hardware design,data selection criteria,efficienc

305、ies in AI model training and tuning,new cooling solutions such as immersion or direct-to-chip cooling and water recycling,the resource footprint of AI can be significantly reduced.Recommendations to build industry and societal resilience in the technology systemThe following recommendations give tec

306、hnology businesses an array of solutions where they can take the lead and manage growing risks from climate hazards in the technology system:Conduct end-to-end assessments across the value chain to identify systemic risks from climate hazards Prioritize the development and implementation of energy e

307、fficient infrastructure,such as communications networks and data centres that are also designed to withstand extreme weather conditions.Cloud,AI and internet of things(IoT)technologies can support the industry to develop risk assessments and build their own supply chain resilience to ensure operatio

308、nal continuity and sustainability in the long-term.Partner with technology providers to develop circular business models that reduce pressure on scarce resources Work closely with technology suppliers to create circular business models that prioritize resource efficiency and sustainability.This incl

309、udes establishing reverse logistics for the reuse and recycling of electronic devices and components.Enhance resilience against supply chain disruptions caused by climate hazards,by reducing reliance on scarce resources and creating more decentralized refurbishmentoperations.Invest in and collaborat

310、e on technologies and approaches to enhance community and supply chain resilience Focus on developing and implementing early warning systems and visualization tools to educate and inform societies.By doing so,provide critical information to the communities served by technology,enabling better local

311、preparedness to emerging climatehazards.Adaptation case studies in the technology systemFIGURE 181 HuaweiHuaweis trade-in and recycling initiatives promote sustainability by recycling electronic devices and offering economic benefits to consumers.By the end of 2021,Huaweis global recycling system in

312、cluded 2,000 centres in nearly 50 countries,processing over 8,600 metric tons of e-waste.Huawei extracts raw materials from discarded devices,significantly reducing e-waste and conserving resources.2 AvevaAVEVA is involved in developing circular business models that reduce pressures on scarce resour

313、ces.The company focuses on creating connected data ecosystems for industries like batteries and electric vehicles(EVs),which include reverse logistics and the reuse of components.For example,AVEVAs solutions help manage the lifecycle of EV batteries,from production to recycling,ensuring efficient us

314、e of materials and minimizing waste.3 CiscoThe Cisco Foundation has committed$100 million over 10 years to fund non-profit grants and impact investments in climate solutions.This funding supports innovative projects aimed at building resilient ecosystems,promoting clean energy and advancing sustaina

315、ble infrastructure.Business on the Edge:Building Industry Resilience to Climate Hazards353.5 Health and well-being socio-economic systemGlobal spending on health reached$9.8 trillion in 2021,a new high equivalent to 10.3%of global GDP.109Floods are expected to cause 8.5 million deaths by 2050.Health

316、care systems account for an average 4.6%of global CO2 emissions.110 By 2050,an additional 500 million people may be at risk of exposure to vector-borne diseases.Climate crisis will lead to an additional 14.5 million deaths by 2050 79%in low-and middle-income countries.Risk of damage to hospitals fro

317、m extreme weather events has increased by 41%since 1990.Data overview health and well-being systemBOX 6Climate risks threaten societal health and healthcareHealth and well-being are at the heart of societys ability to prosper and thrive.However,climate hazards pose significant risks to global health

318、care systems,increasing death and disease while exacerbating inequalities.Extreme heat,droughts,tropical cyclones and floods threaten healthcare by damaging infrastructure,disrupting supply chains and raising operational costs.Climate hazards also undermine preventive health by limiting physical act

319、ivity,worsening nutrition and increasing mental health issues,driving up healthcare demands.Additionally,declining biodiversity threatens the discovery of new drugs,with one potential breakthrough lost every two years as natural sources of medicines disappear.111Business on the Edge:Building Industr

320、y Resilience to Climate Hazards36Consequences of climate hazards to the health and well-being systemFIGURE 19Impacts on human healthDominant hazards Respiratory diseasesInfectious diseasesCardiovascular diseasesHeat-related diseasesMalnutritionFatalities&injuriesMental healthExtreme heatWildfireTrop

321、ical cycloneCoastal floodingFluvial floodingWater stressDroughtHealth&well-being service fulfilmentPreventionDiagnosticsTreatmentDominant hazards Vaccine supply chain disruptionsChallenges to sustain the cold chainMedical devices supply chain disruptionsChallenges to sustain the cold chainHigher ope

322、rating costs of facilitiesIncreased asset management costsDecreased vaccine potencyReduced quantity&quality of cropsMedical devices lifespan&functionality shortagesIncreased energy demand Overwhelmed response capacityMedicine production delays&shortagesStorage disruptions due to power outagesFood su

323、pply chain disruptionsImpact on sterilization processesDecreased sensor reliability of wearable devicesEquipment failure due to power outagesDecreased medicine efficacyDecreased personal investment in physical&mental healthEquipment disruptions due to power outagesReduced test result accuracy Cancel

324、lation of surgeriesDisruptions in raw materials sourcingInfrastructure damage leading to increased asset management&maintenance costs,repairs&retrofits on fixed assetsThreat to workers safety,health&well-being,resulting in staff shortages&service disruptionsBusiness on the Edge:Building Industry Res

325、ilience to Climate Hazards37Extreme weather and flooding impact lives and infrastructureExtreme weather events pose a fundamental direct threat to human health,disproportionately impacting the most vulnerable populations.It is estimated that the climate crisis will lead to an additional 14.5 million

326、 deaths by 2050,112 79%of which will be in low-and middle-income countries.113 Floods alone are expected to cause 8.5 million deaths by 2050.114 Healthcare infrastructure is particularly vulnerable.Storms and flooding cause significant damage to hospitals,medical devices and capacity for critical pr

327、ocedures.115 Cooling-dependent equipment(such as ventilators,MRI machines or refrigerators for storing biological samples)and cold chains for medication and vaccine storage are highly susceptible to power outages and logistics disruptions.Extreme weather events lead to substantial repair costs and i

328、ncreased healthcare expenses,placing long-lasting pressure on the entire system.Risk of damage to hospitals from extreme weatherevents has already increased by 41%since1990.116 By 2100,1 in 12 hospitals globally will be at risk of a shutdown due to climate hazards,particularly in low-and middle-inco

329、me countries,increasing mortality rates.117 Damage to hospital structures forces evacuations and closures that overstretch other hospitals,lowering the quality of care they can provide and restricting access topreventivehealthcare.118Extreme heat and air pollution exacerbates diseaseElevated tempera

330、tures and changes in precipitation patterns will increase the spread of infectious diseases,such as malaria,dengue,West Nile virus and Zika.119 By 2050,an additional 500 million people may be at risk of exposure to vector-borne diseases.120 Rising temperatures in the poles increase the risk of relea

331、sing pathogens trapped in permafrost for millennia(zombie viruses),raising the likelihood of dangerous outbreaks,which health systems are not prepared to manage.121 Extreme heat and air pollution are also likely to exacerbate cardiovascular,respiratory and mental health diseases.122 This will furthe

332、r strain healthcare systems,disrupt labour productivity and necessitate significant investments in public health.Water risk and cold chain failure affect manufacture of and access to medicinesHealth-related industries,including pharmaceuticals and life sciences,will face escalating production delays

333、,costs and distribution challenges.The pharma industrys reliance on water makes it highly vulnerable to water-related risks and may result in disrupted medicine production.123 Disruptions to cold-chain storage and transit124 may cause active medical ingredients to degrade and become ineffective,125 which not only leads to financial losses for the companies but also undermines the adequate provisio