When Life Gives You Lemons: How to bolster businesses’ capacity for making lemonade out of a changing climate
This is the fifth and final instalment of our blog series on engaging the private sector in National Adaptation Planning (NAP) processes. To learn more, read our guidance note on the subject.
Lemonade is the perfect drink for a hot summer day: cool, crisp and refreshing. And while it can help us beat the summer heat, soaring temperatures in many parts of the world could threaten the future of the core ingredient needed for this beloved summer fixture.
Lemons—as well as other citrus fruits including limes, mandarins and tangerines—are especially vulnerable to heat waves and water stress. In the citrus-growing region of Souss Massa in central Morocco, heat waves in 2015 and 2016 resulted in a 30 to 40 per cent drop in blossoms. And while Morocco’s citrus production recovered by 2018, climate change is expected to increase the frequency of heat waves and severe droughts in the region, posing a threat to local businesses dependent on the crop.
To preserve the growth of these fruits and secure livelihoods across the industry, private sector actors—including farmers and processors—will need to adapt their businesses to a future of increasing temperatures and lengthening drought. This applies, broadly, across a wide range of industries and countries. However, a number of barriers prevent engagement in climate change adaptation policies and programs. Businesses may be unaware of what adaptation options are available to them, or may be unable to receive appropriate financing for responses. Further, there may be regulatory or institutional obstacles preventing their participation. But even if a business is operating with the right information, financing and policy requirements, it may still lack the technical capacities to participate in adaptation.
Capacity building is a key enabling factor to private sector engagement in the NAP process and a fundamental precondition for participation in the Paris Agreement. It is imperative that governments work in tandem with civil society actors, development partners, academia and businesses to identify and address capacity gaps.
The needs can be great. Many private sector actors, for example, may lack the capacity needed to understand or use climate information and to integrate climate risk management into their business operations. Climate risk assessments are especially useful in establishing the business case for adaptation and identifying subsequent actions—though it may be a new skill for many ongoing operations. Businesses and individuals may also require enhanced capacities in the use of technologies and equipment needed to adapt (the adoption of conservation agricultural practices, for example, or the use of drones for pollination). They may also need help to develop the business models needed to bring adaptation products and services to market, or to implement business strategies that can reduce their exposure to climate risk.
Governments—through the NAP process—can help to address these capacity shortfalls through the development and delivery of training or outreach programs. To reach larger audiences and tap into existing private sector networks, targeting business multipliers is a good first step in this endeavour.
Governments can also offer guidance notes or training on ways to measure returns on climate change adaptation investments, including cost-benefit analysis, cost-effectiveness analysis, portfolio risk analysis for financial institutions, and new metrics that measure returns beyond the financial. Further, capacities are often needed to translate these assessments into responsible management plans and concrete actions. Building on risk assessments, governments can ensure that private sector actors have access to adaptation decision-making support tools designed to help them understand and incorporate climate risks into business activities. Many such tools are available.
The Climate Expert Initiative, for example, developed under the Deutsche Gesellschaft für Internationale Zusammenarbeit’s (GIZ’s) Private Sector Adaptation to Climate Change Program, provides a four-step approach for private sector actors conducting climate risk management and planning. The tool is designed specifically for companies, including micro-, small, and medium-sized enterprises (MSMEs), to analyze climate risks and opportunities and generate strong adaptation strategies.
So what does this have to do with the lemons in Morocco? Agrumar Souss, a citrus processing company, was trained to use the Climate Expert Initiative tool to assess its exposure to climate change and identify corresponding business opportunities and pathways. The assessment found that impacts like floods, drought, rising temperatures, and heat waves could have devastating impacts upon its business, drawing examples from the heat waves of 2015 and 2016. Using the tool, Agrumar Souss identified adaptation measures they could take to enhance their climate resilience in response, including using anti-backflow systems to address heavy rains, strengthening windbreaks in company orchards to reduce the trees’ exposure to strong winds, and using irrigation pumps powered by solar energy to address increasing droughts. In doing so, the company is contributing to the country’s overall adaptation aims and goals, as set out in the NAP process.
While there are many barriers to private sector engagement in the NAP process, there are often also corresponding solutions. In order for the NAP process to be successful, it is vital that governments promote four key enabling factors—information sharing, financing, institutional arrangements and capacity building—to get the private sector on board.
Any opinions stated in this blog post are those of the author and do not necessarily reflect the policies or opinions of the NAP Global Network, its funders, or Network participants.
Read the other four parts of this blog series:
Find out more about our work on Financing NAPs.