Resilience is key to surviving climate change, Covid and the age of emergencies

As some economies begin the gradual process of emerging from COVID-19 "hibernation", it is worth noting that animals don't spring from hibernation in full physical strength. The months of torpor leave them diminished, groggy and disoriented. This makes them particularly vulnerable -- to the elements, to diseases, to a lack of food, and to predators.

Similarly, the experience of COVID-19 lockdowns will likely see companies and economies emerging in a weakened state, at least initially. It is in this state that we will be faced with confronting new and continuing disasters. We may have entered an "age of emergencies", in which we face a constant need to react to multiple crises simultaneously, and on a rolling basis. Uncertainty is the new certainty.

For lawyers, this translates into a discussion about strategic, operational and legal risks with businesses. Formulated as a question, it goes something like this: In a world where risk is growing significantly each day, month and year, how can organisations manage it?

Many companies responding to the risks and opportunities posed by climate change have explored this question in a serious way, some for more than two decades, and they have devised evidence-based frameworks to help arrive at some answers. These frameworks emphasise resilience as a unifying theme. We believe that understanding what resilience means in the climate change space, could help both governments and business leaders as they plan how to manage through this crisis and beyond.

Resilience as a state of mind

What does resilience mean for a company, organisation, government or society? Arguably, in today's environment it requires the ability to respond to short-term shocks but, importantly, to have the foresight to plan for long-term outcomes that are not always easy or obvious to predict.

Organisations that are serious about understanding how climate change could affect them, have been adopting a risk assessment and management method called "scenario analysis" for many years, and increasingly so following the publication in 2017 of the Final Report from the Financial Stability Board's Taskforce on Climate-related Financial Disclosures (TCFD).

Under this method, an organisation selects an array of scenarios -- being events or trends -- and uses those hypothetical situations to test how an organisation would fare. That gives organisations a sense of the range of futures that could emerge, and the vulnerabilities and opportunities they would reveal. These possible futures usually include a climate change extreme of more than three degrees warming, and the catastrophic environmental, social and economic results associated with that scenario.

Internalising this kaleidoscopic view of the future into risk management processes, management decisions, and long-term strategies won't guarantee that an organisation will be unscathed by every potential challenge, but it is much more likely to lead to more robust, agile and adaptive entity.

Indeed, there is already some early evidence that companies with well-developed approaches to "ESG" -- environmental, social and governance -- policies, are faring better during the pandemic.

Why? We believe there are two main reasons. First, they have likely already tested and adapted their operations to be ready to respond to changing circumstances because they integrate the likelihood of change and uncertainty into their management processes. And second, they may have already reduced exposure to some of the assets and businesses that are likely to be negatively impacted by certain scenarios.

By way of example, many of the sectors that are being hit hard by COVID-19, such as companies with significant investments in fossil fuel assets, are also on the front line in having to address business risks associated with climate change. Those companies that are actively developing clear strategies to transition to a low carbon economy are likely to be more resilient to both climatic and economic emergencies.

Instead of thinking about an emergence from hibernation, perhaps the more useful metaphor is breaking loose of the chrysalis -- coming out of the COVID-19 experience as the same entity, but in a new, more resilient form, with different abilities and strengths.

In our view, organisational renewal should be based on resilience and a commitment to reduce future shocks where we can do so. To do otherwise would be to lose a generational opportunity to protect lives, livelihoods, reduce and avoid human suffering, and to become successful societies and responsible stewards of our home planet.