ARTICLE - BUSINESSES AND DISASTERS

BUSINESSES MUST TAKE THE INITIATIVE IN DEALING WITH DISASTER
(Guardian.co.uk)- By Lord Ashdown

Corporate investment in the resilience of developing countries makes sense on economic as well as humanitarian grounds

You don't have to look further than the front pages of our newspapers to see that disasters are becoming more and more frequent, particularly in developing and emerging economies. The roll call of destruction is fresh in our minds – Haiti, Pakistan, Japan, the Horn of Africa, all in the last 19 months. The UK public has responded generously to humanitarian appeals, which is vital, saves lives, and is needed more and more.

But there is another approach that is currently being missed, particularly by businesses. The business community can play a key role in building the resilience of communities, preventing the next extreme weather event from being a major disaster, and creating huge social, economic and environmental benefit at little cost.

As president of Unicef UK I have seen the shattering impact of emergencies, both man-made and natural, on the lives of children and communities. I have also seen the scale of response they require. In 2010, Unicef responded to 290 emergencies in 98 countries. Climate change is set to increase further the frequency and intensity of extreme weather events.

Combined with an increase in urbanisation, rising population and wider environmental degradation, climate change impacts are projected to increase the number of children affected by disasters from 66.5 million to 175 million over the next decade. There is an economic impact to these changes: global losses from weather-related disasters amounted to a total of around $83 bn during the 1970s, but by the 1990s that figure had risen to $440bn. It's set to rise even further, and it is developing countries, and the businesses present in those countries, that are facing the bill.

So how should business respond to the growing need for support following slow onset disasters such as the crisis in the Horn of Africa, or dramatic, extreme weather events like the tsunami in the Indian Ocean? And, perhaps more importantly, why should they respond?

Currently, the business response to emergencies is almost always reactive, focused on immediate requests for cash or gifts in kind. While this support remains vital and is applauded by organisations like Unicef, there is also a longer-term, more strategic need: building resilience and preparedness. A recent study by the UK Trade and Investment department suggests that, globally, nine out of 10 businesses were significantly affected by extreme weather events. Even in the UK, a third of businesses were affected between 2007 and 2010.

Despite this massive risk, UK businesses, especially those with a global presence, or those reliant on supplies and resources from developing countries, are not taking action to adapt and build resilience. A recent report by the UK Committee on Climate Change showed that fewer than one in 15 companies, local authorities and other public bodies were taking action on resilience and adaptation.

Businesses that invest in risk reduction and resilience are not only supporting the communities most vulnerable to the impacts of climate change and wider emergency issues, but are investing in that country's business continuity. It makes both ethical and strategic sense for businesses to support companies and communities down their value chain.

For example, the risk posed by flooding and rising sea levels to rice producers in Bangladesh, or the textile industry in India, is also a risk to supplies for their client businesses. Building more resilient communities can help reduce the need for aid and the risk of conflict and migration, helping to develop local economies. And if money is a problem, here's the thing: investment isn't just financial. Business can and should be offering managerial training to support and build government capacity in vulnerable countries. Resilience is not just about infrastructure, it's also about investing in human capital.

It is estimated that $10bn is spent annually on humanitarian assistance. Of this, only 4% is devoted to prevention. Yet every dollar spent on risk reduction saves between $5 and $10 in economic losses from disasters. This is a clear financial case for business as well as a critical humanitarian case.

In China, investment of $3.15bn in flood control measures over 40 years is believed to have averted potential losses of $12bn. In Vietnam, 12,000 hectares of recently-planted mangroves protect 110km of sea dykes. Planting and protection cost $1.1m, but have reduced the cost of dyke maintenance by $7.3m a year (and the mangroves have protected 7,750 companies living behind the dykes).

Unicef is scaling up its work on disaster prevention and resilience around the world. These projects vary from building cyclone-proof and environmentally-friendly schools in disaster-prone areas such as Madagascar, to involving women and children in teaching essential skills such as swimming and evacuation plans.

We are deploying innovative new technologies and approaches and working with a range of actors, including governments and local organisations. But currently businesses are playing a limited role (though one that we value highly). Frankly, this is a missed opportunity for them. They have a real chance to future-proof local communities, related to their businesses, helping to build resilient communities, suppliers, customers, employees and future markets.

In May 2011, Unicef UK launched a new scheme for businesses called climate positive. The aim is to create resilient communities around the world by calling on the business sector to invest in a future that is less dependent on humanitarian aid. On Monday, I will be chairing a Unicef UK corporate social responsibility event on this issue that will bring together some of the leading voices in the corporate sector along with the secretary of state for international development.

My message will be clear: investing in emergency risk reduction and helping to build the economies of developing countries should be on international businesses agendas. This will not only save lives, but also protect livelihoods and local economies, which can't help but benefit business.