Authored by Michaela Aspell
Amid political uncertainty surrounding climate and sustainability initiatives both globally and in Australia, the purpose of climate-related policy can sometimes be obscured in the debate. However, regardless of potential amendments to climate-related reporting regimes or their popularity with political parties, the reality remains: climate change is already occurring, and global emissions continue to rise.
This article focuses on the need for adaptation to climate change and includes an update on climate change.
Emissions and warming continue to increase
2024 marked a milestone, with global average temperatures exceeding 1.5˚C above pre-industrial levels for the first time (World Meteorological Organization). While this does not indicate a failure of the Paris Agreement's 'stretch goal' to limit temperature increases to 1.5°C—since averages are calculated over decades rather than years—it is likely that this threshold will be surpassed within the next decade, as emissions continue to rise year-on-year, and substantial mitigation efforts will be necessary between 2030 and 2050 to meet the Paris Agreement target of limiting warming to 2°C. The World Weather Attribution Organization is reporting recent advances in climate attribution science, that are able to determine how climate change impacted the likelihood and intensity of extreme weather events – such as the LA wildfires – proving that climate change is causing increased extremities of weather events.
What is climate change adaptation?
The Intergovernmental Panel on Climate Change defines adaptation as the “process of adjustment to actual or expected climate and its effects”. The term was first introduced globally in the early 1990s during the establishment of the United Nations Framework Convention on Climate Change. In 2016 the Paris Agreement included a ‘Global Goal on Adaptation’ in Article 7.1, with the aim to strengthen resilience and reduce vulnerability to climate change and ensure an adequate adaptation response. Despite this goal, climate adaptation planning and financing have been slow - according to the Climate Bonds Initiative, only 19% of capital from the sustainable bond market flows to activities to adapt to climate change.
Adaptation typically focuses on either reducing exposure to climate hazards or decreasing vulnerability to those hazards. This could be at the asset management, corporate, government or international level. There are numerous opportunities for achieving other climate and sustainability goals as part of climate adaptation; for example, nature-based climate adaptation—such as restoring seagrasses, mangroves, and tidal wetlands to protect coastal infrastructure—can also enhance biodiversity and absorb carbon emissions. Adaptation actions contribute to increased resilience to climate change impacts.
Advances in adaptation planning in Australia
Adaptation is occurring globally, but as adaptation actions can be very localised, often falls at the individual or local government level. Many councils have successfully undertaken climate adaptation planning (for example, in 2023 the NSW Government reported that 37% of NSW local councils declared to having a climate change adaptation plan) but implementing specific actions can often be difficult due to resourcing and cost restraints. For some areas, adaptation is no longer an option, and ‘managed retreat’ also known as ‘transformational adaptation’ is required in areas of high existing or future exposure (an example being the ‘raise, repair, retrofit or buy-back’ scheme introduced after the Lismore floods).
National advances in climate adaptation in Australia include the National Climate Resilience and Adaptation Strategy and the National Emergency Management Agency’s Hazards Insurance Partnership and Disaster Ready Fund, the latter of which is providing up to $1 billion of funding from 2023 – 2028 for supporting projects which increase resilience to climate-related disasters (171 projects were approved for funding in 2024).
Investing in climate adaptation
Investment opportunities in relation to climate change, are often focused on decarbonisation, but investment in adaptation is a priority – with an ‘adaptation finance gap’ of around $194 - $387 US billion a year reported by the United Nations.
A recent report by the Investor Group of Climate Change discusses that investing in initiatives that promote or enable climate adaptation can have multiple benefits for investors as well as the society and economy, including lowered risk of climate-related reduced growth and profits and opportunities to invest in emerging adaptation technologies. These investments may lead to increased profits through avoidance of future losses, positive economic gains and additional social and environmental benefits. Investors may wish to include physical risk and adaptation screening as part of valuation processes.
Incorporating climate adaptation into reporting
Companies can use the process of undertaking climate-related reporting as an opportunity to define and communicate adaptation actions. Climate adaptation can be addressed as part of assessing climate resilience through climate scenario analysis, and as part of risk management for climate-related risks. Integrating identified responses into, for example, asset management planning and strategies, worker health and safety, and business strategy, will assist in uptake of climate adaptation actions.
In an uncertain future, one thing is certain – the climate will continue to change, and adaptation will not be optional. Increasing investment in adaptation actions and climate resilience can help reduce the extent of impacts on the economy and community from climate change.
Reach out to Owl Advisory by KWM Senior Climate Adviser Michaela Aspell or Director Tim Bednall to discuss how we can support your company with climate-related reporting.
This publication is a joint publication from King & Wood Mallesons, and KWM Compliance Pty Ltd (ACN 672 547 027) trading as Owl Advisory by KWM. KWM Compliance Pty Ltd is a company wholly owned by the King & Wood Mallesons Australian partnership. KWM Compliance Pty Ltd provides non-legal compliance and governance risk advisory services for businesses. KWM Compliance Pty Ltd is not an incorporated legal practice and does not provide legal services. Laws concerning the provision of legal services do not apply to KWM Compliance Pty Ltd.