NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

The main problem with climate change, as David Keith highlighted in his brilliant TED talk, is that in the immediate short run, it creates winners and losers. And the major portion of this loss will be borne by developing nations almost all of whom are in the global south. The food productivity of a lot of areas will suffer. They will be plagued by more diseases. Water scarcity due to the melting of glaciers and evapotranspiration will limit the already acute fresh water supply. The list is endless.

Also, it is pretty much agreed that for the world to meet its climate change mitigation goals, business cannot continue as usual. Though businesses realize that adapting to the changing scenario is inevitable, they don’t want to be at the receiving end of a raw deal in order to remain competitive.

I came across an interesting paper (via AccountAbility) titled The Business of Adaptation that strikes at the core of this issue. It’s a call to action for the governments and UN from the businesses side. The paper admits that the private sector has been slow to adapt to climate change challenges faced by nations, however, it’s also quick to point out that with adequate support in the form of appropriate financial mechanism and suitable international policies the private sector can act be a huge helping hand to the public sector to meet their targets.

Take the case of Microfinance institutions, for example. Given their existing rural market penetration they can always expand the range of services they offer as is the case with Grameen Shakti. It capitalized on the Grameen Bank’s business linkages and evolved its financial package to become one of the largest renewable energy companies in Bangladesh. In the future, such a transformation could be performed as a public private partnership too, making the program more efficient.

But one of the advantages of market based approaches is that they act as primary breeding ground for technological innovations. Some striking examples are Global Easy Water Products which provides affordable drip irrigation solutions to many small scale farmers in India, or Electricité de France, which, through partnerships with NGOs and the government, provided over 6,000 Mali homes with affordable electricity using solar source and low cost village grids.

Efficient business adaptation is hindered by various factors, however. These include lack of soft venture capital, absence of business linkages with the government, lack of awareness pertaining to climate change, and in some cases lack of adequate environments to do business. The report highlights some points and concrete recommendations, including the role of business and its mention in the UNFCC text, the role of national poilicies in enabling private sector participation, and the availability of suitable financing mechanisms that facilitate the participation of enterprise in addressint the effects of climate change.

In the end, it comes down to a simple inevitable truth which is beautifully summed up by Jared Diamond in his best-selling book Collapse:

“Because we are rapidly advancing along this non sustainable course, the world’s environmental problems will get resolved, in one way or the other….the only question is whether they will become resolved in pleasant ways of our own choice, or in unpleasant ways not of our choice, such as warfare, genocide, starvation…and collapse of societies.

If you’re at all interested in the way climate change, business and the base of the pyramid meet each other, I suggest you give this report a read.