Climate change is no longer an abstract future threat; it is a pressing reality with tangible effects on ecosystems, societies, and economies around the world. Businesses and financial institutions must build climate resilience in response to increasingly threatening climate challenges.

Strengthening resilience is not just about mitigating the direct impacts of climate events but also about ensuring that businesses can adapt, thrive, and contribute to a sustainable future. From rethinking operational strategies to deploying cutting-edge technology, enterprises have an important role in transitioning towards a greener economy. 

At Sibos 2024 in Beijing, the panel session ‘Climate change resilience and social impact’ explored the various ways organisations can enhance their climate resilience and promote sustainable development.

Climate resilience through sustainability initiatives

One of the most fundamental ways businesses can enhance their climate resilience is by developing and implementing comprehensive sustainability initiatives. 

Athina Chatzi, Global Sustainability and Environment Head at Tenemos, said, “Businesses are strengthening their climate resilience by investing in energy-efficient infrastructure and transitioning to renewable energy; but they must also ensure that their supply chain is equally sustainable, recognising where there are vulnerabilities and dependencies within the supply chain.” 

Enhancing climate resilience starts with a holistic analysis of an organisation’s entire value chain to recognise climate-related risks. For many businesses, this includes identifying inefficiencies in operations and examining dependencies within supply chains to understand potential weaknesses.

The transition to sustainable practices also involves setting measurable goals. Targets like reducing emissions across all scopes—Scope 1, Scope 2, and Scope 3—by a defined percentage in the coming years will help drive action. 

Achieving such ambitious goals requires embedding sustainability in day-to-day operations, making operational efficiency a priority. Data centres, manufacturing plants, and office facilities must adopt energy-efficient solutions and rely on renewable energy sources to meet science-based targets. In doing so, businesses can build climate resilience and benefit from cost savings and an improved environmental footprint.

Another element of enhancing climate resilience is working closely with suppliers. This is about more than just enforcing compliance; it is about mutual support, education, and collaboration. 

Chatzi said, “We assess our suppliers according to their climate maturity. For those suppliers that are low in the maturity curve, we educate them and we support them to start their sustainability journey.” 

By assessing their suppliers’ climate maturity and helping them embark on their own sustainability journeys, businesses can uplift the entire supply chain. This integrated approach ensures that sustainability becomes intrinsic to every segment of the business.

Climate resilience through technology

Technology advancements empower organisations to address environmental and social challenges. Chatzi said, “Technology is a key enabler in strengthening climate resilience, especially for financial institutions, because it can help banks to address both environmental and social challenges. 

“For example, mobile banking can help banks reach underserved communities in remote areas when there are no physical branches.” 

Cloud technology is one advancement that can aid business operations. Moving IT infrastructure from on-premise data centres to cloud services can drastically reduce energy consumption and emissions. 

For businesses, the same is true with operational costs. Chatzi explained, “[Moving to the cloud] can enable them to offer more affordable financial services to low-income areas.” 

Artificial intelligence (AI) can also help promote climate resilience. It allows businesses to create products and services more efficiently and at a lower cost, thereby improving productivity while reducing resource consumption. AI-driven analytics can provide organisations with the data they need to make informed decisions about sustainable investments, helping them integrate environmental, social, and governance (ESG) considerations into their core operations. 

Chatzi said, “Using explainable AI, we can provide ESG data and insights to banks so they can design and better address the needs for designing a product and offering their services in a more environmentally and socially responsible way.” 

Engagement with high-impact sectors

Addressing climate resilience at a macro level requires engaging with the types of high-carbon-emitting industries that are integral to the global economy and then working to decarbonise them. 

Chaoni Huang, Managing Director and Head of Sustainable Markets at BNP Paribas, said, “We’re also looking at other high-emitting sectors. For example, steel, cement for this part of the world, aluminium, automobiles. In these sectors, we’ve actually set targets.” 

For financial institutions, this means prioritising lending and investment portfolios that target these sectors with sustainability-linked financial products such as loans, which can be a powerful tool in this regard. Linking loan conditions to sustainability outcomes can allow financial institutions to actively influence their clients in high-impact sectors to reduce emissions. 

Huang said, “If we have a client from the steel sector, and if I’m doing a sustainability-linked loan with them, we have to make sure the target set in the facility is in line with our short-term and medium targets.” 

Such loans have clearly defined carbon intensity reduction targets that must be met, depending on the financing’s timeframe. By breaking down overarching goals like ‘net zero by 2050’ into achievable short-term milestones, businesses and financial institutions can make meaningful progress and ensure that climate action happens in an orderly, progressive manner. 

Each loan or financing decision becomes an opportunity to move towards a more sustainable future.

UNDP’s efforts in supporting the climate transition

The United Nations Development Programme (UNDP) is one organisation that is actively engaged in supporting the climate transition, particularly in developing countries that are vulnerable to the impacts of climate change. 

Their approach involves both tangible on-the-ground projects and theoretical research and development to help communities, businesses, and financial institutions looking to enhance their impact. 

Shi Rong, Economist at UNDP China, said, “We have some dedicated on-the-ground projects supporting vulnerable communities within China. We are also doing the South-south corporation, supporting other developing countries in enhancing their early warning system.” 

Knowledge exchange has been commonplace between countries in Europe and Central Asia for centuries, given their common economic ambition. The South-south cooperation is an initiative to encourage knowledge, resource, and technology sharing between countries in the Global South.

Additionally, early warning systems, which enhance climate resilience in vulnerable regions, are one of the key contributions of UNDP, but they also play an instrumental role in creating public goods through evidence-based research and programmatic tools that can guide private and public financial institutions. 

Rong said, “We developed the impact standards, which help businesses and investors to incorporate sustainability into their management system and ensure that they generate more direct impact.” For example, UNDP’s role as the secretary of the G20 Sustainable Finance Working Group has enabled it to drive frontier discussions on sustainable finance among member countries. 

And finally, UNDP has undertaken specific research projects related to biodiversity finance, an emerging but essential aspect of the climate transition. The interlinkages between climate resilience and biodiversity are significant, and UNDP’s work in mapping finance options for biodiversity conservation helps ensure that efforts in these two areas are coordinated and mutually reinforcing. 

Rong said, “We have a biofinance initiative, for which are working with the Shanghai and Shandong governments to map out the whole landscape and what are the resources that are available to support biodiversity conservation.” 

In collaboration with local governments, UNDP aims to explore innovative financing methods to support conservation efforts. The organisation is also contributing to the development of transition finance frameworks that help economies, particularly those reliant on high-carbon sectors, make the transition to sustainable models.

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Businesses and financial institutions have an integral role to play in building climate resilience. By setting ambitious, science-based targets and investing in renewable energy and sustainable technologies, businesses can ensure they are part of the solution rather than the problem. This can allow businesses to mitigate risks and capitalise on the opportunities presented by the transition to a low-carbon economy. 

Similarly, financial institutions can both support their clients’ transitions and use their influence to steer industries towards more sustainable practices.

Its effectiveness is no longer possible through regulatory or moral obligations towards contributing to global sustainable development goals (SDGs): climate resilience must become an imperative to remain competitive.