Climate change will dramatically alter global business and trade

Climate change will dramatically alter global business and trade

Climate change will increase water scarcity, alter food production and dramatically change energy supply and migration patterns, according to a new report released today by Lloyd’s, the world’s leading specialist insurance market.

Climate change and security: risks and opportunities for business, launched in conjunction with the International Institute for Strategic Studies (IISS), highlights that these changes will bring threats – and opportunities – for businesses.

Lloyd’s Chief Executive, Dr Richard Ward, said:

“Climate change will change the way we live and work, and will lead to greater competition for scarce resources, such as food and water. This is likely to result in increased economic nationalism and greater global insecurity, which will in turn add to the complexity and cost of doing business.

“Every organisation needs to have a clear understanding of its particular vulnerabilities and have in place a range of mitigation strategies. Their ability to understand what the impacts of climate change are going to be could not only protect them from threats but could also open up new business opportunities.”
IISS Director of Transnational Threats and Political Risks, Nigel Inkster, said:

“Climate change has the potential to act as an accelerator of global instability and has been recognised in both the USA and Europe as an issue affecting national security. Climate change could lead to increased competition between states for ever more scare resources and could in the worst case lead to inter-state conflict.

“Doing business in a world increasingly affected by climate change will present challenges and companies will need to be aware of both the general and specific aspects of climate change likely to affect their particular businesses. But climate change also presents major business opportunities. And the business work has a crucial role to play in both developing new low-carbon technologies and changing consumer behaviour to adopt a low-carbon lifestyle.”
The report explores four key areas through case studies, outlining their impacts on business:

Water - The risk of water-induced conflict with particular reference to competition between India and Pakistan over access to the diminishing supply of water from the Indus river basin.

Food - Issues of food security - looking at the problems facing China, a country with a large population and declining water resources and arable land, and the prospect for tension with Russia, a country with an excess of arable land and water and a declining population.

Energy security - looking specifically at the Arctic, an area rich in oil and gas resources which are becoming increasingly exploitable as the ice-cap melts, and which could be the subject of competing claims by five nations.

Migration - with a particular focus on the problems potentially faced by the USA in the event that climate change drives populations in Mexico to migrate northwards.

While awareness of the threats and opportunities is a key factor, businesses also have an important role to play in encouraging debate and greater understanding of the problem.

“The private sector needs to support research on climate change, and develop and promote new technologies both to mitigate and adapt to climate change. Just as important is encouraging informed public debate, such as our 360 Risk Insight project,” Dr Ward said.

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