The unprecedented rainfall this year in Pakistan has led to mass destruction and devastation, with estimated losses of billions of dollars and displacement of more than 3.3 million people. The recent flooding, leading to one-third of the country being submerged in water, is a testament to climate change realities.

The Global Risk Report 2022 declares extreme weather events to be Pakistan’s second most significant risk, right after the debt crisis. One thing has become clear, Pakistan can no longer be complacent in its response to climate change.

This short-term “bandage” approach toward disaster management is not only costly but proves to be unsustainable in the long term. United Nations Intergovernmental Panel on Climate Change’s (IPCC) 6th assessment report published in 2021 clearly states that by the mid-21st century, Pakistan will experience shorter winter spells with greater precipitation levels in both winters and summers.

With the expected rise in sea level by 0.22-0.44mm and heavy rainfall, flooding remains an imminent threat to the country. The IPCC report emphasised the urgent need for adaptation policies to be introduced in Pakistan to ensure minimum damage to livelihood and communities.

Top businesses need to come together to develop more concrete long-term business plans to cope with climate shocks

Infrastructure, crops, logistics, and property has suffered significant damage. This, in turn, adversely affects food production and water supply, impacting human health and the labour force. Inversely, this will impact the financial bottom line for businesses on various fronts.

Businesses using agricultural raw produce are most impacted in the short term. Medium-term to long-term impacts include customer demand due to a shift towards low-carbon and climate-friendly products. One cannot ignore the indirect impact of damage to the road network or loss of demand due to a fall in economic activity.

Along with direct costs, these extreme weather events can set off additional indirect effects along the upstream and downstream supply-chain operations.

As resources are currently focusing on rehabilitation, it is important to understand that businesses in Pakistan can no longer ignore the vast array of climate risks they face. By understanding and incorporating climate risks as part of their business strategy, leaders can safeguard their businesses against physical, transition and financial risks attached to their businesses.

Physical risks are related to damage inflicted on factors of production such as labour and physical capital. Transition risks are associated with moving toward a decarbonised society due to changes in regulations, customer demand and changes in technology.

Recognising transition risks would help the business reduce its exposure to assets and industries subject to these risks. Finally, financial risks incorporate the current and future business risks to business owners, insurers and investors due to changing weather events.

Through climate risk assessments, the leadership in businesses will better understand their vulnerability to climate shocks by assessing and evaluating their propensity at each level of the value chain.

Moving forward in Pakistan, the focus needs to be on adaptation — incorporating actions that reduce the impact of climate change. Businesses can identify their climate risks along their supply chain and divert their resources to build resilience to climate shocks.

Through capacity building, businesses can help their suppliers be better prepared for these impending extreme weather events. Companies linked to agriculture need to train their farmers in better agricultural, husbandry, and dairy practices. Other capacity-building tools include introducing weather-resilient hybrid seeds, fertilisers, funding for drip irrigation, building silos and other value additions.

The private sector needs to advocate for better quality, climate-compliant transport network. Instead of short-term, easy-fix solutions, road network reconstruction needs to respect the ecological format by avoiding flood paths and incorporating rain drains throughout the cities. This change can only happen with adequate planning and investment toward building a sustainable road network.

A consolidated effort needs to be made by the private sector and government by forming public-private partnerships to plan and execute medium to long-term disaster preparation and coping strategies that help build the resilience of businesses against these climate shocks.

Disasters are often closely related to unsustainable development, climate action mismanagement and a lack of strategic planning for adaptation and mitigation. With international donor fatigue, the recovery for Pakistan will be a slow and painful process, with the onus falling on the private sector to help Pakistan build resilience against future national disasters.

Top businesses in Pakistan have pledged to the COP-26 “Race to Zero” and are working to halve emissions by 2030; they now need to come together to develop more concrete long-term business plans to cope with climate shocks with minimal damage to life and property.

The writer works in the Centre for Excellence in Responsible Business, a Pakistan Business Council initiative

Published in Dawn, The Business and Finance Weekly, October 3rd, 2022