Sunday, October 24, 2010

Climate Change is Already Real. Ask Any Multi-National.

We usually consider climate change a mid- to long-range threat, something that won't really bother us much for the next twenty to thirty years.  In fact much of the world is already at extreme risk of devastating climate change impacts over the next three decades.  Maplecroft, a corporate risk consultant, has evaluated the short-term climate change vulnerability of 170 countries.

The new Climate Change Vulnerability Index (CCVI), released by global risks advisory firm Maplecroft, enables organisations to identify areas of risk within their operations, supply chains and investments. It evaluates 42 social, economic and environmental factors to assess national vulnerabilities across three core areas. These include: exposure to climate-related natural disasters and sea-level rise; human sensitivity, in terms of population patterns, development, natural resources, agricultural dependency and conflicts; thirdly, the index assesses future vulnerability by considering the adaptive capacity of a country’s government and infrastructure to combat climate change.

The index rates 16 countries as ‘extreme risk,’ including nations that represent new Asian economic power and possess significant forecasted growth. Bangladesh (1), India (2), Philippines (6), Vietnam (13) and Pakistan (16) all feature in the highest risk category and are of particular importance as they are major contributors to the ongoing global economic recovery and are vital to the future expansion of Western businesses in particular.

...Other countries featuring in the ‘extreme risk’ category include: Madagascar (3), Nepal (4), Mozambique (5), Haiti (7), Afghanistan (8), Zimbabwe (9), Myanmar (10), Ethiopia (11), Cambodia (12), Thailand (14) and Malawi (15). According to Maplecroft, the countries with the most risk are characterised by high levels of poverty, dense populations, exposure to climate-related events; and their reliance on flood and drought prone agricultural land. Africa features strongly in this group, with the continent home to 12 out of the 25 countries most at risk.

China, Brazil and Japan are rated 'high risk' countries while Russia, the U.S., the U.K., Germany and France are 'medium risk' nations.   Canada, like the other high northern latitude states, is rated 'low risk.'

So, how does this matter?   Over the past twenty years massive investment has poured into 'extreme' and 'high risk' countries.  It has been foreign investment that has largely fueled the economic miracle experienced by the emerging economic superpowers, India and China.  Those same multinationals and institutions that inundated those emerging economies with their seed wealth are now having to weigh the security of those investments.

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