Urbanisation can be done wrong which will be disastrous, or right – by taking into account climate impacts, says Sir David King.

Adapting infrastructure to cope with ever more severe climate impacts is essential if businesses are to avoid crippling losses, warned Sir David King, the UK Government’s special representative on climate change, last week.

“The next 30 years will witness the fastest growth in urbanisation the world will ever see. This can be done wrong, with infrastructure that isn’t fit for purpose, which will be disastrous. Or it can be done right – we turn it into an opportunity to create new urban environments that are low carbon and climate resilient.” - Sir David King

Sir David delivered a hard-hitting keynote speech at the launch of a new report, Climate change and business survival, authored by Mott MacDonald.

The world has experienced nearly 1oC of warming since the dawn of the industrial age and is on course for a 6oC rise by 2100 unless drastic steps are taken to curb carbon emissions. Our climate is increasingly volatile and further change, resulting from historical carbon emissions, are already “locked in” he warned.

Meanwhile rapid population growth and urbanisation mean that the global infrastructure inventory is expanding rapidly. “People and infrastructure are at rapidly escalating risk from climate events,” Sir David cautioned.

“The next 30 years will witness the fastest growth in urbanisation the world will ever see. This can be done wrong, with infrastructure that isn’t fit for purpose, which will be disastrous. Or it can be done right – we turn it into an opportunity to create new urban environments that are low carbon and climate resilient.”

Climate change and business survival highlights the need for US$200bn of global investment per annum within 20 years to protect against US$1trn of potential losses. The report states that a third of this investment will deliver rapid payback but warns of a US$130bn ‘funding gap’. New financial instruments are required to stimulate funding to avoid leaving the asset base exposed to harm from climate change.

“There will always be residual losses as a result of climate events,” Allison said. “However, we predict that it will be cost-effective to protect against up to 80% of damage.” - Ian Allison, Mott MacDonald.

Mott MacDonald’s global head of climate resilience Ian Allison highlighted the interdependence of infrastructure and businesses, with the risk of cascade failures as service disruption caused by severe weather events ripple out across connected asset systems.

“There will always be residual losses as a result of climate events,” Allison said. “However, we predict that it will be cost-effective to protect against up to 80% of damage.”

Alistair Clark, managing director for environment and sustainability, European Bank for Reconstruction & Development (EBRD), called for public and private sector collaboration to unlock capital in order to reduce risk and cut losses.

“Governments can’t afford the scale of investment needed,” said Clark. “The private sector needs to do it, and governments need to leverage that investment.”

Clark added: “Mitigation projects are so easy to do, we’ve got the experience… and the payback time is several years. The rate of return on investment in adaptation is often much slower, which makes it hard for clients and investors to justify.”

Read Climate change and business survival here.