Climate risk shocks and corporate outsourcing

Over the last decade, Australia has experienced several severe natural disasters which have caused significant disruptions to its agri-food supply chains. Global climate change is driving an increase in the frequency and intensity of extreme weather events that can lead to natural disasters. The Intergovernmental Panel on Climate Change (IPCC) warns that climate change - and extreme weather events, in particular - pose significant threats to food security. While much food security research focusses on developing nations, contemporary, supermarket-based food systems have a number of characteristics that make them highly vulnerable to disruptions from extreme weather events. The experience of recent disasters and projections of on-going climate change suggest that Australia’s food systems are facing escalating climate risks to which they must adapt. This thesis considers how the agri-food supply chains that underpin Australia’s food system are enabled or constrained to cope with emerging climate risks and, in particular, to a more rapid recurrence of damaging weather events. In this thesis, supply chains are conceptualized as social institutions and identified as a key location in the food system for decision-making regarding the management of climate risks. The empirical focus of the research is national-scale fresh produce supply chains based on vegetables produced in south-east Queensland’s Lockyer and Fassifern Valleys. These supply chains have been affected by a series of severe weather events and natural disasters since 2011. The study applies qualitative methods to draw insights from supply chain actors regarding: the impacts of recent severe weather events; perceptions of these events and future climate risks; the ways in which climate risks are governed in the supply chain; and what responses have occurred following recent events. The analysis is informed by theoretical perspectives from the social sciences, in particular the social construction of risk, risk governance and resilience. The thesis aims to advance recent conceptualisations of food system resilience and proposes a set of attributes that would enable a capacity for resilience to climate risks and natural disasters within agri-food supply chains. The results of the study demonstrate that the impacts of recent natural disasters were unevenly distributed within the supply chain. Upstream segments of the chain (that is, business involved in vegetable production, packing and transport) experienced more significant impacts and longer recovery periods than downstream segments (such as wholesalers and retailers). The study finds that this is strongly linked to an uneven distribution of vulnerability to risks in the chain which, combined with the rapid recurrence of disaster events, has weakened the fresh produce supply system. The study provides important insights into perceptions, and social constructions, of recent weather events and climate risks amongst actors within fresh produce supply chains – addressing a significant gap in the literature. The results suggest that a shared narrative about Australia’s highly variable climate strongly influences a collective construction amongst supply chain actors which normalises and attenuates climate risk. The study finds, however, that recent extreme weather events have unsettled this dominant construct. Perceptions of future climate risks amongst supply chain actors were varied. Those strongly influenced by the climate variability narrative did not expect future risks to be much different from those experienced in the past. A smaller number of research participants, however, were concerned that climate risks may be escalating and that this may require changes to how those risks were managed. The study found two strongly contrasting approaches to the governance of climate risk in fresh produce supply chains. The findings demonstrate that, typically, climate risks are governed in highly individualised ways but that the emergence of new supply chain intermediaries is facilitating a more collective approach to climate risk governance in some chains. The research also shows that recent recurrent floods have catalysed a number of supply chain actors to pursue changes that improve their capacity to more effectively manage climate risks. Those most motivated to make adaptations were found to be involved in supply chains characterised by individualised governance of climate risks. The thesis concludes by considering what the findings suggest about the prospects for cultivating resilience to escalating climate risks in supply chains and the implications for food security in Australia. The study finds that while a collaborative approach to risk governance is emerging in some cases, there are significant constraints to cultivating climate change resilience in fresh produce supply chains in Australia – and that this adds to known threats to our national food security. The research suggests, however, that adopting a risk governance perspective could help to engage a wider set of social actors, particularly governments and consumers, in the process of improving supply chain and food system resilience in the face of climate change.

This study analyzes how two different kinds of rationality—scientific and social—interact with each other with respect to the management of global climate change (GCC) risks. Interactions between scientific and social rationalities have two meanings: one is interaction between researchers and citizens (science and society), and the other is interaction between natural scientists and social scientists (among disciplines). As for former meaning, the present study conducted several attempts of “talking about climate” with citizens as transdisciplinary research practice in sustainable science. As for the latter meaning, the present study conducted transdisciplinary research among social scientists and natural scientists. The results show that there are three types of understanding on GCC: (A) understanding of the mechanism of GCC, (B) understanding of the effect of GCC, and (C) understanding of the countermeasures. The results also show the gaps between the understanding of experts and that of citizens: whereas experts want to show a Type A understanding first and then Type B followed by Type C, citizens tend to focus on Types B and C first. In addition, natural scientists tend to divide value-free statements and value-laden statements, whereas social scientists tend to consider that every statement includes value judgements. Here, natural scientists think of themselves as being neutral, because they divide technical issues and ethical issues, while citizens think that experts are not neutral, because they see natural scientists as putting more value on GCC risks than other risks. It is easy in scientific papers to criticize dichotomy between facts and value and linear model in which the interaction between science and policy is conceived of as unidimensional, linear, and one way: from science to policy. However, in actual interaction in transdisciplinary practice, these kinds of dichotomy and linear model still underlie in the base of experts’ thinking. To overcome these kinds of gaps between experts and citizen as well as between natural scientists and social scientists, we recommended a discussion space as an intermediate layer between government, experts, and public.

This chapter compares regulations that address the risks of air pollution—one of the most critical dimensions of environmental regulation. It specifically examines the policies in the United States and Europe and their decisions toward the health and environmental risks of mobile (vehicular) source pollutants, ozone-depleting chemicals, and global climate change. The politics of global climate change reveals a very divergent pattern. In this case, the preferences of American policy makers were more polarized than in Europe. American public policies toward the risks of global climate change have been significantly affected by partisan differences, which increased substantially during the 1990s. By contrast, European policies toward global climate change have been much less affected by differences in the political preferences of center-left and center-right policy makers.

Climate change risk has become an important challenge for global sustainable development. The insurance industry can play an important role in coping with the increasingly severe climate change risk. This paper first describes the increasing climate change risk and the difficulties of the insurance mechanism in dealing with it. Then this paper summarizes the international practice of using the insurance mechanism to deal with climate change risk from ten different aspects. Based on the summary of the role of the insurance mechanism in dealing with this risk in developing countries, this paper puts forward the main application areas for climate change risk insurance and discusses the policy implications of developing climate change risk insurance in China.

The major research question of this paper is to analyze climate change risk as a challenge to corporate governance. Climate action failure was the environmental risk most frequently listed in the top ten country risks. It also becomes a major reason that many companies are taking their own initiatives on climate change action which poses an imminent challenge for corporate governance as boards of directors track and assess such initiatives by their own companies. Boards can play a key role in guiding their organizations into the next new normal in the wake of global pandemic, economic disruptions, and ongoing climate change problems. This paper identifies and studies the corporate governance risks and opportunities related to global climate change risk and provides recommendations to boards of directors. The major sections of this paper are global climate change risks, corporate climate change pledges, climate-related financial disclosures, major topics in the Global Climate Change report, whether companies are ready to manage major climate change risks and opportunities, climate-related investment benchmarks, and conclusions. Future research could investigate this climate change risk challenge with case studies or empirical studies.

Over the past decade, climate risk has emerged as one of the most urgent global challenges, posing serious threats to ecosystems, economic stability, and human well-being. A substantial body of research has explored the macroeconomic implications of climate risk. However, studies examining its micro-level effects, particularly on financial institutions remain relatively scarce. This imbalance underscores the need for deeper investigation into how climate risk influences bank-level performance. This paper explores whether corporate social responsibility (CSR) can mitigate the negative effect of climate risk on bank performance. The paper uses a sample of MENA banks from 2010 to 2022 and the system generalized method of moments (SGMM) model was used as an empirical approach. The findings of this paper support three major conclusions. First, climate risk was negatively and significantly associated with the bank performance measured by return on assets (ROA) and return on equity (ROE). Second, CSR scores were positively and significantly linked to bank profitability. Third, the findings indicated that banks in the MENA region benefit from an interactional between CSR and climate risk since it increases bank performance. This research completes an important missing piece of the debate on the moderating role of Corporate Social Responsibility (CSR) on the climate risk-bank performance interaction. This research addresses a significant gap in the ongoing debate surrounding the moderating role of CSR in the relationship between climate risk and bank performance. Findings of this study offer several practical insights. Notably, CSR initiatives may serve as an important mechanism in mitigating the adverse impact of climate risk on banking outcomes.

Although the general acceptance of human-influenced global climate change within the technical sphere of science is important to consider, public perceptions of global climate change risks, impacts, causes, and solutions are as important to policy actions as scientific findings. Yet, studies analyzing climate change risk perceptions suffer from a number of limitations or use only a handful of approaches. Using a limited life history approach, this article answers calls for additional qualitative approaches in risk perception research. This article (1) introduces risk perception researchers to the limited life history method; (2) discovers that young adults articulate climate change solutions at the individual level, often as consumers, and blend their responses to climate change risks and advocacy for solutions with a general, environmentally friendly orientation, a ‘green posture;’ and (3) contends the key sources informing young adults’ perceptions about climate change risk have changed significantly from previous studies.

Research on quantitative assessment of climate change risk at an urban scale: Review of recent progress and outlook of future direction

Global climate change and contaminants, a call to arms not yet heard?

South Asia is the most vulnerable region in the context of global warming, climate change, and climate risk. Climate finance is the most useful tool for combating climate challenges worldwide. The study explores the present picture of climate finance in South Asian (SA) countries. The study uses multilateral development bank (MDB), Green Climate Fund (GCF), and Germanwatch supplied data from 2011 to 2021. Under the theoretical lens of institutional capacity development, the study attempts to correlate climate finance and climate risk. The study indicates an increasing trend of MBDs’ and the GCF’s climate finance in many countries worldwide. The study finds that MDBs’ total global climate finance is USD 446,977 million, while the SA region has received USD 59,301 million since 2011. It also reports that MDBs provide 77% and 23% of the money to the mitigation and adaptation areas. Moreover, the study reports that, after COVID-19, MDBs substantially increased the amount of global climate financing, but this increase was not seen in the SA region. Our climate risk data indicate that most of the SA countries are highly long-term climate risky and lose, on average, 0.378% of GDP. The correlation matrix finds a negative and significant correlation between climate finance and long-term and yearly climate risk. The study identifies that the region’s climate financing flow of money is not rationally distributed based on the short-run and long-run climate risks. The study presumes that more climate finance would be the most effective mechanism to mitigate climate risk. Therefore, SA region leadership drastically requires a holistic framework to address the prevailing climate problems and to ensure regional coordination and cooperation toward climate finance and policies. The research findings have significant implications for climate policy and climate finance.

This working paper looks at the extent to which current securities filings regulations with the Australian securities authorities require (or alternatively, recommend) listed Australian Securities Exchange (ASX) entities to disclose climate change risks on the performance of a listed entity. The paper also reviews what in practice is being reported for the 2013 reporting year. The ASX Corporate Governance Principles and Recommendations which ASX-listed entities are strongly encouraged to adopt are currently under review and a new proposed 3rd edition draft includes a recommendation that ASX-listed entities disclose environmental and social sustainability risks to investors. Further, the Australian Securities Investment Commission has issued guidance that recommends listed entities include in their annual reporting requirements a discussion of environmental and other sustainability risks where those risks could affect the entity’s achievement of its financial performance or outcomes disclosed, taking into account the nature and business of the entity. A review of the 2013 disclosures made in annual reports from a sample of ASX Top 20 listed entities by market capitalization evidence a lack of comprehensive risk identification and discussion which linked climate change risks to business strategy and financial performance. Many of the annual reports reviewed for the purposes of this work paper contained only limited basic information, if any at all, rather than any substantive disclosure on climate change risks and their materiality on existing or future operations and financial performance.

<p><span lang="EN-US">To broaden our understanding of global climate change (GCC), this article presents results from an ongoing longitudinal research project that investigates public GCC risk perceptions in nine countries focusing on different perceptions important in policy formulation. A key goal of the study is to understand which nations express similar or different viewpoints with respect to explanatory factors such as threat perceptions, hazard experience, socio-demographics, knowledge of climate change, and other factors found in the environmental hazards literature. Despite many variances in GCC perceptions among the surveyed national populations, the analysis shows that some differences are marginal, while others allow the grouping of countries based on different perception factors. Survey results reveal a high degree of uncertainty with regards to climate change dimensions including risk, science, knowledge, and policy approaches to mitigate GCC.</span></p>

In the face of climate change (CC), “business as usual” is futile. The increased frequency and intensity of extreme weather events (e.g., hurricanes, floods, droughts, and heatwaves) have hurt lives, displaced communities, destroyed logistics networks, disrupted the flow of goods and services, and caused delays, capacity failures, and immense costs. This study presents a strategic approach we term “Climate-Change Resilient, Sustainable Supply Chain Risk Management” (CCR-SSCRM) to address CC risks in supply chain management (SCM) pervading today’s business world. This approach ensures supply chain sustainability by balancing the quadruple bottom line pillars of economy, environment, society, and culture. A sustainable supply chain analytics perspective was employed to support these goals, along with a systematic literature network analysis of 699 publications (2003–2022) from the SCOPUS database. The analysis revealed a growing interest in CC and supply chain risk management, emphasizing the need for CCR-SSCRM as a theoretical guiding framework. The findings and recommendations may help to guide researchers, policymakers, and businesses. We provide insights on constructing and managing sustainable SCs that account for the accelerating impacts of CC, emphasizing the importance of a proactive and comprehensive approach to supply chain risk management in the face of CC. We then offer directions for future research on CCR-SSCRM and conclude by underlining the urgency of interdisciplinary collaboration and integration of climate considerations into SCM for enhanced resilience and sustainability.

Chapter 6: Insurance industry

Social security contributions and corporate outsourcing