Why resilience is essential in a volatile world
By Joel Makower
IgorAleks
The following article is an excerpt from our State of Green Business (SOGB) 2017 report. Published by GreenBiz in partnership with Trucost, it provides a global view of the year's trends in sustainable business. The report is free to download here.
For decades, "sustainability" has embodied the full measure of environmental and social goals — aligned, always, with economic ones. That triple bottom line has nicely described the overarching goal of a wide range of endeavors by individuals and families, companies and institutions, communities and nations.
Increasingly, though, a new word is on the scene, one that similarly articulates a state of being and that acknowledges that meeting the needs of both present and future generations in a dynamic and dangerous world likely will involve myriad twists and turns.
The word: resilience.
Unlike sustainability, resilience already resonates for the uninitiated: Being a resilient person means withstanding shocks of many kinds — job loss and financial setbacks, death of loved ones and other relationship endings, illness and disabilities and other life challenges. Being resilient means bouncing back from adversity, adapting to change and coping with whatever surprises come our way — in essence, being ready for anything.
So, too, for companies, communities and the planet.
In a world roiled by extreme weather, mass migration, political turmoil, cybersecurity, economic swings, terrorism, wars and other conflicts, resilience has become a cornerstone of sustainability. As our brittle infrastructure and supply chains increase risk to organizations' finances, reputations and business continuity, being resilient is key to being sustainable, in every sense of the word.
The military gets this. Defense Department directive 4715.21, issued in early 2016, titled Climate Change Adaptation and Resilience, aims to facilitate federal, state, local, tribal and private- and nonprofit-sector efforts "to improve climate preparedness and resilience." It is the latest in a long series of assessments, strategy and planning documents from the Pentagon dating to 2003, during George W. Bush's first term as president.
The latest directive states: "All DoD operations worldwide must be able to adapt current and future operations to address the impacts of climate change in order to maintain an effective and efficient U.S. military."
Also last year, a coalition of 25 military and national security experts, including former advisers to Ronald Reagan and Bush, warned that climate change poses a "significant risk to U.S. national security and international security" that requires more attention from the federal government. The DoD has called climate change (PDF) a "threat multiplier" that could demand greater humanitarian or military intervention and lead to more severe storms that threaten cities and military bases and heightened sea levels that could imperil island and coastal infrastructure.
As our brittle infrastructure and supply chains increase risk to organizations' finances, reputations and business continuity, being resilient is key to being sustainable.
The building and infrastructure sectors are also talking increasingly about resilience. Last year, the architecture and design firm Perkins+Will introduced the RELi resilience standard, aimed at encouraging city planners, project developers and companies to build and operate facilities that can better withstand superstorms, sea-level rise, drought, heat waves or even social unrest. Meanwhile, the U.S. Green Building Council, creator of the LEED green building standard, approved three LEED pilot credits on resilience in design.
And what's good for buildings is good for the cities where they reside. The resilient cities movement — spurred by the 100 Resilient Cities initiative, which supported the creation of Chief Resilience Officer positions in cities around the world — has helped metropolitan areas in harm's way of sea-level rise and other calamities improve planning and emergency services. And it's not just about climate change: Resilience for cities often means shoring up the social fabric, addressing housing and other inequities and creating a unified sense that in the face of shocks of any kind, everyone needs to come together.
What about companies? They, too, are recognizing they need to be prepared for shocks — climate shocks, of course, but also political, public health, economic and terrorism shocks — so that they can adapt and bounce back quickly. The experience of extreme weather events such as Superstorm Sandy in 2012 disrupted an estimated 10,000 manufacturing facilities in the Northeast U.S. and stalled an estimated 20 percent of the U.S. commercial trucking industry for a week or more, according to an assessment by the U.S. Department of Commerce. Local utilities found themselves without sufficient fuel to send trucks to fix the storm's damage, among other signs of a lack of preparedness for such inevitable natural disasters.
Around the world, Hurricane Katrina in New Orleans in 2005, the Sendai Earthquake and tsunami in 2011 in Japan, the 2012 floods in Thailand and Typhoon Haiyan in the Philippines in 2013 all have played critical roles in awakening companies to the risks of a changing climate, for both themselves and their suppliers.
Some company resilience initiatives play nicely into their business strategies. Consider AkzoNobel, a major producer of global paints, coatings and specialty chemicals. It developed an urban resilience guide for cities — with an emphasis on how paints, coatings and chemicals can build both "hard" and "soft" resilience into city systems. The company is conducting projects in cities that belong to the 100 Resilient Cities network. Each participating city will explore the contribution of color and coatings to a particular aspect of resilience — from improving public health to protecting urban heritage, from community identity to economic prosperity, from education to social connection and from reliable mobility to improving infrastructure efficiency.
For many organizations, there is a disconnect when it comes to the intersection of sustainability and risk management.
In many ways, company efforts to address resilience are nothing new. Companies regularly assess threats and opportunities as they strive to maintain a competitive edge, a discipline called risk management. But for many organizations, there is a disconnect when it comes to the intersection of sustainability and risk management, as noted in a 2016 report by GreenBiz, Marsh & McLennan Companies and the Association for Financial Professionals. Simply put, the two departments within companies speak different languages.
"The role of enterprise risk management is to pull together all these different types of risks — whether they're financial, operational or strategic — into one place so that companies can start thinking through and prioritizing what is most impactful to the organization," explained Alex Wittenberg, executive director of the Global Risk Center at Marsh & McLennan Companies. "Often, companies establish a risk committee with representation from core areas of the business representing the ownership of these different risks."
Wittenberg added: "It is important for the sustainability professional to make the effort to actively engage with the risk and finance teams to more effectively integrate their thinking with those of the commercial operations of the organization."
Beyond ensuring business continuity and reducing downtime and disruptions, building resilience is also a key economic development strategy — what Judith Rodin, president of the Rockefeller Foundation, calls the "resilience dividend." (She's the author of a book by that name.)
The dividend, said Rodin, comes from investing both money and resources: "It requires innovation to solve for known vulnerabilities but also for variables unknown. And it takes partnerships with the private sector, both to uncover weaknesses within systems, but to also unleash the full range of financing for resilience projects and infrastructure."
That's the kind of full-spectrum thinking that in any sector engenders resilience, the mindset that allows companies, communities and institutions to withstand the test of time with flying colors.
Organizations to watch
100 Resilient Cities — spawned by the Rockefeller Fund, this initiative is helping cities around the world identify and address their biggest vulnerabilities.
Center for Resilience at Ohio State University — a research center dedicated to improving the resilience of industrial systems and the environments in which they operate.
Global Risk Center — a division of the Marsh and McLennan Companies, its focus is on global and emerging risks, resource security, risk-based decision making and multinational risk governance.
Resilience.org — operated by the Post Carbon Institute, this resource center focuses on local initiatives such as community gardens, local energy projects, timebanks, local currency projects, repair cafes and more.
U.S. Climate Resilience Toolkit — produced by an alliance of federal agencies, the online resource provides more than 200 tools to help build resilience, from engaging a community to developing a climate action plan.
Risk & Resilience
State of Green Business Report
State of Green Business 2017
Joel Makower
Chairman & Executive Editor
@makower
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