Ricardo Quarterly

New extremes: How can global economies cope with a changing climate?

20 Mar 2024

A gap is opening between what we know about climate adaptation and how the world is actually responding.

James Davey, Climate Resilience Lead at Ricardo, says recent technical reports highlight the world's slow pace in tackling climate risks.

Early 2024 has seen two milestone publications in the climate risk space, with the first European Climate Risk Assessment (ECRA) and also the Australian National Climate Risk Assessment.

The latter is particularly important, for whilst Europe has been producing advice and guidance on adapting to climate change for some time – including the MIP4Adapt platform which Ricardo supports – Australia has been comparatively slow, at a federal level, in its own responses to the challenge.

A national climate risk assessment is therefore a major step forward. A more detailed second pass assessment will now follow, to analyse 11 priority risks identified in the first pass assessment.

We will be carefully considering the outputs of this deep dive, to ensure our work in Australia is informed by the biggest challenges the country is facing.

More focus on climate impacts is certainly welcome. The bad news, however, is the slow pace of action to actually tackle the climate risks that the world’s major economies have been identifying.

Indeed, the ECRA makes sobering reading. Despite the fact that “Almost all of the selected major risks can reach critical or even catastrophic levels during this century” sufficient action to address these risks is not being taken. “More than half of the major climate risks for Europe identified in this report need more action now.

Meanwhile, in the UK the Climate Change Committee is not holding back in its criticism of the country’s efforts. In 2023 they wrote that “Our assessment has found very limited evidence of the implementation of adaptation at the scale needed to fully prepare for climate risks facing the UK across cities, communities, infrastructure, economy and ecosystems.”.

And now the language is even stronger. “NAP3 (the UK’s 3rd National Adaptation Plan) falls far short of what is needed. NAP3 lacks the pace and ambition to address growing climate risks, which we are already experiencing in the UK.

The ECRA is particularly alarming for those living or working in Southern Europe, where a combination of extreme heat and decreasing rainfall will significantly harm ecosystems and cause economic damage across a range of sectors. Companies operating in this region this must act urgently to identify and address climate risks, not just to their assets, but also to their employees, their customers and their supply chain.

However, the rest of Europe cannot rest on its laurels. Risk from flooding, overheated buildings and increasingly vulnerable supply chains are among those the EEA have identified as applying to the whole of Europe (and successive IPCC reports flag that these risks are truly global).


Not a matter of box-ticking

Inaction is not an option. The advice from scientific bodies in all major economies is clear: there needs to be a rapid move towards adaptation action if the worst impacts of climate change are to be addressed.

Understanding your climate risks is not a box-ticking exercise. It's about ensuring that investments are appropriate for the future world in which they will operate, that they are directed at the right place and with the right technologies.

It is also about avoiding much larger costs to adapt in the future, or worse, deal with the consequences of a flood, storm or wildfire that you didn’t prepare for.

If your business insufficiently prepared for the risks posed by climate change, or simply not sighted on them, then talk to us. Whether your driver is to comply with existing frameworks like TCFD and CSRD, or to start building a resilience strategy as part of your wider climate strategy, or simply to understand the risks climate change poses to your business over the next 10 years, our climate risk assessment and scenario analysis work will put you on the first step of your journey.

Ricardo's specialist teams in water, energy, land & agriculture, mobility and more will also work with you to build resilience that reduces your exposure to extreme events long into the future.

The analysis is stark. The language of the official reports is atypically blunt. We must all – businesses, communities and society in general – now fast-track all the talk and planning into affirmative action.


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