MNCs in Asian Growth Economies Face Spiraling Environmental Risks

Multinational companies operating in the Asian growth economies will be exposed to spiraling environmental risks over the coming decades, according to Maplecroft’s 5th annual Climate Change and Environmental Risk Atlas, which identifies Dhaka, Manila, Bangkok, Yangon, Jakarta, Ho Chi Minh City and Kolkata as the cities facing the most risk from the onset of climate change.


Maplecroft’s Climate Change Vulnerability Index (CCVI), which forms a central pillar of the Atlas, classifies seven cities as ‘extreme risk,’ out of a list of 50 that were chosen for their current and future importance to global business.


Dhaka, Bangladesh, (ranked 1st), Manila, the Philippines (2), Bangkok, Thailand (3), Yangon, Myanmar (4), Jakarta, Indonesia (5), Ho Chi Minh City, Viet Nam (6) and Kolkata, India (7) emerged as the most at risk from the changing temperatures and weather systems that are forecast to take hold in the coming years.


Long-term risks to business
With strong economic growth of above 5% forecast for countries such as the Philippines, Viet Nam, Indonesia and India in the next few years, the relevance of climate change to populations and business in the major commercial centres should not be underplayed, states Maplecroft in its analysis.


“As global corporations expand into the emerging growth markets, their operations and supply chains will become exposed to a complex set of climate risks that have the potential to disrupt business continuity,” states Maplecroft’s Head of Maps and Indices, Helen Hodge. “It is essential for companies to identify where suppliers, assets and personnel are most at risk and plan for the long term.”


According to Maplecroft, the vulnerability of cities in the growth economies stems not only from their exposure to climate related hazards, but also the sensitivity of their populations and the poor capacity of governments to support local adaptation measures to combat the potential effects of climate change.


Disaster risk reduction programmes, more stringent building regulations, better education and improved communications networks are therefore essential to secure the future stability of these cities.


Exposure to ‘high risk’ Chinese cities
A further 19 cities are classed as ‘high risk’ in the CCVI, including the important commercial centres of Mumbai (8) and Delhi (20) in India; Lagos, Nigeria (10); Johannesburg, South Africa (13); Rio de Janeiro, Brazil (21); and Hong Kong (14), Guangzhou (18), Shenzhen (19), Wuhan (23) and Shanghai in China (24).


Chicago, London, St Petersburg, Paris and Madrid, meanwhile, were the only four cities to be classified as low risk.


The appearance of so many ‘high risk’ Chinese cities is of particular concern to companies using the country as a manufacturing base. Water stress is already a risk in China, due to the needs of industry and the agricultural sector, alongside swelling urban populations.


Should climate change place further pressure on the country’s water resources by increasing the risk of drought, water intensive industries could find their ability to operate restricted, says the report.


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