Climate intelligence, an opportunity to boost climate resilience
27 December 2021
By Joanna Kedzierska
Climate intelligence is becoming an increasingly popular technology as it enables the prediction of climate risks in advance, making public and private entities more resilient to the extremes caused by climate changes. Although it is still not a prevalent concept, if it was to be applied on a massive scale, it could significantly cut the costs that companies have to bear as a result of climate change.
What is climate intelligence?
💡 Climate intelligence is based on technology that is able to collect different data to assess long- and short-term climate risks then mitigate these and adapt to them. It uses artificial intelligence, machine learning, data gathered by different sensors, satellites, and both historical and current information from many entities.
Based on this data, the companies engaging with climate intelligence are able to prepare models that can predict events such as heatwaves, floods, hurricanes, droughts, or wildfires, thus giving public and private companies sufficient time to adapt to and mitigate those extremes.
Climate intelligence is in fact business intelligence as it allows unnecessary costs to be saved by those who decide to use it.
“Climate intelligence puts climate at the core of decision-making. Enterprises, governments, and NGOs use it to make climate-aligned decisions,” says Iggy Bassi, Founder & CEO of Cervest, a UK-based climate intelligence company.
How does climate intelligence work and what can it improve?
When companies are aware of what the climate risks are, they then have the ability to make informed decisions thus protecting them against financial losses. For instance, real estate construction companies may decide how to build properties to make their investments more climate-resilient in the face of extreme winds or rising sea levels. With knowledge of changing weather patterns and extremes, farmers would be better equipped to decide how to optimally plant, grow and harvest by learning about predictable temperatures in advance. Climate intelligence may in fact allow a great deal of money to be saved.
A study published in 2016 in the American scientific journal, Nature, assessed that up to 16.9% of global assets worth about US$24.2 billion are at risk due to climate change. In 2020 alone, the US witnessed 22 climate and weather extremes which caused over US$100 billion in losses whereas the application of climate intelligence could have significantly reduced those costs. Furthermore, knowledge about climate risks is also helpful in the decision-making process for those banks and insurers that cooperate with the public and private sectors.
Challenges
The market for climate intelligence services is growing and over the last few years, the industry has seen a boom in venture capital investments, amounting to US$17 billion in 2020. Those investments included projects that focused on climate intelligence and risk-modeling technologies.
Nevertheless, the sector still faces a great deal of challenges. In many countries, there is a lack of a regulatory landscape that would enable climate intelligence to grow as currently entities only voluntarily disclose data related to climate risks. Many companies have so far failed to understand that climate risk assessment could significantly add to the profitability of their business. In 2019 alone, 30% of the largest public companies in the US took climate changes into consideration in their annually reports. Whereas in the US more and more companies are willing to disclose their climate risk information thanks to appropriate regulations being in place, in many other countries such steps have yet to be taken and more effort is therefore needed to address this issue.
SOURCE: DEVELOPMENT AID