Experts advise businesses on climate change
These are the two key recommendations from two leading analysts with quite different careers.
Admiral Dennis Blair, formerly US Director of National Intelligence for President Barack Obama and commander of US Pacific forces, said climate change was "becoming a specific issue ... in the security planning of all countries".
Admiral Blair will outline the "future global security agenda" at the National Business Leaders Forum on Sustainable Development on Thursday in Canberra. He cited the unrest in Syria and Egypt as related to more extreme weather and predicted greater pressure on water resources, including in Asian nations reliant on seasonal flows from the shrinking Himalayan ice cap.
He supports placing a price on carbon, while recognising such a policy was unlikely to win backing in the US and faces the threat of being repealed in Australia if the Coalition is elected in September.
"We're just not going to be able to get a big-bang solution," Admiral Blair said. "I know of very few businesses who will volunteer to make their products more expensive because of something that might happen in 20 or 30 years."
The retired admiral's comments come as President Obama is expected to reveal in the US his long-awaited climate change action. Rather than seeking congressional backing for a price on carbon - a battle he lost during his first term - Mr Obama is likely to use regulatory powers to curb emissions from coal-fired power plants, spur renewable-energy investments on public lands, and provide incentives to increase energy efficiency.
Admiral Blair argues that if governments are to spend money in this area, it should be in research and development, such as in universities, rather than to pour subsidies into favoured industries. "It creates bubbles that are unsustainable, and when government subsidies are finally pulled out, there's some sort of crash that discredits what otherwise might have been a good idea."
Director of the CSIRO's Climate Adaptation Flagship Paul Hardisty said it was up to companies to make investments to limit the effects from the expected increase in wild weather on their businesses.
Dr Hardisty, whose former roles include global director for sustainability at mining services company WorleyParsons, will tell this week's forum there is a "huge upside" in investing in programs with "no regrets" - steps they should take whatever their view on the seriousness of global warming.
Preparing for extreme heat, for instance, can involve simple improvements to insulation and adaptive-cooling systems, resulting in big energy savings, and protecting the health of employees.
Recent floods in Australia have also shown firms that "retrofitting" is a lot more expensive than building in resilience at the outset, not least because cost pressures are fiercest when many firms seek to recover at the same time. While some firms are undertaking risk assessments, many are not as prepared as they should be, Dr Hardisty said.
Frequently Asked Questions about this Article…
The article notes Admiral Dennis Blair warns against costly government subsidies for renewable energy, saying they can create unsustainable bubbles that crash when subsidies end. For investors, that means being cautious about companies that rely heavily on government support and watching for signs of durable demand or underlying technology strength rather than temporary subsidy-driven growth.
Admiral Blair supports placing a price on carbon because it influences business planning, but the article says such policies may lack political backing in the US and could be repealed in Australia under some governments. Investors should factor in carbon-pricing risk as a potential regulatory driver, while keeping in mind the political uncertainty around implementation.
The article reports President Obama was expected to use regulatory powers to curb emissions from coal-fired power plants rather than pursuing a new carbon law. For investors, tighter regulation of coal plants can shift returns toward cleaner energy and efficiency-focused companies and increase regulatory risk for coal-heavy businesses.
Paul Hardisty from CSIRO’s Climate Adaptation Flagship advises companies to invest to limit the business impacts of more frequent extreme weather. For shareholders, companies that build resilience (rather than delaying fixes) can avoid bigger disruption and repair costs after events, protecting long-term value and cash flow.
The article highlights ‘no-regrets’ steps such as improved insulation and adaptive cooling systems, which reduce energy use and protect employee health. These measures save money and lower risk regardless of how climate policy evolves, making them sensible investments from an investor’s perspective.
Recent floods in Australia showed that retrofitting after the fact can be much more expensive than building resilience from the start, especially when many firms face recovery costs simultaneously. Investors should watch for companies that plan ahead on resilience to avoid large, unplanned capital outlays that can hit margins.
The article says some firms are undertaking risk assessments but many aren’t as prepared as they should be. Investors should look for evidence of formal climate risk assessments, resilience planning, investments in adaptive infrastructure, and transparent reporting on how extreme weather risks are managed.
Admiral Blair recommends governments prioritise R&D—for example in universities—over industry subsidies. For investors, advances from publicly funded R&D can create long-term opportunities in new technologies and services, so monitoring R&D outcomes and spin-outs may reveal promising investment themes.
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