Assessing climate change risk and resilience of JSE-listed companies

Abstract

The future of social and ecological systems has become more uncertain and more unpredictable due to global climate change. For businesses to continue creating business value while also contributing to the sustainable development and climate change mitigation and adaptation agendas, they will need to rigorously assess climate change risks and opportunities as well as implement creative and adaptive solutions to survive and thrive in this uncertain future. The aim of my research was to contribute to our understanding of climate change integration into risk management and business strategy by exploring the climate risk landscape of eighteen JSE-listed companies and their adoption of a systems approach towards enhancing resilience to climate-related risks in a developing economy. The study made use of quantitative and qualitative methods by conducting report analysis followed by semi-structured interviews to gain more insights into climate-related risk assessment, risk management and resilience thinking in companies from the mining, construction, agriculture, forestry, and fisheries sectors. Company reports and documents for the period FY:2016- FY:2018 were analysed to assess the extent and nature of climate change disclosure and to create climate-related risk maps for each of the sectors. Through the report analysis, companies were further scored against an adapted social-ecological-systems resilience framework to assess the state of resilience to climate change over this period. Results from the report analysis showed that the mining sector had higher levels of disclosure on climate change and addressed climate related risks and interconnections better compared to the other sectors. The mining sector was also found to have a higher state of resilience to climate change than the other sectors and accordingly companies seemed to be more successful at integrating climate change consideration into their business planning, strategy, and policies. The construction sector had the lowest state of resilience to climate change and attributed this to their position in the project value chain as well as financial constraints. My findings suggest that there is commitment from a few South African companies to address business and community challenges in an integrated manner, thus creating shared value. This commitment however needs to extend further, as the impacts of climate change will affect all sectors directly or indirectly and the severity of these impacts may only ever be truly realised in real time. The study highlights the importance and urgency of collaboration between businesses, government, and society in addressing climate change. By enhancing social-ecological systems resilience to climate change and its disturbances, we may reduce the severity of climate change related risks and impacts during unprecedented times.