Climate Change: Boon or Bane to Consumers and Businesses?

July 31, 2014

“Climate Change: Boon or Bane to Consumers and Businesses?”
Speech of Senator Loren Legarda
General Membership Meeting of the
Philippine Association of National Advertisers
July 31, 2014 – Hard Rock Café, Glorietta 3, Makati City

It is with great pleasure that I take part in this gathering to encourage the private sector to take a more active role in finding solutions to the growing social, economic and development challenges caused by disasters arising from natural hazards made stronger by climate change.

Disaster risks abound. The Philippines, located along a typhoon belt and the so-called Ring of Fire, is no stranger to typhoons, droughts, as well as earthquakes and volcanic eruptions.

We are normally visited by an average of 20 typhoons a year. But in 2013, the country had more than the average with visiting 25 typhoons, the most devastating of which was Yolanda, with unprecedented wind intensity and storm surge that killed more than 6,000 people and caused damages and losses estimated at 571 billion pesos.

The single deadliest disaster in the world in 2012 was typhoon Bopha or Pablo, which killed 1,901 people in Southern Philippines. Our country accounted for 12.5 million victims of disasters caused by natural hazards in 2012 alone or 10.2 percent of total global disaster victims.

Moreover, the increasing frequency and volume of torrential rains from the Southwest Monsoon or Hanging Habagat and its resulting floods have been disrupting our lives and livelihoods and causing enormous and social and economic losses.

All these point to one indisputable fact — climate change has changed the magnitude and frequency of extreme weather and climate events and according to climate scientists, heavy and excessive rainfall is now “the new normal”.

The United Nations estimates that between 80 and 90 percent of all declared disaster today are weather-related. Global exposure to tropical cyclones almost tripled between 1970 and 2010.
Why are we in this situation today?

The 5th Intergovernmental Panel on Climate Change’s (IPCC) 2012 Special Report on Extreme Events revealed that climate change is “unequivocal” and that there is 95 percent likelihood that human activity is the cause of global warming.

Human activity released 545 gigatons of carbon dioxide, the main greenhouse gas, from 1750 to 2011. Of the carbon dioxide emitted, two-thirds was due to the burning of fossil fuels with one-third caused by deforestation and land-use change. In the last decade however, 90 percent of the rise in carbon dioxide levels was due to burning of fossil fuels.

Unless drastic cuts are introduced, global temperatures are projected to increase by 0.3 to 4.8 degrees Celsius by the end of this century.

The ADB says that the increase in carbon dioxide emissions could rise to 10.2 metric tons per capita by the year 2050 if interventions to reverse the trend are not introduced.

Definitely, we need to reverse the trend because the extreme weather events we are experiencing caused by the warming climate threatens our basic human rights—food, health, potable water, decent shelter, and even life itself.

Climate change threatens food security as crop yields are estimated to decline by 19 percent in Asia towards the end of the century. Rice yield in the Philippines is projected to decline by 75 percent. A 4-degree scenario doubles these impacts.

A warmer temperature is also a threat to public health as this could cause the surge of diseases such as dengue, malaria, cholera and typhoid. Communities that have been displaced by disasters will most likely be exposed to health threats.

Further impacts on our economy will be significant. Based on a study by the Asian Development Bank, the country stands to lose six percent of its GDP annually by 2100 if it disregards climate change risks.

However, this same study found that if the Philippines invests 0.5 percent of its GDP by 2020 in climate change adaptation, it can avert losses of up to 4 percent of its GDP by 2100—clearly a short term investment with a long term eight-fold gain.

The private sector is likewise threatened by climate change.

A 2013 report released by the United Nations Environment Programme (UNEP) discusses the impacts of climate change in several industries such as building and construction, finance, food and beverage, tourism and other industries.

Climate change affects operating costs, markets for products and availability of raw materials. Changing weather patterns and extreme weather events could also cause business interruption and infrastructure damage.

But the increasing temperature of the Earth’s atmosphere, while seen as a threat, should actually promote innovativeness in the private sector. Now that people are becoming more aware of climate change and its effects, they are gradually redefining the way they do things. Consumers are starting to be more mindful of environmental protection and now tend to choose environment-friendly products and services.

In the building and construction industry, higher material costs due to availability constraints will be a challenge. However, there will be a growing demand for green and sustainable infrastructure and buildings that are disaster-resilient.

Green building designs significantly reduce demand for energy, water, and materials through ecologically sensitive design and maintenance practices. It can generate up to 30 percent in energy savings, reduce carbon emissions by 35 percent, reduce water use by 30-50 percent and save 50-90 percent in waste output.

In the insurance industry, a great concern is the increased cost of insurance claims resulting from extreme natural hazards. For instance, re-insurer Munich Re experienced a 38 percent quarterly drop in profit partly due to the severe floods in Australia in 2010 to 2011, when claims exceeded US$350 million.

Given this scenario, the industry can start developing insurance products that would promote climate change adaptation and mitigation such as paying claims that encourage rebuilding homes and commercial buildings that are more energy-efficient after a loss as well as offer lower premiums for infrastructures built with disaster risk reduction measures

They can also engage in environmental programs that would decrease or even prevent damage and losses to communities in times of natural hazards, like Tokio Marine and Nichido Insurance Company which undertook a mangrove reforestation project in India and southeast Asian countries. Mangroves are great buffers during storm surges and help sequester carbon.

In the food and beverage industry, the availability of raw materials from agriculture, livestock and fisheries is a crucial factor. It is perhaps the industry most exposed to the effects of climate change.

Food safety is a challenge especially with increasing temperatures and water scarcity. Thus, industries should address higher risks of food and beverage contamination as this could harm a company’s reputation and sales.

Today, consumers are gradually shifting to local and organic products. In fact, major markets for organic food and beverages expanded on average by 10 to 20 percent per year between 2000 and 2007.

A low-carbon lifestyle will eventually be adopted by consumers. This kind of lifestyle entails eating more of local, plant-based and in-season food, because food that comes from distant places utilizes more energy for transportation and preservation, resulting to greater carbon emissions.

This would also mean a shift to indigenous and renewable energy sources to economize on energy consumption; considering energy-efficient transport modes like walking, biking and taking public transport; maximizing the use of natural light and wind flow in house design; and building rainwater catchment recycling systems.

The changing environmental landscape poses various challenges that would likewise change the business landscape, but forward-thinking companies will see adaptation as an opportunity to innovate and contribute to improving the environment. Companies should:

(1) Know and make known the risks and how climate change could affect their business.
(2) Mitigate and adapt to the changing climate by reducing your company’s negative impact on the environment.
(3) Create business strategies that advocate for ecosystems protection and consider the environmental changes ahead.
(4) Have a business continuity plan (BCP) that ensures business resilience and the welfare of employees following the impact of a disaster.
(5) Mainstream disaster risk reduction into corporate planning and investment decision-making.
(6) Work with the government and other sectors in finding solutions.

How should we look at climate change then? Is it a boon or a bane? Your answer will depend on how you convert the threats into opportunities.

Many countries have fallen victims to the perils of war and destruction over the past decades and century. With limited resources, but with much perseverance, they rose above the ashes of destruction and rebuilt their countries.

Disaster resilience is an attitude. It requires character to find good and strength in the threats we face today.

As advertisers, I ask you to help develop that attitude and character in every Filipino. You have the means and the innovativeness to deploy messages that evoke inspiration. Be builders of inspiration so others may be motivated to build better and live better.

Thank you and good afternoon.