Risk Mitigation and Adaptation Strategies

[Music] there's five areas that I would suggest most businesses need to focus on when they think of adaptation and risk

associated with climate change and and here we're really talking about the development or the the you know starting to think about the development of an

Environmental Management plan or uh climate change uh um mitigation or ad sorry a climate change adaptation

strategy for your for your business so there's five elements of this that that I want to talk about today one is around

financing next is energy water Staffing and business inputs my background is in renewable energy andme financing so I'll probably

spend a little bit more time on on those two themes uh but uh we could certainly pick up um uh points around around the other three if you feel there's areas that that you

want to come back to okay on the financing side there are three sub themes if you will that I'll briefly touch on the first is preparing

for shocks second regulatory pressures and three diversification okay on regulatory shocks actually it given the economic

history of many African countries I actually think many African businesses are well prepared in this regard so I won't spend too much time on it the only

thing I want to say really is that it's more and more likely that you and or your suppliers Andor your uh buyers will

experience some form of economic shock associated with environmental issues in the coming decade or two and so for most of us

that means being able to withstand these shocks which probably means having more in the way of cash reserves so that

really is the fundamental point in terms of of being able to withstand shocks is what's your plan and very often the answer to that is we're going to have a

little more cash in the bank than we would ordinarily expect to or we or or we have would have historically expected to I mentioned earlier that you're less

likely to see regulatory pressure in the near future um but that you are very likely to see Market pressure in the near future uh a blueberry farmer friend

of mine put it this way he said if I'm not making efforts to reduce my carbon footprint I'm going to lose my license to operate and it's not because his

government in this case uh the government of Zimbabwe it's not because his government um is going to regulate that change upon him in the in the near

term but it's because his buyer which is a UK Supermarket is saying to him listen it's I want to see

your plan to reduce your carbon footprint because if I don't see that plan in the near future I'm going to have to buy my blueberries from someone

else and that is just the reality of the Fresh Foods industry uh these days uh if you're trying to ship your goods to Europe and or the you know the UK

generally and it's and it's coming to uh North America and other parts of the planet it um okay third financing

sources as I mentioned above banks are going to be increasingly focused on climate risks When U making their decisions around who they feel they can

lend to so um rather than repeat myself about uh the changes that they're making to the iaps I'll just say that or I'll just

perhaps remind you that this is already happening albeit probably in a slightly disorganized way at the moment central banks across the continent are telling

commercial banks that they need to do this and as you know Banks don't generally need an excuse to cut back on lending to small small and medium-sized

Enterprises they're very conservative organizations they're reluctant to do it anyway for the most part if I'm making broad generalization about it so I I

think this is one of the areas that we're going to see fairly quick change in the relatively near future on the equity side it's my view

that you're going to see a lot more headlines like this over the coming few years and if that's the case then it's

worth being prepared to see these kinds of opportunities there are um dozens now of equity investors operating on the

continent that are actively considering Net Zero Andor reduced carbon emission strategies when it comes to their

investment uh practices so I would encourage you to be prepared for that um opportunity as and when it comes up

uh okay that I sorry if that sounded a little gloomier than I intended I I didn't intend for it to be gloomy actually I see a lot of opportunities in

in in what I've just what what I've just presented to you but I can now present some kind of even happier news if you will which is that building

sustainability into your business is good for business I think historically we used to we used to think or o some used to think of building

sustainability into your business model as a bit of a CSR or corporate social responsibility add-on to the Core

Business that's not the case anymore and indeed like I would suggest to you that that the kinds of things that we're

describing um today is around changes to your core business your core operating model um and how that uh can can ensure

your business is is more sustainable uh this in this Zimbabwean company that I was advising a couple

years ago made a $600,000 investment in a uh solar micro grid system it will pay for itself in roughly four years time

then the company goes on to save roughly a million dollars in energy bills mostly diesel over the next 10 years that that is the kind of investment that most

businesses dream about that kind of return on investment so um I would encourage you to kind of think of it in those in those terms the typical process

goes something like this first you look to reduce your load your energy demand if you will then you move towards less

Reliance on the grid and on diesel generators if you're in a place where the the grid is deeply unreliable and four things kind of come

out of that process one you save money two you improve productivity three you improve product quality because you don't have as many defects associated

with um poor power supply and four you reduce stress levels amongst your employees I don't know I don't know how many of you um are forced to run diesel

generators on a regular basis but in my experience there is nothing more stressful than hearing the sound of a diesel generator running right outside

your office window where all you can think to yourself is I might as well be just ripping up dollar bills just

burning the burning the uh the cash in your account because it costs so much money to to run that diesel

generator in in most countries the economics of of making these these um this change is kind of crystal clear I'm

I grew up in Canada uh I now live in Nairobi but I grew up in Canada it where it is basically in wintertime it's

basically dark at 3:30 in the afternoon even in most of Canada investing in solar or other Renewable Energy Technologies makes good sense if it's

not until you basically reach the Arctic Circle that the economics of solar start like waning a little bit so so I would

so I would just say take advantage of your incredible Geographic gift of being based in Africa and consider how you

might change um your energy um your energy sources to to more renewable supplies okay on the waterfront

here's how this process works one you use less two you're very likely going to because of the pressures that we talked about earlier on changes in rainfall

patterns you're very likely going to need to store more if especially if you're in the kind of farming World um

but um but probably even offices are going to find that um that their regular water supplies are less reliable than

they traditionally have been so storage of water is going to become an issue that that that is going to affect all of us finally I would say on this one

developing early warning systems or developing a plan to create early Warning Systems is likely going to pay

off in uh in Spades so that if you have a water problem that's likely to affect you in 2 to 3 months time time you have

systems in place to alert you to the fact that that that that is likely to to be a problem for you and your business if you start you know maybe

actually can I add a fourth actually which is the focus on community engagement um and community relations and it's it's related to that early

Warning Systems um process because water is a shared resource fresh water is a shared resource SCE and if you start sucking tens of thousands of liters out

of the aquifers out out of the well in your in in the ground beside your office which is exactly what's happening in many many African cities because the

urban water supply is so unreliable then this is only going to lead to conflict with your neighbors right where you where each of you are drilling deeper

and deeper and deeper wells 10 years ago in Harari where I just moved from so the examples are are more prevalent for me

there it was common for a for a house to drill a I don't know a 30 or 25 M 30 m

well just 3 weeks ago a friend of mine suggested he needed to drill 150 M down in order to get um fresh water for his

just for his house let alone um you know the kinds of drilling that needs to happen if you're into um commercial

water consumption so um consider the kind of community aspects of this and how you as a business leader in this area may need to um make a plan that

involves others and not just your particular business um okay on Staffing I think the point four on

Staffing there will be those among you thinking 2° H it's not that much actually 2° like what you know what's

the difference 31° rather than 33° C it's not not the end of the world my team is tough we can handle that this misses the point in case in case you

haven't been kind of um watching the news and and the kinds of risks that are associated with climate change on the continent it's two degrees on average

but it's many days of the year many many days of the year that are going to be completely unworkably hot so you will have staff suffering

from heat and weather exposure maybe not in the office but um because probably at your office you will think ah don't worry I'll I'll Implement um a new air

conditioning system and okay well that'll cost us a little bit more in terms of um you know power reliability but we can handle that we've got a big roof space we'll put more panels on the

roof it's it's not just at the office or it's not just out in the field where your staff are going to be affected by these things it's at their own homes

right where a 2 degree increase in temperature means that malaria starts becoming a bigger issue on more of the continent um or Cher starts becoming a

bigger issue Water Supplies uh flooding all of these things mean that your staff on a personal basis are going to have a lot more to deal with when it comes to

their own family health so um that needs to be accounted for next you're going to have um you're going to have to address

education and knowledge gaps uh within your team some of this that I'm describing today is probably not news to

you but it may be news to members of your team and the science is becoming clearer and clearer by the day so it behooves us as Business Leaders to help

our staff um better understand that science and ensure that they too within their units are prepared for the kinds of changes that are are going to be

impacting their individual unit Lines within your business finally on Staffing you may need to look at your kpis you may need

to consider remuneration changes such that your staff are considering how climate change will impact their particular ular line of the business and

their kpis that they are developing and what they need to be looking at as as the climate within your particular country uh

changes okay uh the fifth area is around business inputs and how easy is it going to be for you to diversify stockpile and

find climate smart inputs for your business these are the areas that we're going to have to work through I'll give you a really overly simplified example to illustrate the point but each

of your businesses are likely to have your own version of the story that I'm going to tell you okay let's say you're a small hot sauce company outside of

kalala your job is producing hot sauce such that uh or your your business is producing hot sauce for export um and uh

up to Europe let's say I don't know lemon um are a key ingredient in your hot sauce uh not all hot sauces use lemons

but let's say yours does the price of lemons I didn't know this until recently but the price of lemons is only partially related to what's going on in

Uganda India China and Mexico produce most of the world's lemons far more than Uganda and uh the price of lemons has

very little to do with what's going on in Uganda and almost everything to do with what's going on in Mexico India and

China so if Mexico has a frost thanks to some climate induced very unusual weather then the price of lemons everywhere is very likely to go up and

guess what the cost of your hot sauce or the cost of your inputs rather to your hot sauce has just gone up by let's say 15% so what are you going to do about

that what's your plan in order to account for the fact that um you're You're vulnerable to the to price

fluctuations in one of the key ingredients in your business model maybe you need to plant some lemon trees maybe it's as simple as that but then but I

think lemons take about five years to to kind of lemon trees rather take about 5 years to start really producing lemons so what are you going to do in the

meantime what's the strategy to be kind of um ready or aware of the fact that um your business inputs may also be

vulnerable to climate change