Participants at the Eastern Economic Forum discussed how businesses can adapt to climate change, including one of the most pressing issues for Russia, the thawing of permafrost. The panel session “Business in the Climate of Tomorrow: Risks and Adaptation” was held with the support of Udokan Copper.
According to Yulia Shabala, Deputy General Director for Sustainable Development and Corporate Affairs, both government and businesses are increasingly facing the negative consequences of global climate change, such as droughts, floods, forest fires and ecosystem degradation. In the past year alone, the damage from floods in Primorye exceeded RUB 12 billion, while the area affected by wildfires in Yakutia was comparable to the territory of Greece. The thawing of permafrost, which covers about 65% of Russian territory, poses a particular challenge for the country. According to the Russian Academy of Sciences, damage to infrastructure in the Arctic could cost the economy up to RUB 9 trillion annually by 2050. Russian companies must therefore adapt proactively to these changes.
“Fighting climate change is a double financial blow,” said Ms Shabala. “According to the Ministry of Economic Development, climate change adaptation measures may require around 1.5% of GDP. At the same time, the carbon reduction goals set by businesses themselves remain in place: companies must adapt to a changing climate while also investing in combating it.”
Maria Nikishova, a member of the Board of Directors of the Kamchatka Krai Development Corporation, noted during the discussion that warming in Arctic regions is occurring at a rate three times faster than the global average. More than 40% of the buildings in permafrost zones are currently showing signs of deformation, posing serious risks. By 2050, the bearing capacity of soils across 70% of Russia’s Arctic territory is expected to decline by 15%, putting buildings, pipelines, power lines and other infrastructure at serious risk. Climate-related damage could amount to RUB 11 trillion by 2050.
According to Igor Makarov, head of the Laboratory for Climate Change Economics at the Higher School of Economics, the diversity of Russia’s climatic conditions and the differing levels of socio-economic development across the country mean that the impact of climate change on the populace varies significantly from region to region. At the same time, he said that there is no single recipe for adaptation and that the need for adaptation measures often extends beyond the scope of business and requires state involvement.
Mr Makarov added that regions in the Far Eastern Federal District face a combination of three climate risks: the impact of thawing permafrost on populations and infrastructure, the spread of wildfires and the effect of extreme precipitation on infrastructure.
According to Igor Korotetsky, head of the Engineering Department and the Operational Risks and Sustainable Development Group at Kept, infrastructure disruptions caused by climate change could lead to losses equivalent to up to 7% of corporate profits by 2035. He stated that the issue of adaptation has become a core business concern, as climate impacts are already being felt in production and logistics. He also noted that one effective response is systematic management of climate risks at the corporate level.
Forum participants also discussed the risks posed by forest fires, extreme precipitation, and the impact of global warming on rivers and other ecosystems, as well as how businesses and government can adapt to a changing climate.
