Cities protecting capital from climate change

The majority of the world’s major cities have disclosed that climate change presents a physical risk to the businesses operating in their cities - and local governments are taking action in response. This information was published in the report Protecting our Capital, written by not-for-profit organisation CDP, infrastructure and support services firm Aecom and the C40 Cities Climate Leadership Group.

Over 200 cities around the world, including Johannesburg, London, Melbourne, New York, São Paulo, Sydney, Tokyo and Wellington, disclosed their climate change strategies and actions through CDP this year. Three-quarters of these cities revealed that extreme weather and other effects of climate change threaten the stability of their local economies, with damage to property and capital assets, transport and infrastructure destruction, and citizen wellbeing being among the most commonly reported risks.

In the US, the City of Cleveland has found that increasing cases of severe weather and diminishing water at Lake Erie put its US$6.5 billion shipping industry at risk; Pittsburgh reports that some business owners are abandoning their investments because they are unable to seek compensation for losses incurred as a result of climate change; and the US insurance industry recently filed lawsuits against city municipalities for failing to adapt to the consequences of climate change.

In Australia, the City of Melbourne reported that heat-related deaths in those aged over 65 are expected to double by 2020, partially as a result of urban heat island effect. The City of Sydney is currently evaluating the costs and benefits of solutions to reduce the urban heat island effect, such as how shade trees and pavement colour affect urban temperatures.

“Melbourne and Sydney experience extreme temperatures during summers that put strains on essential infrastructure, such as electricity and transport networks,” noted Ben Smith, Associate Director - Sustainability at Aecom. “Both the City of Melbourne and the City of Sydney are facilitating action on climate change because they recognise that future climate impacts on businesses will depend on measures taken by business, councils and state governments working in collaboration to manage these risks.”

Cities are largely aligned with companies on risk identification, recognising 69% of the physical climate change risks that businesses identify in those cities and moving to address 66% of the company-identified risks. For example, in Hong Kong, energy provider CLP Holdings suffered site damage and business interruption as a result of rising sea level. The company has spent US$193,000 raising building floor levels and has invested a further US$516,000 to increase drainage capacity. The Hong Kong Drainage Services Department, meanwhile, has put US$2.7 billion towards flood defence infrastructure, including river widening and underground water storage.

“Local governments are storming ahead to protect their citizens and businesses from the impacts of climate change, but further collaboration with business is needed to increase city resilience,” said Larissa Bulla, the head of CDP’s cities program. “Through the provision of information, policies and incentives, cities can help equip businesses to manage these risks and embrace the opportunities.”

Kerem Yilmaz, C40 head of research, added, “The need to understand and act upon climate risk is a growing priority. That’s why these cities are taking steps right now to help create more climate-resilient communities, economies and infrastructure. Their commitment to measuring and reporting on this critical issue is accelerating action by enabling cities to identify common challenges and work together to spur and implement solutions.”

The report can be viewed here.

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