Shared from the 1/17/2020 Houston Chronicle eEdition

Climate change called a CEO-level issue

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Melissa Phillip / Staff file photo

Houston was used as a key example in the report of the impact of climate change.

Absent major preparation, climate change will do substantial damage to the world’s economies, wreaking havoc on communities and economic activity across the globe, asserts a new report from McKinsey & Co., one of the largest consulting firms in the world.

In an analysis of the physical risks of climate change, researchers laid out acase for immediate action by detailing a scenario that assumes no decrease in emissions or efforts by communities to protect themselves from the effects of climate change —the worst case scenario of the Intergovernmental Panel on Climate Change, the United Nation’s body on climate change.

The result is an alarming picture of the next 10 to 30 years that includes more frequent severe hurricanes, intensifying droughts and heat waves, dwindling water supplies, and substantial economic losses.

All business and policy decisions need to be examined through the lens of climate change, researchers at McKinsey said.

Economic decisions today — from where homes are built, to the hours people work, to the strength of a petrochemical plant to withstand storms — are predicated on past data that assumes the climate is relatively stable.

“Companies need to get climate (data) embedded into all the decisions you make, and use forward-looking data to make those decisions,” said Dickon Pinner, a senior partner at McKinsey, who headed the research initiative. “This is a CEO-level issue.”

The report is the first of its kind for the consulting giant, a project of McKinsey’s internal think tank that is studying and modeling the physical risks of climate change. The think tank was launched last year.

The impact of increasing frequency of catastrophic climate events, such as 100-year hurricanes or lethal heat waves, and steadily rising chronic climate hazards, such as rising average temperatures, will put hundreds of millions of lives and trillions of dollars of economic activity at risk if economies do not adapt to reduce emissions, the report said.

Disaster preview

McKinsey’s analysis, which largely relies on Woods Hole Research Center, a climate change research group in Massachusetts, aligns with other models that show that the Southeastern and Gulf Coast regions of the United States will be among the hardest hit by the physical effects of climate change over the next three decades.

Researchers forecast precipitation of severe hurricanes could double along the U.S.’ southern coasts under this scenario.

Houston was used as a key example in the report for how climate change already is having substantial physical impact. Research suggests that precipitation during Hurricane Harvey in 2017 was about 8 to 19 percent more intense because of climate change, and caused about $125 billion in damage, shutting down economic activity in the region for weeks.

During the first months after Hurricane Harvey in 2017, the mortgage delinquency rate almost doubled from 7 to 14 percent, researchers noted. If taken as a preview of what’s to come, researchers wrote, mortgage lenders around the world could increase lending rates for properties located in risky areas, or stop providing 30-year mortgages all together.

“How people live their daily lives, and fundamental things about how a city is designed, need to be rethought,” said Mekala Krishnan, a senior fellow at McKinsey’s Global Institute, the firm’s research arm. erin.douglas@chron.com twitter.com/ erinmdouglas23

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