Climate Change Adaptation Guide
for Private Sector－Preparing for Climate Risk and Surviving－
March 2019

Contents
1. What is Climate Change Adaptation for Private Sector? .................................................................. 31) Climate Change Impacts are Growing ............................................................................................................................................... 32) Climate Change Affects the Sustainability of Firms ..................................................................................................................... 6
2. Impacts of Climate Change on Business Activities .......................................................................... 8
1) Impact on Business Activities Due to Meteorological Disasters, etc. (Sudden Impact) ............................................. 102) Long-term Impacts of Climate Change .......................................................................................................................................... 123) Indirect Impacts through Supply Chains ........................................................................................................................................ 13
4) Current Progress in Adapting to Climate Change ...................................................................................................................... 16
3. Turning Climate Change Adaptation Initiatives into Opportunities ................................................. 171)Enhancing Business Continuity ............................................................................................................................................................ 18a) Preparing for meteorological disasters ..................................................................................................................................... 18b) Preparing for medium- to long-term business continuity challenges ........................................................................ 192) Building a Flexible and Resilient Management Base to Resist Climate Change Impacts .......................................... 21
3) Building Stakeholder Trust to Enhance Competitiveness ..................................................................................................... 24a) Building good relationships with employees and suppliers .......................................................................................... 24b) Enhancing the trust of customers ............................................................................................................................................... 25c) Strengthening the management foundation by gaining the trust of investors, etc. ............................................. 25d) Improving corporate value through coordination with local governments .............................................................. 26e) Contributing to the achievement of the Sustainable Development Goals (SDGs) ................................................. 28
4) Developing Existing Products and Services as an Adaptation Business ........................................................................... 29
4. How to Approach Climate Change Adaptation ............................................................................. 32
1) First Steps .................................................................................................................................................................................................... 32a) Objectives (policies) for climate change adaptation ........................................................................................................... 32b) Scope (boundary) ............................................................................................................................................................................... 33c) Time frame............................................................................................................................................................................................. 33d) Implementation structure ............................................................................................................................................................... 34e) Involvement of senior management .......................................................................................................................................... 36
2) List the Impacts (Risks and Opportunities) of Climate Change ............................................................................................ 37a) Determine the impacts of climate change experienced so far ........................................................................................ 37b) Obtain information on future climate change and impacts in each field .................................................................. 38c) List the specific impacts expected in future ............................................................................................................................ 39d) Determine the actual extent of countermeasure implementation ................................................................................ 403) Identify Priority Issues ............................................................................................................................................................................ 42
4) Select and Implement Adaptation Measures ............................................................................................................................... 42a) Selection of adaptation measures ............................................................................................................................................... 42b) Timing of implementation of adaptation measures ............................................................................................................ 44
5) Confirm and Review Progress ............................................................................................................................................................. 48a) Periodic review..................................................................................................................................................................................... 48b) Review based on new forecast information ............................................................................................................................ 48
5. For More Detailed Information .................................................................................................. 50
Review Committee on Promotion of Climate Change Adaptation by Private Business Operators ............. 52

1

Introduction
In July 2018 torrential rain caused enormous damage in Japan, mainly in western regions, and Typhoon Jebi,
which hit the Kinki region (the area around Kyoto and Osaka) in September of the same year, had a variety of
impacts on private sector, including damage to buildings, power outages, water outages, and suspended
operations. The impacts on private sector were not limited to the disaster-stricken areas, but spread throughout
Japan due to the disruption of supply chains and distribution. In the future, climate change is expected tofurther increase the risks of such torrential rains and typhoons, as well as extreme heat.
The impact of climate change varies depending on the location and business activities of individual companies.
Climate change impacts are expected to grow further in the future. In order to avoid and mitigate these impacts,
it is important to implement independent measures that take into account the characteristics of eachcompany's business activities. Strategic efforts to adapt to climate change are indispensable not only forenhancing business sustainability, but also for enhancing the competitiveness of private sector by, for instance,increasing the confidence customers and investors have in them, and creating new business opportunities.
Under Japan’s Climate Change Adaptation Act enacted in June 2018, it is expected that "in order to carry out
their own business activities smoothly, businesses shall endeavor to adapt to climate change in accordancewith the content of their business activities and to cooperate with national and local governmental programsfor climate change adaptation." To this end, Japan’s Ministry of the Environment has formulated this Guide tosupport private sector's voluntary efforts.
The purpose of this Guide is to deepen understanding of the relationship between climate change and businessactivities and to promote independent efforts among those who are engaged in the management andoperation of private sector seeking to tackle climate change adaptation. The main body of this Guide introduces
the impact of climate change on business activities, the basic approach to adaptation, and the merits of private
sector addressing adaptation. The accompanying supplementary material explains the items contained in themain body of this Guide, and also provides reference materials on climate change impacts and examples bothin Japan and overseas.
We hope that this Guide will be used not only by private sector, but also by other organizations and NGOs asa reference document to promote independent adaptation and sustainable management in line with theirrespective activities. We hope that this Guide will also be used by local governments in cooperation with private
sector and other organizations in their efforts to deal with the issues of local climate change adaptation.

2

1.

What is Climate Change Adaptation for Private Sector?

In recent years, natural disasters, increased risk of heatstroke, and crop failures caused byclimate change have begun to have a major impact on business activities.
There are concerns that the impacts of climate change will expand as global warming
progresses, and the importance of adaptation efforts to avoid and mitigate the impacts ofchanging climate in the future is increasing.

As companies in Japan manage their daily business activities they have to deal with a variety of issues
including a dwindling labor force, changes in consumer preferences, changes in the political andeconomic situation in Japan and abroad, and the need for stable procurement of raw materials.
At the same time, they are also required to act appropriately by giving consideration to the naturalenvironment and to social issues such as the human rights of workers and coordination with local
communities. Climate change, in particular, raises concerns that, in addition to bringing about majorchanges in social and economic activities as we strive to achieve decarbonized societies, it could also
generate various impacts that will threaten the sustainable development of corporations, such as
climate disasters, drought, increased risk of heatstroke, and changes in market and customer needs.
Adaptation to climate change refers to efforts to improve business continuity and resilience by
avoiding and mitigating risks in preparation for climate change impacts that are currently occurringor are of concern in the future.

1) Climate Change Impacts are Growing
In recent years, extreme weather phenomena (i.e., abnormal weather) such as heat waves, torrential
rains, and droughts have occurred frequently in many parts of the world. In Japan, too, heavy rainfall
exceeding 100 mm per hour and extreme heat exceeding 40℃ have been observed in various areasof the country, and have had a major impact on corporate activities and the lives of citizens.

3

Canada:High/low temps• In Quebec over 50 deathsin July due to heat waves• Daytime max. over 35C
• In Newfoundland -1Cwith snow in June

Armenia:
High temps• 42.6 C in July(highest on record)• Daily average +4-7Ccompared to normal
years

Western U.S.:High temps• In California 53C
• Near Los Angeles 48.9CSouth America:
Low temps• In Argentina and Bolivia
June monthly average -3Ccompared to normal years

Siberia:
High temps• June monthly average +5Ccompared to normal years• Daytime max. 29C (daily
average in normal years:
3C)

Japan:High temps/high rainfall• Over 220 deaths due toheavy rain
• In Shikoku total
precipitation over
1,800 mm
• 41.1C recorded in July(highest on record)

Scandinavia:
High temps/low rainfall• High temps during May-July• July monthly average +5Ccompared to normal years• In Sweden approx. 50 forest
fires during July

India:High rainfall• Over 280 deaths inJune and over 190
deaths in July due
to heavy rain

Northern Africa:
High temps• In Morocco 43.4C(highest on record)• In Sahara Desert 51.3CSouthern Europe:
High rainfall• June rainfall far
exceeded normal
years• In Italy 8 times asmuch rainfall as innormal years

Northern Europe:
Low rainfall• Little rain during June-July• June rainfall less than 10%
of normal years

Turkey:High temps• High temps during June-July• 41C in July (daily average
in normal years: 25C)

Figure 1.1 Abnormal weather worldwide(Difference in average June & July temperatures compared to the average for 1981–2010)
Source: WMO (excerpted from WMO articles and the Japan Meteorological Agency's website)

One of the causes of these abnormal weather conditions is thought to be global warming resulting
from greenhouse gases such as carbon dioxide emitted by human activities. Global average annual
temperature is currently about 1°C higher than the pre-industrial level due to greenhouse gas
emissions and is likely to exceed 1.5°C higher than the pre-industrial level between 2030 and 20521.
If adequate measures are not implemented in future, the average temperature is expected to rise by
about 4°C by 2100. At present, various impacts on business activities and people's lives have alreadybeen generated, and there are concerns that the impacts will grow further as global warming
progresses in the future.

1 IPCC (Intergovernmental Panel on Climate Change) 1.5°C Special Report (October 2018)
In English and Japanese: https://www.env.go.jp/press/files/jp/110087.pdf

4

Up by1.19C
Trend = 1.19 (ºC/100 years)

Up byapprox.

in 100 years

Deviations from averages for 1981–2010 (ºC)

4C
more
Note: Shaded part indicatesrange of uncertainty.

Assuming continuationof current GHG
emission levels

Up byapprox.

Assuming continued,
steadfast efforts to limit
GHG emissions
Japan Meteorological Agency

1C
more
Year

Year

Figure 1.2 Annual average temperature deviations inJapan (1898–2017)
Source: Prepared based on annual average temperature dataon the Japan Meteorological Agency website

Figure 1.3 Projections of global average surface temperature
Changes as compared to average temperature levels for 1986–2005
Source: IPCC, 2013: Prepared based on graphs in the Working Group I
contribution to the IPCC Fifth Assessment Report

The effects of climate change may comprise not only sudden impacts, such as abnormal weather,which are relatively infrequent but can cause significant losses once they occur; they may also
comprise long-term impacts that gradually progress, such as an increase in heatstroke risk due torising average temperature, an impact on water resources due to changes in precipitation patterns,
or an increase in storm surge risk due to rising sea levels.
See the next chapter (2. Impacts of Climate Change on Business Activities) for details.

Table 1.1 Examples of Potential Future Climate Change Impacts and Major Adaptation Measures
Category
Agriculture
Natural disasters

Water resources
and water
environment
Naturalecosystems
HealthPotential Future Climate Change
Impacts

Examples of Major Adaptation
Measures

Degradation of rice and of fruit trees due
to high temperatures
Frequent flood damage exceeding thecapacity of flood control facilities

Development and popularization ofhigh-temperature resistant varieties
Steady development of levees, flood
control facilities, and seweragesystems
Promotion of rainwater and recycledwater use

More frequent, prolonged, and severe
droughts
Coral bleaching
Increased risk of mosquito-borne
infections such as dengue feverConservation and restoration ofcoral reefs
Promotion of measures to control
vector mosquitoes

Source: Prepared from the Climate Change Adaptation Plan (approved by the Japanese Cabinet on November 27, 2018)52) Climate Change Affects the Sustainability of Firms
To fundamentally solve the problem of global warming, it is essential to take measures to mitigate;that is, to reduce greenhouse gas emissions. The international Paris Agreement2 sets goals such as
keeping the increase in global average temperatures well below 2°C compared to pre-industrial
levels (2°C target). In order to meet these goals, the Paris Agreement requires that emissions ofanthropogenic greenhouse gases be reduced to net-zero3 (i.e., decarbonization is achieved) in thesecond half of this century. To bring about decarbonized societies, governments certainly must
accelerate their efforts, but high expectations are being placed on the contribution of industry as
well.
The Paris Agreement also calls for the promotion of adaptation as another measure against climatechange. This reflects concerns that—even if the efforts of governments and industry to reducegreenhouse gas emissions are maximally effective and the 2°C target is achieved—a temperature riseof 2°C compared to pre-industrial levels (about 1°C compared to today) could cause abnormal
weather conditions such as torrential rains and heat waves to occur even more frequently than atpresent. In order for enterprises to manage their businesses sustainably, therefore, it is very important
to work on mitigation targeting transition to a decarbonized society, as well as adaptation to avoid
or alleviate the inevitable impacts of climate change.
In recent years, the attitudes of institutional investors who invest in companies have been changing,and the trend toward seeking disclosure of information on climate change risks, opportunities, andresponses to them has accelerated. In June 2017, the Financial Stability Board (FSB)'s Task Force on
Climate-related Financial Disclosures (TCFD) released its recommendations, and an increasing
number of companies are using their annual reports and sustainability reports to disclose information
on risks and opportunities associated with the transition to a decarbonized society (transition risks
and opportunities), as well as climate change impacts (physical risks and opportunities), such as theincreased number of abnormal weather events. The TCFD requires companies to identify transition
risks and physical risks in their business activities from a medium- to long-term perspective throughscenario analysis, and evaluate the risks’ financial impacts and impacts on corporate strategies.
Corporate climate change adaptation is an effort to analyze physical risk scenarios and respond tothem, to collect information on future temperature rises and associated changes, and to evaluate theimpact on business activities. (For a glossary on transition risks, physical risks, opportunities, andscenario analysis, see the supplementary material that accompanies this Guide.)
Climate change impacts vary depending on the business activities and location of companies.
Correctly recognizing the relationship between climate change-induced changes in the businessenvironment and the company's business activities, and implementing measures in accordance with
Legal framework adopted at the 21st Conference of the Parties to the United Nations Framework Convention on Climate Change(COP21) held in Paris in November to December 2015. It came into force in November 2016, and now 184 countries and regions have
ratified it (as of January 16, 2019).
3This entails balancing the amount of anthropogenic greenhouse gas emission with the amount of anthropogenic greenhouse gas
absorption through methods such as afforestation and CCS (engineering methods for capturing carbon dioxide emitted and storing it
underground, etc.).
2

6

those business activities, will lead to building a business foundation that remains sustainable andresilient into the future. Strategic actions to adapt to climate change can also gain the trust ofinvestors, customers, and other stakeholders, thereby leading to increased competitiveness.

7

2.

Impacts of Climate Change on Business Activities

Climate change has had a variety of impacts on corporate business activities in the form ofchanges in the working environment of employees, decreased yields and quality of raw
materials, increased costs for maintenance and management of equipment, and changes inmarket needs.

Climate change has various impacts on management resources that are indispensable for businessactivities by private sector (such as employees, raw materials, physical resources, products, facilities,
funds, assets, technologies, and trust).
These impacts include not only sudden impacts such as damage to corporate facilities, or damage
to employees’ homes and disruption to commuting due to natural disasters. They also include longterm impacts such as decreased availability of water resources, agricultural products, fishery products,
and natural ecosystems due to changes in climate patterns, and the scope of these impacts covers
the entire supply chain.
These impacts of climate change affect enterprises' business activities in a variety of ways, including
a decline in production capacity and an increase in operational costs.

8

Table 2.1 Examples of Climate Change Impacts on Business Activities
Management
Resources andBusiness Activities
Buildings andfacilities

Examples of Climate Change Impacts
・Increase in the frequency of damage to facilities due to abnormal weather and weather disasters,
and in cost outlay for restoration
・Increase in the need for relocation due to sea level rise and storm surges
・Increased health risks due to heatstroke and infectious diseases, and increased costs associated with

Employees, etc.

measures to prevent heatstroke
・Damage to employees’ homes and disruption to commuting due to weather disasters

Manufacturing andbusiness activities
Supplies andlogistics
Markets andcustomers

・Damage to manufacturing facilities and interruption of business activities due to weather disasters
・Impacts of changes in climate conditions (precipitation, temperature, humidity, etc.) on productquality and water use
・Interruption of business activities due to supply chain disruption, such as damage to suppliers’
facilities
・Reduction in harvest yields and quality of raw materials and increase in their cost・Changes in customer needs and consumer trends (e.g., demand for high-temperature resistance)
・Changes in transaction and loan terms (e.g., stable supply is required despite increased weather
disasters)

Table 2.2 Recognition of the Impact of Climate Change on Business Activities4
Impact of climate change on business activities
Decrease/collapse of production capacity
Inability to maintain production levels

Increase in operating costs
Increase in the daily cost of implementing projects

Decline in demand for products/services
Decrease in consumer demand for products/services offered

Inability to execute business
Rise of market entry barriers (e.g.) Insurance contracts cannot be offered due to very high uncertainties.

Japan

Worldwi
de

40%

43%

38%

46%

17%

10%

11%

14%

Increase in cost of capital
Increase in capital investment required to maintain competitiveness. More frequent facility renewals and10%9%relocation costs
Source: Compiled from responses to the CDP Climate Change Questionnaire (2017)

The impact of physical changes caused by climate change on their business activities as recognized by companies that responded to
the CDP questionnaire for 2017 (limited to publicly available responses). CDP is an NGO established by institutional investors and others
to encourage companies to disclose their efforts to tackle climate change, etc. Of the Japanese companies that responded, 40%
recognized that they would not be able to maintain production levels, and 38% recognized an increase in operating costs, as effects ofclimate change.
491) Impact on Business Activities Due to Meteorological Disasters, etc. (Sudden
Impact)Climate change can bring about unprecedented weather disasters and heat waves.
In July 2018, torrential rain in western Japan brought arecord amount of rainfall in various regions, causing
serious impacts on private sector such as shutdown ofoperations, power outages, and interruption to supplies
of water for industrial use due to inundation. Some
small and medium-sized enterprises have been forced
into bankruptcy due to these impacts. Although it is noteasy to clarify the relationship between individual
meteorological phenomena and climate change, there are Figure 2.1 Damage caused by July 2018
concerns that climate change will increase the frequency

torrential rain disaster5

and severity of climate disasters in the future.

Case Study 2.1 Examples of Damage to Private Sector Caused by July 2018 Torrential
Rain Disaster

Manufacturing: As the supply of water for industrial use ceased due to the effects ofheavy rain, companies had to reduce their production activities by employing
temporary measures such as intermittent operation and shutdown of production
facilities. In addition, some of the in-house power generation facilities seriously
malfunctioned and significant losses were incurred due to the costs of restoringthese facilities to their original state and procuring additional external power.
Retail: A number of restaurant chain outlets were unable to operate due toprolonged water outages, which negatively impacted performance.
Leisure: Visitor numbers declined significantly due to the earthquake in northern
Osaka Prefecture, the torrential rain in western Japan, and the extreme heat. As aresult, business performance worsened and some companies had to apply for
insolvency protection under the Civil Rehabilitation Act.
Source: Compiled by the Ministry of the Environment using public documents

Heatstroke has also become more serious in recent years. In 2018, extreme heat exceeding 40℃
occurred in many parts of Japan, and the number of ambulance trips due to heatstroke increased to
1.5 times the previous year’s number. Particular attention is warranted in the construction industry

Source: Disaster Research Activity: July 2018 Torrential Rain, Kokusai Kogyo Co., Ltd. website
In Japanese: http://www.kkc.co.jp/service/bousai/csr/disaster/201807_west/index.html
510and other workplaces with many outdoor workers. According to a survey by the Ministry of Health,Labour and Welfare, the number of people killed or injured by heatstroke in the workplace has beenin the order of 400–500 every year in recent years.
(No. of people)

Construc- Manufac- Transportion
turingtationSecurity Commerce Cleaning/ Agriculture Forestry
servicesslaughter

No. of patients absent from work 4 days or longer

OthersNo. of deaths

Figure 2.2 Deaths and injuries due to heatstroke by industry (totals for 2013–2017)
Source: Death/Injury Accidents Caused by Heatstroke in the Workplace (2017)
In Japanese: https://www.mhlw.go.jp/stf/houdou/0000208979.html

112) Long-term Impacts of Climate Change
The impact of climate change on business activities is not limited to sudden events such as storms
and heat waves, but may also comprise the long-term impact of gradual climate change. Progress isgradual for such impacts as increased summer air-conditioning costs, crop failure due to higher
average temperatures, effects on water resources due to changes in precipitation patterns, and riskof storm surge due to rising sea levels. For example, in the tourism industry, which depends on thenatural environment, long-term impacts such as shortages of snow at ski resorts and coral bleachingin the Okinawa region have already emerged, and adaptation measures such as artificial snow
machines and coral reef conservation are required.
For many companies it is very important to secure good-quality, abundant water resources for stable
operations. Decreases in snowfall and changes in precipitation associated with climate change may
affect river flow, water quality, and dam water storage. In addition, companies that handle food andbeverages cannot overlook the impacts of climate change on the agricultural crops they use as raw
materials. In order to continue to procure sufficient quantities of high-quality raw materials, it isnecessary to implement measures over the medium to long term, such as improving the plantvarieties used in order to produce crops that can withstand high temperatures, and moving
production to different areas. At business facilities located in coastal areas, in addition to theincreased risk of storm surges and high waves due to rising sea levels, poor drainage may also be
expected.
These long-term impacts are not noticeable until they progress to some extent. However, when theymaterialize, countermeasures may not be taken in time, and there is a possibility that they will havea significant impact on business activities.

12Box 2.1 Awareness of Water Risks among Global and Japanese Companies (Aggregated
CDP Water Questionnaire6 Data)

There are concerns thatclimate change may
increase the risk of dry
weather and drought aswell as flooding. The
aggregated results of the
CDP Water Questionnaire
show that global
companies tend to beaware of water shortages
and Japanese companies
tend to be aware of floods.
We can see that many
companies alreadyrecognize water risks
related to climate changeeven today.

Table 2.3 Awareness of water risks among
companies responding to CDP Water Questionnaire
Awarenessof water risks

Japan

Global62%

No. ofcompanies
23

18%

298

51%

17

14%

255

43%

14

11%

Floods

249

42%

30

24%

ClimatechangeDeterioratingwater quality

237

40%

20

16%

226

38%

16

13%

Worseningwater
shortages
Increasingwater stressDroughts

No. ofcompanies
363

％

％

Source: Aggregated from responses to the CDP Water
Questionnaire (2017)

3) Indirect Impacts through Supply Chains
Supply chains encompassing suppliers of raw materials and parts, customers, and distribution
networks play important roles in corporate business activities. Climate change impacts that occur
outside a company's boundaries can therefore exert significant, although indirect, impacts
throughout the supply chain.
A typical example of a weather disaster that caused significant damage through a supply chain wasa major flood in Thailand that occurred in 2011. The prolonged inundation of seven industrial parks,
many of which were occupied by Japanese companies, had a major impact on Thailand's domestic
and international supply chains in the automotive and electronics industries, reducing global
industrial production by an estimated 2.5%7.

A CDP questionnaire aimed at ensuring that companies are aware of water risk, engage in comprehensive risk mitigation strategies,
and promote disclosure of the results. In 2017, CDP sent questionnaires to 4,653 companies worldwide and received responses from
2,025 companies. Of these, responses from 588 companies worldwide and 126 companies in Japan are available for public disclosure.
Table 2.3 shows the results of an analysis of the publicly available responses from companies.
7
White Paper on International Economy and Trade, 2012, Chapter 2, Section 1, “Thai Floods Significantly Impacted the Trade
Environment for Japan and Other Nearby Countries and Regions,” the Ministry of Economy, Trade and Industry
6

In Japanese: http://www.meti.go.jp/report/tsuhaku2012/2012honbun_p/2012_02-3.pdf

13

Society/Economy• Operating region weakened (infrastructure, labor
force, etc.)• Demands by investors, etc.
• Regulations requiring climate change adaptation, etc.
• Public criticism of maladaptation, etc.

Suppliers

Company

Customers• Supply-chain
disrupted• Supply destabilized• Quality deteriorates• Price volatility Etc.

• Facilities damaged• Employee healthaffected• Water supply affected• Quality affected Etc.

• Transportation
disrupted• Customer demands• Market changes• Price volatility Etc.

Indirect Impact

Direct Impact

Indirect Impact

Figure 2.3 Indirect impacts of climate change through the value chain 8

If climate change increases concerns about the procurement of raw materials and stable supply of
products, it is anticipated that an increasing number of companies will change their procurementfrom only one supplier to many, will geographically diversify their suppliers, or will require them toprepare for climate change. Suppliers who are unable to respond to these concerns may lose theircustomers. Climate change could also change product specifications and market needs, and could
affect the sale of existing products and services.
As a result of the shift to overseas production and the global expansion of supply chains, there is anincreasing risk that impacts such as weather disasters and droughts, which occur particularly in areas
vulnerable to climate change, will have a significant impact on the business activities of Japanesecompanies.

The Environmental Reporting Guidelines 2018 of the Japanese Ministry of the Environment define a value chain as “The entire chain of
economic agents or economic activities involved in the entity’s business processes from the creation of added-value to consumption.
Includes activities such as raw material mining, procurement, production, sales, transport, use, disposal, etc.”
814Box 2.2 Example of Checklist for Gauging Recognition of Climate-Change Risks in Supply
ChainsThe UK Environment Agency publication Assessing and managing climate change risks in supply
chains (2013)9 proposes that, if any of the checklist questions below apply, companies should
recognize the potential for climate change risk in their supply chain and conduct a more detailed
assessment:
Table 2.4 Checklist for Climate Change Risk in Supply Chains
Your supplier:

You:





Are they located or do

weather phenomena on

vulnerable areas (along

personnel and operations

rivers, floodplains, coastal

recognized?

they stockpile in(vulnerable) geographic

vulnerable areas (coastal

areas?

areas, floodplains, and

Is the number ofconditions (agricultural

alternative suppliers

resources, high water

limited to one or a few?

production) supplied?
Are long-distanceshipments made at sea

Is it heavily dependent







it keep stockpiles invulnerable areas?

Are product and businesssustainability promoted?

Is there a limited numberof products sold and arethey susceptible toclimate conditions?



Are you located in asingle or vulnerable
location?

Is there a risk of not
being able to recoverquickly in the event of aIs the process dependent
on cooling?

Is climate change
recognized as a risk?

on energy and water?

or in mountainous areas?
Is it a JIT supplier or does

along rivers)?

Are raw materials that are

consumption inAre they located or do

Are they clustered insensitive to climate

Are the effects of past

they stockpile inareas)?

Your customers:

disaster?

Are you dependent on

Are long-distanceother suppliers located or

shipments made at sea

stockpiled in vulnerable

or in mountainous areas?

areas (along rivers,
floodplains, coastal

Are you using long-lived

areas)?

assets?

Are you dependent onother suppliers clusteredin (vulnerable) areas?

Assessing and managing climate change risks in supply chains, UK Environment Agency
In Japanese: http://www.adaptation-platform.nies.go.jp/lets/pdf/ref/RefOS01rev2.pdf 20139154) Current Progress in Adapting to Climate Change
Climate change can affect corporate activities in a variety of ways. It is expected that the impacts will
increase as climate change progresses in the future. However, while many Japanese companies areactively working to reduce greenhouse gas emissions, including through energy conservation, onlya small number are actually working on adaptation to avoid or mitigate the impacts of climate change.
For example, in Japan, 81.4% of large enterprises and 46.5% of mid-sized enterprises have formulated
BCPs (business continuity plans) 10 based on their experience of disasters such as the major
earthquake and tsunami that occurred in the Tohoku region in March 2011. However, only 43.2% oflarge enterprises and 30.0% of mid-sized enterprises include floods (excluding tsunamis) in the risks
assumed by BCPs.11 In addition, even if some companies have formulated BCPs including floods andweather disasters, still fewer companies seem to assume long-term climate change.
Factors contributing to the lack of progress in adaptation to climate change in private sector are
thought to include: insufficient penetration of the concept of adaptation to climate change;
insufficient understanding of the need for adaptation because of the lack of experience of actual
harm as a result of climate change impacts; and the fact that priority is judged to be relatively low inthe context of a balance with other risks and challenges related to business activities.
However, as mentioned above, some degree of climate change cannot be avoided in the future. It is
important to analyze the impact of climate change on the company and strategically address
adaptation so that the company can fulfill its social responsibility and gain an opportunity to enhancesustainability.

Plans that enable continuation or early restoration of core businesses in the event of disasters and other emergencies while
minimizing damage to business assets
11
Fiscal 2017 Survey of Enterprises' Business Continuity and Disaster Prevention Efforts, Cabinet Office, March 2018
In Japanese: http://www.bousai.go.jp/kyoiku/kigyou/pdf/h30_bcp_report.pdf
10

16

3.

Turning Climate Change Adaptation Initiatives into Opportunities

Strategic initiatives to adapt to climate change have the following benefits:
・ Enhancing business continuity
・ Building a flexible and resilient management base to resist climate change impacts
・ Building stakeholder trust to enhance competitiveness・ Developing existing products and services as an adaptation businessJapanese companies have responded to various changes in the external environment, such as
developments in domestic and foreign markets and the evolution of technologies, and have turned
these changes into opportunities for growth. Climate change is a major change in the external
environment and a risk to companies. At the same time, however, climate change can be regarded
as a new opportunity for sustainable development, and strategic efforts to adapt to climate change
can provide a variety of benefits.
The impact of climate change on business activities depends on the circumstances of individualcompanies. Therefore, in order to turn this change into an opportunity, it is important that companies
correctly recognize how changes in the business environment caused by climate change relate to theirown business, and adapt to climate change in accordance with their business activities.

17

Case Study 3.1: Turning Climate Change Adaptation Initiatives into Opportunities (Chemicals)
Sekisui Chemical Co., Ltd. manages risk by integrating risk management for preventing materialization ofrisks with crisis management for dealing with serious risks after they materialize. It considers the risk ofclimate change to be a significant risk for the entire company over the long term. The company evaluates
this risk by classifying it into natural disaster risk, raw material procurement risk, and regulatory and legal
liability risk, and considers measures to avoid or prevent it. Sekisui Chemical believes that responding torisks at an early stage will not only consolidate its business foundation, but will also enable such risks to
be turned into new opportunities.

Damage caused by repeated climate change-related natural disasters,e.g., floods and landslides• People (injuries and deaths  temporary/permanent loss of personnel)• Things (production line/warehouse destruction  production and supply interrupted)• Money (loss of products and building value  re-production, restoration, etc.)

Loss of local customers
Turn risks into
opportunities

Risk avoidance/
prevention measures
Enhance disaster preparedness at businesssites, disperse production sites

Improve procurement/production/logistics systems
to prepare for disasters• Enhanced measures inhigh flood-risk areas
Measures cost more

Responsibility to supply products maintained;business continues and expands
Contributes to improving region's disaster
resiliency

Disadvantage of increased costs remains

Long-term advantages are increased

Source: Climate Change Adaptation Information Platform (A-PLAT)In Japanese: http://www.adaptation-platform.nies.go.jp/lets/climaterisk/sekisui.html

1)Enhancing Business Continuitya) Preparing for meteorological disasters

In preparing for meteorological disasters in the course of business activities, companies are expected
to formulate BCPs (business continuity plans) anticipating the risks of weather-related disasters suchas floods. Until now, BCPs have been based primarily on past experiences of disasters and similar
events. However, from the perspective of adaptation in preparation for future climate change impacts,
it is now advisable to anticipate hitherto unprecedented disasters. The impact of meteorologicaldisasters varies depending on the business activities of each company. Even within the same industry,
impact varies greatly depending on where a company operates, how it operates, the structure of the
supply chain, business models, cost structures, and risk management capabilities. By carefully
examining the impacts of climate change based on the particular characteristics of a company's
business activities, it becomes possible to develop a more robust and effective BCP.

18

Table 3.1 Typical Examples of Meteorological Disasters by Industry
Industry

Typical Impacts of Meteorological Disasters

Food production

Loss of crops due to droughts and forest fires

Buildings and realestateDamage to buildings due to extreme torrential rains, damage due to flooding,and loss of land value

Manufacturing

Disruption of parts and products logistics due to weather-related disasters

All industries

Damage to buildings and equipment due to storm surges and storms caused bytyphoons

Case Study 3.2 Efficacy of BCPs in Dealing with Meteorological Disasters

Early recovery from torrential rain disaster (machinery)
The torrential rain disaster in July 2018 affected DISCO Corporation's Kure Plant as the resultof a water outage and logistical turmoil. However, as business continuity management (BCM)
measures worked effectively, delivery could be returned to the normal schedule promptly.
The delivery delay was only one day at most, and the impact on customers was minimized.

Source：DISCO Corporate Report 2018
In English: http://www.disco.co.jp/eg/ir/library/pdf/dar/dcr2018eg.pdf

Formulating BCP is recognized as opportunity (non-ferrous metal)
Sumitomo Electric Industries, Ltd. is promoting preparations based on its Business Continuity
Plan (BCP) to minimize damage and recover quickly even if major suppliers' plants aredamaged by floods caused by typhoons or heavy rains. The ability to recover faster thantheir competitors gives them the opportunity to generate more sales amount.
Source: Response to CDP Climate Change Questionnaire 2017b) Preparing for medium- to long-term business continuity challenges

For companies that use natural resources as raw materials or depend on water resources, difficultyin ensuring stable procurement of raw materials or adequate water intake can be critical. These
companies are often already working to respond to risks by, for example, securing multiple suppliers.
However, in addition to their existing activities, it is possible to enhance the sustainability of theirbusiness by taking into account medium- to long-term changes in temperature, precipitation, sealevel, etc. caused by climate change.
When building facilities that will be used for a long time, even if no impacts of climate change areapparent during construction, the cost of renovation and loss of opportunity when impacts do
19become apparent can be reduced by taking predicted future impact into account at the design stage.
For existing facilities, meanwhile, it is possible to implement economical adaptation measures byconsidering climate change adaptation when renovating.
Companies that have not experienced actual damage from meteorological disasters and the like mayfind it difficult to understand the need to prepare for future climate change. However, changes insuppliers, development of alternative materials, and changes in business models may be too lateonce the impacts of climate change have materialized. Early recognition of the potential impacts ofclimate change and consideration of adaptation measures will lead to economical and sustainablebusiness activities.

Case Study 3.3 Medium- to Long-Term Climate Change Preparedness

Sustainable and stable procurement in preparation for climate change (food)
The typhoon that hit Japan in August 2016 caused great damage to Hokkaido's agricultural

products, and as a result, snack manufacturer Calbee, Inc. was unable to secure sufficient
stores of potatoes, forcing sales of several products to be suspended. Global climate change
is expected to increase the number of natural disasters in the future. However, the company
has established closer partnerships with producers for procurement of the potatoes that canbe regarded as its lifeline, and is taking measures in the medium to long term.
Source: Calbee, Inc. website
In Japanese: https://www.calbee.co.jp/csr/social/trader.php

Discovery of optimal varieties in cooperation with research institutes (foodproducts)
Coffee production sites have been affected by increases in temperature and humidity
associated with climate change, and changes in volumes and timing of rainfall,.
Consequently, a warning has been sounding that the land suitable for cultivating coffee (ofthe arabica variety) will be reduced to 50% of what it is today by 2050. Key Coffee Inc. is
working on the International Multi-Location Variety Trial (IMLVT) with World Coffee
Research, a global coffee research organization. IMLVT is a project to cultivate high-quality
coffee varieties selected from around the globe and test them in production areas in various
countries to identify optimal coffee varieties that are resistant to climatic changes and pests,
while also offering rich flavor. Key Coffee offers part of its directly managed plantations at
Toraja on Sulawesi Island in Indonesia as a research site and carries out joint test activities.
By identifying optimal varieties based on the test results and sharing information andtechnology with the local community, the company can expect better coffee yields andquality, as well as improved profitability for the producers. Meanwhile, coffee drinkers canenjoy a stable supply of delicious, premium coffee.
Source: Climate Change Adaptation Information Platform (A-PLAT)

20

2) Building a Flexible and Resilient Management Base to Resist Climate Change
Impacts
Climate change has various impacts on daily operations and management activities. It is important
to incorporate the concept of climate change adaptation into such daily operations and management
activities (called "mainstreaming of adaptation"). Reviewing these operations and activities from theperspective of adaptation to the impacts of climate change may lead to reductions in the costs of
responding to the impacts, as well as in manufacturing costs.
In order to avoid and mitigate the impacts of climate change, it is likely that far-reaching measures
such as business reviews and business model changes will become necessary. By anticipating andpreparing for the impacts of climate change when making decisions in day-to-day operations, it ispossible to respond sensitively to such changes and to build a foundation for flexible and resilient
management to resist the impacts of climate change.

21

Table 3.2 Examples of Incorporating Climate Change Adaptation into Daily Operations andManagement Activities
Operations and Activities
Product development

Examples of Incorporating Climate Change Adaptation
Anticipating changes in consumer preferences and changes in raw
material prices due to rising temperatures when developing products
and formulating sales strategy

Facility management

Reducing damage, repair costs, and opportunity losses byconsidering the possibility of floods and heat waves when designingfacilities

Quality management

Establishing a management system to prevent deterioration of quality
due to high temperature, high humidity, etc.

Environmental management

Establishing a management system that takes into account the needto prevent effects of high temperatures such as offensive odors anddeterioration of water quality
Implementing measures to prevent the outflow of contaminated soil
and waste during flooding

Safety and health

Introducing measures for the prevention of heatstroke in outdoor

management

workers
Managing hygiene of drainage channels, etc. to prevent risk ofinfectious diseases

Supply chain management

Ensuring a raw material procurement system in the event of a disasteror other emergency
Sharing information on climate change impacts with suppliers andcustomers

Energy conservation measures

Introducing renewable energy and improving the work environment
to avoid high temperatures and increased electricity use in summer(i.e., combating the heat by improving ventilation and changing work
hours)

22

Case Study 3.4 Cost Reduction Effects of Climate Change Adaptation
Adapting to increased operation costs due to rising temperatures (information &communications)Risks associated with rising temperatures include increased operating costs due to greater
power consumption by communications equipment and air conditioning equipment usedin data centers. For this reason, the NTT Group is continually promoting measures toreduce power consumption, such as the introduction of an optimal air-conditioning control
system. In addition, energy conservation is promoted through elimination of heat spotsthat cause high temperatures, thereby optimizing the temperature setting of air
conditioners.

Source: NTT Group Sustainability Report 2018
In English: https://www.ntt.co.jp/csr_e/pdf/sustainability_report_2018e.pdf

Reducing CO2 emissions and costs by reducing water consumption (food products)
Climate change can cause extreme rainfall and drought. Reducing water consumption in response to
droughts will reduce CO2 emissions and the cost of manufacturing products. Since the Kirin Group uses
87,861 thousand m3 of fresh water worldwide (as of 2016), water-saving activities will enable significant
reductions in costs.
Source: Response to CDP Climate Change Questionnaire 2017

Reducing manufacturing and materials procurement costs through business improvement(retail)

Examples of operations within the supply chain of Abercrombie & Fitch Co (A&F)12, which may beaffected by changes in precipitation patterns, include the agricultural industry (e.g., water
availability for cotton cultivation) and its apparel production networks (e.g., water use in dyeing).
A&F believes that there is an opportunity to identify/implement best practices to involve material
suppliers to improve water efficiency in these agricultural supply chains, and reduce the impact ofclimate change on water shortages. By proactively identifying and implementing these actions
ahead of competitors, A&F can improve its operational efficiency and consequently reduce
manufacturing and material procurement costs.
Source: Response to CDP Climate Change Questionnaire 201712

A US-headquartered manufacturer of clothing for casual fashion brands

233) Building Stakeholder Trust to Enhance Competitiveness
Active efforts to adapt to climate change will enable companies to build good relationships with
employees, business partners, and customers, leading to new business opportunities. Moreover,proactively disclosing information on climate change efforts will help gain the confidence of investors
and enhance competitiveness. Cooperation with local governments and other bodies to tackle
climate change not only fulfills a company’s social responsibility, but also enhances the credibility
and sustainability of the company in local communities.
a) Building good relationships with employees and suppliers

Active measures against meteorological disasters and heatstroke will improve the workplaceenvironment and safety of employees, enabling improved work efficiency and loyalty. In addition to
a company pursuing its own climate change adaptation, supporting the efforts of suppliers and otherbusiness partners (e.g., by providing guidance, advice, and emergency sites and facilities) will enablea stable and resilient supply chain to be built, which will in turn lead to enhanced sustainability ofbusiness activities. Through efforts to adapt to climate change, good relationships of trust can bebuilt with employees and business partners, which are indispensable to a strong business foundation.

Case Study 3.5 Working with Business Partners to Adapt to Climate Change
Measures to combat heatstroke in coordination with partner companies (construction)

Daiwa House Industry Co., Ltd. and its partner companies are taking steps together to protect
the health of their employees and workers from heatstroke, including setting up rest areasthat provide shelter from sunlight, stocking water and other liquids at all times, and providing
training on prevention of heatstroke.
Since 2016, moreover, the company has been developing environmental sensors jointly with
manufacturers and installing them at more than 100 construction sites. These comprise threebuilt-in sensors: temperature/humidity, wind speed, and motion. When a sensor detects
temperature/humidity or wind speed exceeding the reference value, it alerts workers withindicator lights and sounds, and sends an email to the manager. This allows the company toimplement early countermeasures and prevent incidents.
Source: Climate Change Adaptation Information Platform (A-PLAT)

Building a strong supply chain (food products)

British American Tobacco (BAT)13 works closely with the supply chain to understand the climatechange challenges that suppliers (particularly farmers) are facing today and in the future.
BAT provides the necessary support through agricultural support and awareness programs andhas the necessary reporting and monitoring tools to better understand the resilience of farmers(supply chains) to climate change risks.
Protecting the BAT supply chain, i.e., protecting the amount and quality of leaves needed, meansthat it is an opportunity for BAT to maintain/improve market share.
Source: Response to CDP Climate Change Questionnaire 201713

A tobacco manufacturing and sales company, headquartered in the UK24b) Enhancing the trust of customers

As awareness of the impacts of climate change increases, there is a tendency among companies toplace emphasis on securing multiple suppliers that are geographically dispersed to ensure stableprocurement. However, suppliers themselves can actively tackle climate change adaptation and use
these efforts as PR to gain the trust of customers. For example, building a system that can provide
stable supplies even in the event of a meteorological disaster could enhance the competitiveness of
supplier companies and lead to new business opportunities.

Case Study 3.6 Building Trust to Enhance CompetitivenessWe guarantee stable delivery to your door! (manufacture of resin products)
TOYOX Co., Ltd. has formulated a business continuity plan
(BCP)

that

prioritizes

flood

controlmeasures,havingconsidered the geographical characteristics of its head officeand vicinity, which are surrounded by rivers. The company israted highly by its customers for its strict adherence to delivery
dates. In addition to strengthening measures against flood risk
at the head office factory itself, therefore, the company isbuilding a system that will enable stable supply even in the event of a disaster. To that end, it isdispersing its bases domestically and internationally and developing a BCP for its supply chain. TOYOX
actively disclose progress with these activities, which has led to greater trust from its customers.

Source: TOYOX Co., Ltd. website, etc.
In English: https://english.toyox-hose.com/company/bcp/
Climate Change Adaptation Information Platform (A-PLAT)In English: https://adaptation-platform.nies.go.jp/en/lets/climaterisk/toyox_e.htmlc) Strengthening the management foundation by gaining the trust of investors, etc.

By tackling climate change adaptation actively and disclosing information on such actions
strategically, companies can gain the trust of investors and financial institutions and strengthen their
management base.
In June 2017, the TCFD announced its recommendations on the disclosure of corporate climatechange risks. These recommendations aimed to enable individual companies to understand thefinancial impacts of climate change risks and opportunities in their business activities and to disclose
them through annual reports and sustainability reports.
It is widely recognized that climate change impacts, such as meteorological disasters and shortagesof raw materials, as well as changes in regulations and markets to combat global warming, canthreaten corporate value. Individual enterprises are required to grasp these changes in advance andattempt to transform their businesses.
These recommendations were agreed and signed by 585 institutions worldwide (as of the end ofJanuary 2019), of which 51 institutions are from Japan, including 43 companies; the National Bankers'
Association; the Government Pension Investment Fund (GPIF); the Ministry of the Environment; the25

Ministry of Economy, Trade and Industry; and others. It is believed that the recommendations will be
one of the indicators for assessing the credibility of companies and the sustainability of business inJapan, as in other countries. For a summary of the TCFD recommendations, please refer to the
supplementary material that accompanies this Guide.
d) Improving corporate value through coordination with local governments

Companies rely on local resources (raw materials, infrastructure, employees, communities, customers,etc.) for their business activities. On the other hand, companies also play an important role insupporting local infrastructure, employment, and economic activities. Consequently, climate change
impacts in local communities have an impact on business activities of companies, and climate change
impacts on companies have a significant impact on local communities. It is therefore very importantfor private sector to contribute to climate change adaptation in cooperation with local governments,
not only to fulfill their social responsibility, but also from the perspective of their own adaptation.
Cooperation with local governments has the advantage of enabling information, technology, andresources to be shared with each other. By cooperating in climate change adaptation, which is acommon issue, companies and local governments can also be expected to achieve results that cannot
be achieved by themselves alone.
For cooperation between private sector and local governments, it is important to foster a relationshipof mutual trust on a daily basis and to have a common understanding of issues faced by both sides.
Building this relationship of trust and common understanding through coordination to address the
specific theme of climate change adaptation can provide a basis for companies and local
communities to work together on themes related to sustainability as well as to climate change. At
the same time, for private sector, such a relationship can help with building a foundation forsustainable development and improving corporate value.

26

Case Study 3.7 Examples of Coordination between Private Sector and Local
Governments

Coordination between private sector and local governments in times ofdisaster (retail)
The Aeon Group as a whole has concluded disaster preparedness agreements with more than 900
local governments, and does all it can to assist them with procurement of supplies in the event of
a disaster. It is important that Aeon and the local governments that order the supplies sharedetailed information on the disaster-stricken areas (evacuation centers, etc.) where goods are to
be delivered to ensure that goods are supplied without problems. When the torrential rains
occurred in July 2018, Aeon supplied a total of 920,000 products in over 80 deliveries to disasterstricken areas in the Chugoku-Shikoku area from July 6 to August 30.
Source: Responses to interviews with Aeon Co., Ltd.

Expectations for regional financial institutions (finance)
One of the major roles of regional financial institutions, which are the drivers of regional
economies, is support for the management of small and medium-sized enterprises. Indeed, mostregional financial institutions are thought to be providing programs for solving the businessproblems of such enterprises.
As a result of this experience, it is believed that these financial institutions understand what SME
managers really want to achieve and the factors obstructing them when they tackle newchallenges, and therefore, they can be expected to be good supporters of climate change
adaptation efforts by the SMEs. For example, Seibu Shinkin Bank provides the following programs
to help SMEs solve their problems.
(1) Implementation of "business support seminars" (dissemination of information that leads tosolutions to business, social, and environmental issues)(2) Support via the bank’s core businesses (loans and deposits) that contributes to solving socialand environmental issues(3) Comprehensive support for NPOs and social businesses that endeavor to solve social andenvironmental issues(4) Co-sponsorship of the Eco-Power Award for Corporate Executives (including activities topublicize the award)
Source: Responses to interviews with Seibu Shinkin Bank27e) Contributing to the achievement of the Sustainable Development Goals (SDGs)

Climate change adaptation is related to Target 13 of the SDGs: "Take urgent action to combat climatechange and its impacts." In addition, climate change adaptation is associated with a variety of otherareas, including SDG Targets 1, 2, 6, 11, and 15. Implementing adaptation measures that take into
account sustainability-related issues not only in-house, but also in the communities where thecompanies operate, is expected to contribute to the SDGs on many levels.
Table 3.3 Major SDG Targets Related to Private Sector Adaptation

Target1.5

By 2030, build resilience for the poor and those in vulnerable situations, and reduce
their exposure and vulnerability to climate change-related extremes and othereconomic, social, environmental shocks and disasters.

2.4

By 2030, ensure sustainable food production systems and implement resilient
agricultural practices that increase productivity and production, that help maintainecosystems, that strengthen capacity for adaptation to climate change, extreme
weather, drought, flooding and other disasters, and that progressively improveland and soil quality.

6.4

By 2030, substantially increase water-use efficiency across all sectors and ensuresustainable withdrawals and supply of freshwater to address water scarcity, andsubstantially reduce the number of people suffering from water scarcity.

11.b

By 2020, substantially increase the number of cities and human settlements
adopting and implementing integrated policies and plans towards inclusion,
resource efficiency, mitigation and adaptation to climate change, resilience todisasters, and develop and implement, in line with the Sendai Framework for
Disaster Risk Reduction 2015-2030, holistic disaster risk management at all levels.

13.1

Strengthen resilience and adaptive capacity to climate-related hazards and natural
disasters in all countries.

13.3

Improve education, awareness raising and human and institutional capacity on
climate change mitigation, adaptation, impact reduction, and early warning.

15.3

By 2030, combat desertification, restore degraded land and soil, including land
affected by desertification, drought and floods, and strive to achieve a landdegradation-neutral world.

284) Developing Existing Products and Services as an Adaptation Business
While climate change has various impacts on citizens' lives and industries, it is also expected thatnew markets (“adaptation business”) will expand to provide products and services that help citizens
and businesses adapt to climate change.
The Climate Change Adaptation Information Platform (A-PLAT)14 includes the Adaptation Businesssection, which provides examples of products and services that can help with adaptation to climatechange. As of September 2018, 42 such examples had been featured. In terms of the fields ofadaptation addressed, many products and services related to natural disasters and coastal areas;industrial and economic activity; or agriculture, forestry, and fisheries. By industry, the manufacturingindustry accounted for almost half of the products or services, followed by the construction industry.
According to these examples, many companies utilize existing products and services for adaptation
business. Companies may be able to increase their new business opportunities if, in addition to taking
a risk-based approach to assessing the relationship between climate change and their businesses,
they also utilize their existing products, services, and strengths to engage in adaptation business.

14

In English: https://adaptation-platform.nies.go.jp/en/index.html

29

Box 3.1 Private Sector’s Awareness of Opportunities Resulting from Climate Change (AggregatedResults of CDP Climate Change Questionnaire)
Analysis of the results of the CDP Climate Change Questionnaire shows that 39.4% of the 2003 companies
worldwide that responded to the questions (limited to publicly available responses), recognized that increased
demand for existing products/services is an opportunity. In addition, 24.8% in the financial sector recognizedthat new products/services represent opportunities, and 28.6% in the agricultural and forestry resources sector
recognized the opportunities represented by lower operating costs. In this way, awareness of opportunities ischaracterized by industry (the items recognized as opportunities by more than 20% of enterprises are shownin yellow).
Table 3.4 Awareness of Opportunities with Regard to the Physical Impacts of Climate Change by
Industry

Industry sector
All
sectors

EnergyAgricultural
Construction
andTransport and
and
Other
Financial
and real
minerallogistics
forestry
manufacturing
estateresources
resources

Other
services

Increased
demand forexisting products
and services

36.7%

28.0%

45.3%

25.0%

47.5%

52.2%

37.5%

39.4%

Lower operating
costs

13.0%

14.5%

15.1%

28.6%

10.7%

19.9%

14.1%

15.1%

New
products/services

24.8%

9.0%

9.3%

10.4%

18.4%

13.4%

11.6%

14.9%

Increase inproduction
facilities

1.9%

15.9%

3.5%

14.6%

2.0%

2.5%

1.2%

5.1%

Investment
opportunity

12.2%

5.9%

0.0%

2.1%

1.3%

0.5%

1.2%

3.3%

Broader societal
benefits

3.3%

6.2%

2.3%

4.7%

2.0%

2.5%

4.2%

3.5%

Premium priceopportunity

2.6%

1.7%

1.2%

5.2%

1.3%

2.5%

1.7%

2.1%

Opportunities
recognized

Source: Aggregated from responses to the CDP Climate Change Questionnaire (2017)30

Box 3.2 Adaptation Business Initiatives of Overseas Companies
The UN Framework Convention on Climate Change (UNFCCC) Secretariat operates aplatform (the Private Sector Initiative [PSI]) that publicizes case studies of unique andinnovative adaptation initiatives by private sector15. As of September 2018, this platform
contained 102 case studies (including non-adaptation businesses), mainly of European and
US companies. Looking at these case studies by industry, the most common industries in theadaptation business are consulting and environmental services, finance and insurance, andinformation technology and communications (service-based industries). A-PLAT casestudies, on the other hand, are currently characterized by a large number of manufacturing
and construction companies (product-based industries).
Direct risk response(Industries)

Indirect risk response

Adaptation businessSocial prestige

Consulting & environmental services (17)Food & beverage manufacturing (14)Finance & insurance (13)Agriculture ( 9)Information technology & communications ( 9)Energy & equipment ( 9)Chemical & pharmaceutical ( 7)Transportation ( 4)Water management ( 4)Direct risk response: 29

Electronics & machinery manufacturing ( 3)Indirect risk response: 19

Tourism ( 3)

Adaptation business: 61

Construction & real estate ( 3)Social prestige:

Mining & metals ( 3)12
(N=102)

Daily necessities ( 2)Apparel ( 1)

No. of instances

Fishery ( 1)

Figure 3.1 Distribution of adaptation businesses in the UNFCCC PSI Database (byindustry)

Source: Climate Change Adaptation Business (Part 1): Why is Japan's Adaptation Business Lagging?
Masahiko Kawamura (NLI Research Institute Report July 16, 2015)
In Japanese: http://www.nli-research.co.jp/files/topics/42597_ext_18_0.pdf

15

In English: https://unfccc.int/topics/resilience/resources/adaptation-private-sector

31

4.

How to Approach Climate Change Adaptation

Adaptation to climate change does not necessarily require extensive efforts. The approachdiffers depending on the objectives of climate change adaptation and the characteristics ofthe business. If companies thoroughly analyze the impacts of climate change on their businessactivities and pursue initiatives tailored to their respective characteristics, they will be able toadapt to climate change economically and effectively.

The objectives of companies in adapting to climate change vary from company to company. There
are also a variety of events that trigger these efforts. For example, they may be implemented as partof risk management activities, facility construction plans, product development plans, etc., or as
overall climate change countermeasures combined with mitigation. It is expected that whencompanies actually tackle climate change adaptation, they will proceed with initiatives tailored to thecharacteristics of each business, while referring to the following basic approach.

1) First Stepsa) Objectives (policies) for climate change adaptation

Climate change affects all aspects of business activities, so a wide range of departments andpersonnel will be involved. For this reason, it is important for companies to first clarify the objectives(policies) of their efforts to adapt to climate change, taking into account the impacts of climatechange experienced in the past and business activities that are expected to incur significant impacts
in the future. Such objectives may include the following:

For example:
・ Assessing climate-related risks and opportunities and financial impacts on overall
operations
・ Incorporating climate-related impacts into corporate risk management (ERM),
business continuity management (BCM), and environmental management systems(ISO 14001, etc.)
・ Enhancing sustainability of supply chains in the context of climate change impacts
・ Minimizing the increase in operating costs and adverse effects on the working
environment due to climate change
・ Taking advantage of business opportunities by developing products that reflectchanging market needs associated with climate change

32b) Scope (boundary)Companies should clarify the scope of their climate change adaptation efforts. As discussed in
Chapter 2 of this Guide, “Impacts of Climate Change on Business Activities,” climate change affects
not only a company itself, but also its entire supply chain. Although it is not necessary to consider
the entire supply chain, however, the scope should be set so as to avoid overlooking elements (e.g.,
manufacturing facilities, business sites, distribution, business partners, or customers) that may besignificantly impacted, in light of the objectives. If resources are limited, focus may be put onelements that are the most important and may be impacted in the short term, subsequently
expanding the results to other elements.

Narrow Specific business activities/sites of the company itself
All the company's own business activities
Business activities including major suppliers and customers
Broad

Scope including local communities in which the company operatesc) Time frame

The table below shows some potential time frames for which companies might consider climatechange adaptation measures (i.e., how far into the future companies might look ahead). The period
for formulating a medium-term business plan is often about three years. On the other hand, it is notuncommon for a business to have a lifetime of more than 10 years and for facilities to have a usefullife of several decades.
Table 4.1 Potential Time Frames According to Objectives
Objectives of climate change adaptation

Potential time frames

Avoiding and mitigating risks to businessactivities in general

During medium-term business plan
formulation

Ensuring stable supply of raw materials

Estimated lifetime of the related business

Managing effects on facilities

Durable years of facilities

Making investment decisions for the businessTime period during which reliable forecasts areavailable

33d) Implementation structure

Companies should clarify the organizations that will play central and ancillary roles in their climatechange adaptation in accordance with the objectives of their initiatives. For instance, initiatives aimed
at enhancing the sustainability of the supply chain require an implementation structure including
major suppliers. If it is possible to incorporate an initiative into existing activities (BCP, ISO, etc.), theinitiative can be started more smoothly by utilizing the existing framework.
ISO 14001 (revised in 2015), for example, requires that internal and external issues of the organization
be clarified and addressed, and these issues include environmental conditions capable of affecting
the organization. ISO 14001 also refers to inclusion of climate change adaptation and other measuresin companies’ environmental policies. If initiatives such as acquiring ISO 14001 certification are
already underway, it is also possible to analyze and respond to climate-related risks andopportunities within its framework.
Furthermore, involvement of as wide a range of organizations as possible can be expected to increaseawareness of climate change impacts. If SMEs in particular lack the internal resources necessary totake action (human resources, information, etc.), they may seek the support of local financial
institutions or SME support organizations, or seek the advice of their major customers.

34

Table 4.2 Examples of Incorporating Climate Change Adaptation into Existing Business Activities
According to Objectives
Objectives of initiatives

Existing corporate activities

Assessing climate-related risks and opportunities
throughout operations

Company-wide risk management (ISO
31000, etc.)
Environmental management (ISO
14001, etc.)

Preventing damage and achieving early recovery in theevent of weather disasters

Business continuity management (ISO22301, etc.)
Business continuity plans (BCP)

Developing products that reflect climate changerelated market needs

Product development plans

Stabilizing raw material procurement in the context ofclimate change impacts

Supply chain management

Reducing the impact of climate change on operating
costs, etc.

Facility management, production
management, and quality control

Preventing effects on employees due to heatstroke,etc.

Safety and health management

Preventing effects on the surrounding environment
due to rising temperatures, etc.

Environmental management

Box 4.1 Climate Change Adaptation Using the Framework of Business Continuity
Management Systems (BCMS)
The British Standards Institution (BSI Group) has prepared and published instructions foradaptation using BCMS. This manual takes the standpoint that, when an organization is
actually addressing climate change risks, it is most efficient to focus on one business function
and its associated standards. Given multiple business functions in an organization, it istherefore advantageous to focus on BCMS in preparing for climate change adaptation. The BSIGroup manual provides specific support for BCMS personnel during actual operation of BCMS.
(An overview is given in the supplementary material that accompanies this Guide.)35e) Involvement of senior management
Since adaptation to climate change is a response to future issues characterized by uncertainty,
companies should align their efforts with management plans, etc. In order to adapt to climate change,
it may be necessary to take measures that involve management decisions, such as large-scale facility
improvements, or changes to business plans and business models, so it is important to involve senior
management from the early stages of these efforts.
In recent years, TCFD recommendations, ESG investment, and other developments have increased
demand for companies to disclose their risks and initiatives related to climate change. These
disclosures emphasize whether management properly understands the risks and opportunities ofclimate change, makes decisions based on them, and steers the business soundly. From this point ofview, it is important for management to recognize climate change as an important management
issue, and to inform others both inside and outside the company of the company's commitment tolinking related initiatives to sustainable development of the company.

Case Study 4.1 Examples of Management Involvement in Related Activities
Management-led sustainability initiatives (land-based transportation)
Tokyu Corporation has set out a medium-term three-year management plan that includes
three basic policies on sustainability (sustainable urban development, sustainable corporate
development, and sustainable HR development) and six material sustainability themes(materialities), driven by senior management. Since its founding, the company has beenworking from a social perspective, but this is the first time it has defined its efforts in terms ofmaterialities. Through repeated exchanges of opinions with senior management, the company
is discussing sustainability in light of the overall business direction, and considering a numberof social issues, including those raised in the SDGs, to identify social issues that need to beresolved by taking advantage of the company's business domains and strengths.
Source: Responses to interviews with Tokyu Corporation

Addressing management issues by integrating management and employees(printing)In order to develop new possibilities, Ohkawa Printing Co., Ltd. holds annual workshops inwhich management and employees work together to take a backcasting approach todiscussing how to achieve the future vision for the company. The company has adopted abottom-up method of management plan formulation in which all employees participate andmanagement issues are narrowed down based on the ideas that have emerged from theseworkshops. As a result, since 2017, it has been working on the SDGs Management Plan toimplement the SDGs in our management planning. Not only does this help all employees tofeel more involved in management, but also enables them to recognize the linkages between
global issues and their own work, thereby nurturing employees' sense of mission, awarenessof issues, and ability to take action. This has prompted activities that lead to the creation of
new businesses.
Source: Responses to interviews with Ohkawa Printing Co., Ltd.

36

2) List the Impacts (Risks and Opportunities) of Climate Change
Companies should list as comprehensively as possible the impacts of climate change experienced todate (impacts due to weather disasters, abnormal weather, high temperatures, heavy rain, drought,storm surges, etc.), the impacts of climate change expected to affect future business activities(impacts due to changes in temperature and precipitation, etc.), and information aboutcountermeasures that are currently being implemented.
a) Determine the impacts of climate change experienced so far

Collating information on climate change impacts experienced to date is the first step toward climatechange adaptation. This information can be collected by checking records on disastercountermeasures implemented by the company or repair of facilities affected by wind and flood
damage, as well as by conducting interviews with related parties. The widest possible range of pastexamples should be collected: even cases in which damage did not actually occur, or the causal
relationship with climate change is not clear, or cases involving other companies in the same industry,
may offer important information for future planning.

Examples of climate change impacts experienced so far:・ Impacts of torrential rains, typhoons, storm surges, high waves, and strong winds
・ Impacts on employee health, such as heatstroke
・ Impacts of high temperatures on facilities and equipment
・Impacts on the supply chain, such as failed raw material harvests, supplier damage,and disruption of transportation routes

37b) Obtain information on future climate change and impacts in each field

Companies should collect information on future climate changes (temperature, precipitation, etc.)
and climate change impacts (forecasts on meteorological disasters, impacts on agricultural products,
fishery products, water resources, natural ecosystems, etc.) that will become factors (triggers) ofimpacts on business activities, as well as related information (adaptation plans of relevant
municipalities, climate change risk management policies of customers and others, market trends
related to climate, etc.).
Methods for obtaining information on climate change and its impacts consist of collecting existing
projections and conducting forecasting simulations independently using climate models and impact
assessment models. Existing projections can be collected from IPCC (Intergovernmental Panel on
Climate Change) reports and from reports published by national research institutes16. For example,
A-PLAT, managed by the National Institute for Environmental Studies, collects data on climatechange to date, as well as a variety of information needed for adaptation efforts, such as projectionsof future climate change impacts. Its National and Prefectural Information (in Japanese) provides
information on projected impacts of climate change at the national and prefectural levels. The Hazard
Map Portal site17 of the Ministry of Land, Infrastructure, Transport and Tourism contains information
on floods and landslides.
Relevant information such as municipal adaptation plans can be obtained from A-PLAT's Local
Government Initiatives pages (in Japanese), including public information such as local climate change
adaptation plans by local governments. Effective means of learning about the latest trends in industry
might include obtaining information provided by industry associations, conducting interviews withmajor business partners (e.g., suppliers or customers), and utilizing outside experts.

Stringentclimate change
measuresnot taken(RCP8.5)

Stringentclimate change
measurestaken(RCP2.6)

Figure 4.1 Examples of climate change projections(future projections of annual average temperature)
Annual average temperature change (°C) at the end of the 21st century relative to average temperature between 1981 and 2000
Source: Projection of Annual Average Temperatures, Climate Change Adaptation Information Platform (A-PLAT)

The supplementary material that accompanies this Guide introduces relevant reports and publications in “2. Information on Climate
Change Impacts."
17 In Japanese: https://disaportal.gsi.go.jp/
1638c) List the specific impacts expected in future

Based on the information they have collected, companies should list as comprehensively as possible
the concrete impacts of climate change on future business activities (impacts on operations due toflooding, increases in heatstroke due to rising temperature, changes in customer needs, etc.). Future
impacts may include the spread of impacts already experienced, as well as entirely new impacts. In
order to avoid overlooking potential impacts on business activities, it is important to anticipate future
impacts from as broad a perspective as possible. To this end, not only the departments directly
related to the objectives of adaptation efforts, but also other departments including corporate
planning and general affairs need to discuss the matter together. It is possible that a wide range ofideas could be obtained by exchanging opinions workshop-style with the participation of related
departments. The exchange of opinions with relevant departments can also be expected to make therelevant parties feel more involved in climate change adaptation. However, in order to avoid bias, it
is recommended that experts with knowledge of private sector climate change adaptation be present
and act as facilitators. In addition, companies can extend their awareness of impacts they may nothave noticed on their own by collaborating with research institutes and consultants that have aninterest in climate change impacts and business risks, and holding discussions involving experts.

Examples of climate change impacts on future business activities:
・ Increase in maintenance and management costs at individual sites due to risingtemperatures and increasing storms
・ Future impacts on agricultural crops and plants/animals used as raw materials
・ Requests for implementation and disclosure of climate change adaptation from key
customers
・ Changes in consumer behavior associated with changes in climate (e.g., long-term
increases/decreases in temperature)

Case Study 4.2 Obtaining Information on Climate Change Impacts

Understanding of risk perceptions through questionnaire surveys(pharmaceuticals)
The Basic Environmental Policy of the Daiichi Sankyo Group states that it will deal with theimpacts of climate change and water risks on its business activities, and it therefore identifies
climate change and water risks, and pursues countermeasures. As part of these efforts, theGroup believed it would be effective to evaluate the risks caused by climate change, etc.
based not only on information already available to head office, but also from the onsite
perspective by, for instance, reassessing onsite perceptions of the current situation, as wellas the actual situation itself. Accordingly, the Group conducted a questionnaire survey of its
domestic branches to ask about risk perceptions. Using questions provided by the CDP asa reference, the survey asked about climate change and water risks. It found that many

39

employees were concerned about the potential impact of changes in maximum andminimum temperatures on production due to cost increases and equipment failures, andthe impact of changes in tropical storms on production and raw material procurement.
Source: Climate Change Adaptation Information Platform (A-PLAT)In English: https://adaptation-platform.nies.go.jp/en/lets/climaterisk/daiichisankyo_e.htmld) Determine the actual extent of countermeasure implementation

Determine the extent to which a response is currently being implemented (or will be implemented
in future) for each specific impact listed.
Table 4.3. Examples of Future Impacts of Climate Change
Reference
number(1)(2)

Businesssites, etc.

Department inchargePlant A

General affairs

Plant A

Manufacturing

Cause ofimpactTyphoonHeavy
precipitation

Plant C

General affairs

Flooding

Administration

Summer heat

Sales

Temperature

(6)

(7)

office D
HeadOfficePreparation offlooded and plant

sandbags

function stopped

and logistics stopped(4)

Flood response costs

None

Alert level changed

increase every year
High temperatureNone

lowers work efficiency
Decrease in sales of

Use of long-termseasonal products

weather forecasts

Changes in consumer

None

Head

Product

Marketbehavior due to

Officedevelopmentchangechanges intemperature

40

None

Power supply facility

precipitation

Sales

Status of response

attend work

Main road flooded

Branch B

Sales

Employees unable to

Heavy

(3)

(5)

Impact expectedBox 4.2 Scenario Analysis
The TCFD recommends,18 with regard to an organization's strategy, that it should "disclose
the actual and potential impacts of climate-related risks and opportunities on theorganization's businesses, strategy, and financial planning where such information is material."
It also states that "organizations should describe how resilient their strategies are to climaterelated risks and opportunities, taking into consideration a transition to a lower-carbon
economy consistent with a 2°C or lower scenario and, where relevant to the organization,
scenarios consistent with increased physical climate-related risks." It thus recommends taking
into account different climate-related scenarios, including scenarios below 2°C.
In order to develop "scenarios consistent with increased physical climate-related risks," it isnecessary to take into account changes in the business environment surrounding the company(such as its business plans, policies on climate risk measures of relevant governments andmajor customers, and the market environment) as well as events (such as weather disasters
and impacts on water resources) that will result from future climate changes. Much of thisinformation can be obtained through the steps detailed in Chapter 4-2) of this Guide, “List the
Impacts [Risks and Opportunities] of Climate Change.”
Events that will result from future climate changes may be based on the IPCC's Representative
Concentration Pathways (RCPs). However, when developing adaptive plans in a medium- tolong-term timeframe, for example, RCP4.5 (the medium stabilization scenario) and RCP6.0 (thehigh stabilization scenario) could be assumed in addition to RCP2.6 (the low stabilization
scenario). Changes in the business environment surrounding companies vary from one
enterprise to another, but if uncertainties about future changes are considerable (e.g., whenindirect impacts of climate change are significant risks, and when uncertainties about the socioeconomic impacts of climate change are substantial), multiple scenarios corresponding tothese uncertainties could be assumed.

Recommendations of the Task Force on Climate-related Financial Disclosures
In English: https://www.fsb-tcfd.org/wp-content/uploads/2017/06/FINAL-2017-TCFD-Report-11052018.pdf
18413) Identify Priority Issues
Of the climate change impacts listed, identify issues that need to be addressed as priorities (i.e.,
assessed in detail, with measures to be considered and implemented as necessary). One of themethods of identifying priority issues among many impacts is a risk-based approach (i.e., selecting
issues highly likely to materialize that will also have significant impacts). In addition, there are othermethods to identify priorities, such as taking into account aspects other than climate change impacts,
as follows.
For example:








Issues for which specific impacts have already materialized or are highly likely to havematerialized
Issues that may be difficult to tackle if the timing of the response is missed (planning,
design, etc. of large-scale facilities)
Issues that could solve problems other than climate change impacts, and issues thatlead to co-benefits (such as upgrading and replacing aged equipment, improving
energy efficiency, and contributing to regional adaptation)
Issues that require long-term review and data collection for implementation (e.g.,changes in raw materials and business models)Issues for which acting promptly will increase value (e.g., early acquisition of market foradaptation business), etc.

Case Study 4.3 Example of Evaluation Using a Risk Map (electrical utility)
UK Power Networks19 selected 14 potential impacts on its electricity distribution network overa time frame up to 2080 and analyzed the relative likelihood and magnitude of these impacts.

Figure 4.2 Example of evaluation using a risk map

Source: UK Power Networks Business Plan (2015 to 2023) Annex 8: Climate Change Adaptation, Mar. 2014
In English:
https://library.ukpowernetworks.co.uk/library/en/RIIO/Main_Business_Plan_Documents_and_Annexes/UKPN_Climate_Change_Adaptation.pdf

4) Select and Implement Adaptation Measuresa) Selection of adaptation measures

Options with regard to adaptation measures can be broadly divided into the three categories below.
19

Electricity distribution company with approximately 8 million customers in London and elsewhere42

In addition, each of them can be subdivided into physical measures and behavioral measures. Specificadaptation measures should be selected in light of a company’s adaptation objectives, the costs andtime associated with implementation, and balance with other management issues. It is also important
to consider how to prevent the implementation of adaptation measures from leading to"inappropriate adaptation" that causes unintended negative impacts, etc.

Table 4.4 Typical Examples of Climate Change Impacts (Risk Countermeasures) and Adaptation
Measures

Adaptation measures
Avoid (prevent)materialization of
impacts by taking
protective measures,etc.

Mitigate (minimize)
impacts that domaterialize by building
resistance to effects, etc.

Avoid impacts entirely
through fundamental
measures such as
relocation of factories,changes in businessmodels, etc.

Shutdown ofproduction
functions due toflooding

Flood protection
measures

Formulation of business
continuity plans

Relocation of production
facilities

Employeeheatstroke due toabnormally hightemperatures

Improvement of air
conditioning facilities

Employee healthmanagement

Outsourcing of work toother companies

Decline in sales ofmajor products due
to changes intemperature

Adjustment of
product sales timing

Product improvement tomeet consumer
preferences

Switching of major
products

Shortage of water
resources due tochanges inprecipitation
patterns

Installation of water
storage facilities
Development ofalternative water
sources

Efficient usage of water
Stockpiling of products,
etc. during drought

Restructuring ofproduction lines
Relocation of businesssites

Specific impacts

43

Table 4.5 Examples of Physical and Behavioral Measures
ImpactPurpose of measures

Physical measures

Behavioral measures

Controlling a flood

Installation of water stops
Relocation of facilities

Introduction of an early planningsystemUse of insuranceManaging heatstroke

Installation of airconditioning facilities

Change in work style

Managing drought

Development of alternative
water sources
Installation of water storage
facilities

Water conservation

Introduction of cost-saving
equipment

Power saving
Change of electric powerpurchasing plan

SuddenimpactLongterm
impactControlling
maintenance andmanagement costsb) Timing of implementation of adaptation measures

Companies should implement adaptation measures in a planned manner based on when the impactsof climate change are expected to materialize. Coordinating the implementation of adaptation
measures with facility improvement plans and the timing of management system reviews may enable
duplicated efforts to be prevented, and adaptation measures to be implemented efficiently andeconomically.

44

Table 4.6 Examples of Adaptation Measures by Industry
Industry
category

Examples of adaptations

Financial

In selecting locations for new branch offices, companies consider the risk ofnatural disasters such as flooding. In order to ensure the safety of employees andmaintain service in the event of a natural disaster, BCPs are established for eachbranch office and companies make provision for a shift to telecommuting andthe establishment of alternative offices.

EnergyIncreases in warm winters could reduce energy demand, such as heating in
winter, and reduce sales. Therefore, companies are reducing climate change risk
through diversification of business areas.

Real estatebusiness

Companies are introducing highly efficient air-conditioning equipment in theirown tenant buildings in preparation for increases in air-conditioning usage andpower consumption due to extreme heat and severe winters in the future.

Transport andlogistics

Companies are evaluating the risk of storm surges, rises in sea level, flooding, etc.
affecting warehouses located on coastal and river shores and examining the needfor relocation to elevated ground, etc., as necessary.

Foodproduction andsales

Since agricultural products currently handled may become impossible to harvestin their present production areas, companies have started research anddevelopment to address the possibility of introducing new varieties and crops
from southern countries in cooperation with farmers.

Manufacturing

Companies are preparing for facility damage due to natural disasters andproduction line shutdowns due to water shortages by developing BCPs that
include their supply chains to identify potential risks in advance and take smooth
initial measures.

Construction

Because of increasing risk of damage to facilities and delays during construction
due to abnormal torrential rain, construction plans are made so that construction
work vulnerable to such risk is carried out at times when rainfall is low.

Advertising

In order to prevent increased electricity costs for air conditioning due to heatcountermeasures, as well as decreased business efficiency and health impacts on
employees working outdoors, companies are introducing energy-saving air
conditioning systems in their buildings. Additionally, in summer, companies aretaking measures such as adjusting working hours to avoid outdoor work during
daytime.

45

Box 4.2 Inappropriate Adaptation (maladaptation)
The Summary for Policymakers of the Working Group II contribution to the IPCC's Fifth
Assessment Report states on p. 28 that "poor planning, overemphasizing short-term
outcomes, or failing to sufficiently anticipate consequences can result in maladaptation(medium evidence, high agreement). Maladaptation can increase the vulnerability or exposure20of the target group in the future, or the vulnerability of other people, places, or sectors. Somenear-term responses to increasing risks related to climate change may also limit future choices.
For example, enhanced protection of exposed assets can lock in dependence on further
protection measures."
Corporate climate change adaptation may include "inappropriate adaptations" as follows:

Water with nowhere to escape due to flood prevention measures during torrential raincauses inundation of surrounding land
Greenhouse gas emissions increase due to additional air-conditioning facilities forcooling
Groundwater development in preparation for drought risk affects the use ofgroundwater by neighboring residents

In order to prevent such inappropriate adaptations, companies are encouraged to consider not only theshort-term effects of implementing adaptation measures, but also the effects on the surrounding
environment, and potential issues from a long-term perspective.

Box 4.3 Adaptation Options
UKCIP in the UK (formerly known as the UK Climate Impacts Programme) 21 publishes guidance on
identifying and selecting adaptation options to address climate change risks22. In this guidance, "Whenit comes to identifying appropriate adaptation measures, a prudent approach begins by recognizingthat there are several viable options that result in effective adaptation yet which minimize the risks
associated with implementation (and are cost-effective) even in the face of associated uncertainties."
The four categories of options below are presented.
Climate change adaptation is a future challenge characterized by uncertainty, but it is undeniably
extremely difficult for current science to accurately predict the impacts of climate change on individual(business) operators. For this reason, many business operators may be reluctant to take action due touncertainty even if they are aware of the need for future preparations. The four option categories
outlined in this guidance will be helpful in making management decisions in such cases.

・No-Regret Adaptation Options
Adaptation measures that are worthwhile (ie. They deliver net socio-economic benefits) whatever
the extent of future climate change.

For a description of vulnerabilities and exposures, see Part 1.2 “Actualization of the Impacts of Climate Change” in the supplementarymaterial that accompanies this Guide.
21
A research institute established in 1997 by the UK's Department for Environment, Food & Rural Affairs (Defra) to assess climatechange impacts. At present, the Environmental Change Institute (ECI) of Oxford University is the main operator, and Defra funds theinstitute’s activities. The scope of activities has been expanded from the initial purpose at establishment and the institute provides
support for adaptation initiatives at governmental agencies, various organizations, and enterprises through practical research activities
and provision of information, as well as offering evaluation tools, support, and advice.
22
Identifying adaptation options (2007)
In English: https://ukcip.ouce.ox.ac.uk/wp-content/PDFs/ID_Adapt_options.pdf
2046

-Building/designing property and buildings to minimize over-heating in summer months;-Reducing the consequences of flooding through the use of water-resistant materials for floors,
walls and fixtures, and the siting of electrical controls, cables and appliances at a higher thannormal level;-Avoiding building in high-risk areas (eg. flood plains) ;-Actions or activities directed at building adaptive capacity as part of an overall adaptive strategy;
and so on.

・Low-regrets (or limited regrets) options
Adapting measures for which the associated costs are relatively low and for which the benefits,
although primarily realised under projected future climate change, may be relatively large.
-Building extra climate headroom in development to allow for further modifications (eg.
Increased ventilation, drainage) consistent with projected changes in temperature andprecipitation;-Restricting the type and extent of development in flood-prone area;-Sharing in developing and operating additional water storage facilities;

・Win-Win options
Adaptation measures that have the desired result in terms of minimizing the climate risks or
exploiting potential opportunities but also have other social, environmental or economic benefits-Improving preparedness and contingency planning to deal with risks (including climate);-Improving the cooling capacity of building through increased shading and/or alternative lessenergy intensive cooling strategies;-Green roofs and green walls which have multiple benefits in terms of reducing building
temperature and rainfall runoff from buildings, and increased green spaces within urban areas,
but also reduces energy use for both heating and cooling;

・Flexible or adaptive management options
Flexible or adaptive management options – involve putting in place incremental adaptation
options, rather than undertaking large-scale adaptation in one fell swoop. Measures are
introduced through an assessment of what makes sense today, but are designed to allow forincremental change, including changing tack, as knowledge, experience and technology evolve.
“Delaying” introducing a specific adaptation measure (or suite of measures) can be part of aflexible or adaptation management strategy as long as that decision is accompanied by acommitment to continue building the necessary adaptive capacity while continuing to monitor
and evaluate the evolving risks.
A decision to delay introducing a specific action is often taken when the climate risks are below
defined thresholds or when the required adaptive capacity (eg. regulatory or institutional
circumstances) is insufficient to allow effective action.
-Introducing progressive withdrawal from coastal areas and creation or re-establishment offloodplains consistent with risks and development lifetimes-Progressive development and investments in recreation consistent with projected changes inclimate (eg. progressive investments towards developing and promoting multi-seasonal
recreation activities).

475) Confirm and Review Progressa) Periodic review

The government will regularly review the progress and effectiveness of planned adaptation measuresin light of the objectives of addressing climate change impacts. If climate change adaptation isincorporated into an existing management system, it can be reviewed within that framework.
b) Review based on new forecast information

Climate change has a variety of long-term impacts. Therefore, it is necessary to regularly review
adaptation measures. Examining adaptation measures requires forecast information on futureclimate change and its impacts; the forecasting technology is advancing every day, and it is expectedthat the accuracy of information will continue to increase in future. In addition, even in areas ofinterest where insufficient forecast information has been gathered at present, new findings may bemade public due to the progress of future investigation and research. In order to proceed withclimate change adaptation in a timely and appropriate manner, a cycle of regularly collecting such
up-to-date forecast information, reconfirming risks and opportunities based on this information, andconsidering adaptation measures, will become very important.
The Japanese national government collects the latest scientific findings approximately every five
years and conducts the "Climate Change Impact Assessment. Based on this, it reviews Japan’s Climate
Change Adaptation Plan. A Climate Change Impact Assessment Report is scheduled to be preparedin 2020 and the latest scientific findings on climate change impacts will be made available to the
public.

48

Case Study 4.4 Examples of Measures Accounting for Uncertainties Regarding Climate
Change Impacts
If rising sea levels due to climate change start exerting increased external force, this could
affect the functioning and safety of river management facilities. Japan’s Ministry of Land,
Infrastructure, Transport and Tourism therefore intends to employ design concepts andconcrete measures to facilitate the development of river management facilities that will not
require redesigning in future. Approaches include constructing facilities such as floodgatesand gutter gates that can be modified as easily as possible in response to future sea level rises,
etc., and considering future needs in advance when designing facilities such as gateposts andfoundations, which are difficult to modify.

Employing Floodgate Design to Deal with Rising Sea Level[Future Action]
Modify hoisting machine, etc.
as gate size changes[Prior Action]
Sea
Sea level riseRiver

Anticipatedhigh tide level

Ensure height of gateposts
accounts for future gate size
Anticipatedhigh water level[Future Action][Prior Action]

Modify gate, etc. as gate
size changes

Ensure foundations
account for future gate
size

Figure 4.3 Example of floodgate design accounting for sea level rise

Source: Ministry of Land, Infrastructure, Transport and Tourism (2015) Report on Climate
Change Adaptation Measures in the Field of Water Disasters

49

5.

For More Detailed Information

The purpose of this Guide is to deepen understanding of the relationship between climate change andbusiness activities and promote proactive initiatives among those who are engaged in the
management and practice of private sector seeking to tackle climate change adaptation. For moredetailed information, please refer to the supplementary material that accompanies this Guide.

50

Table 5.1 Table of Contents and Information in Supplementary Material
No.

Major Items

Information in Supplementary Material

Basic Information on Climate ChangeCountermeasures

・ Mechanisms of global warming and climate change・ Materialization of the impacts of climate change・ Carbon budget
・ Climate change projections and future scenarios
・ Outline of the Paris Agreement and role of adaptation
・ Outline of the Climate Change Adaptation Act
Etc.

2

Information on Climate Change and
Its Impacts

・ Climate Change Adaptation Information Platform (APLAT)・ National Climate Change Impact Assessment Report・ Integrated Report on Climate Change Observation and
Projection and Impact Assessment
・ Meteorological Agency Global Warming Projection Vol.
9・ Historical data by region and prefecture published by
the Meteorological Observatories
・ IPCC AR5, 1.5℃ Report
Etc.

3

Corporations’ Awareness of Risks
and Opportunities with Regard to
Climate Change Impacts

・Industry-specific analysis of risk and opportunity
awareness among corporations with regard to thephysical impacts of climate change, based on the CDP
report4

Examples of Efforts by Companies
outside Japan・Representative examples of initiatives by industry
included in the CDP report
・Summary of examples of adaptation listed in the PSI

5

Current Efforts by JapaneseCompanies

・List of concrete examples of climate change adaptation
measures included in the CSR reports of the top 200
companies in the TOPIX

6

Impediments to Adaptation

・Summary of the impediments to climate change
adaptation by private sector based on literature andinterviews

7

Climate Change Adaptation Efforts in
Cooperation with Local Communities

・Summary of the value and nature of collaboration
between cities and companies, and public-private
partnerships in vulnerable areas, based on overseas
literature

8

Climate Change Adaptation Using
Business Continuity Management
Systems・Description of methods for incorporating climate change
adaptation into existing BCMs, using reference books
prepared by the UK Environment Agency, etc.

9Introduction to the TCFD・Outline of the TCFD’s background andrecommendations, and description of the scenarios
analysis approach10

Overview of References

・Overview of Japanese and non-Japanese books helpful inobtaining more detailed knowledge on climate change
adaptation, and their content

11

Other Information for Reference・Administrative guidance on climate change adaptation
・Description of water risk assessment tools
Etc.

12

Glossary

・Explanation of terms used in supplementary material

1

51

6.

Review Committee on Promotion of Climate Change Adaptation
by Private Business Operators

In preparing this Guide, we received guidance and advice from the Review Committee on Promotionof Climate Change Adaptation by Private Business Operators. We would like to express our sincere
appreciation to all of its members.
List of Review Committee members (titles omitted; affiliations and positions are as of March 2019)

Name

Affiliation, position, etc.

Kaoru Ishigaki

General Manager, Purchasing Division, Calbee Corporation

Ai Kishioka

Project Manager, CDP Worldwide-Japan

Yoshinao Kozuma

Professor Emeritus, Sophia University

Toshihiko Goto

CEO, Sustainability Forum Japan, Incorporated Nonprofit Organisation

Koji Tsusue

General Manager, General Affairs Department, ＆Legal Affairs

Department, Aeon Company Limited
Masaaki Nagamura

General Manager, International Initiatives,
Strategy and Synergy Department, Tokio Marine Holdings, Inc.

Hideo Harasawa(chairman)

Vice President,

Yukihiro Masuda

Professor, Department of Planning, Architecture and Environmental
Systems
College of Systems Engineering and Science
Shibaura Institute of Technology

Hitomi Miura

Senior Manager, ESG Management Department, Sekisui Chemical Co.,Ltd.

Toshiaki Yamanari

General Manager, Sustainability Promotion Group, Corporate Affairs
Headquarters, Tokyu Corporation

National Institute for Environmental Studies (NIES)

52

Publisher / Contact
Climate Change Adaptation Office,
Policy and Coordination Division,
Global Environment Bureau,
Ministry of the Environment
Editing
Kokusai Kogyo Co., Ltd.