BCG-WEF Project: Tech for Climate Adaptation

Innovation and Adaptation in the Climate Crisis

The impacts of climate change are increasing in intensity and frequency, as the rising incidence of extreme weather events vividly demonstrates. Weather events such as wildfires, hurricanes, and extreme heat could, alarmingly, rise to as many as 1.5 a day by 2030. In addition to human suffering, the costs are huge; in 2022, natural disasters cost governments and business more than $200 billion—40% more than the annual average for the past 20 years.

With nearly half the world’s population and virtually every sector of the global economy vulnerable to climate change, adaptation has become a central imperative of climate action. It is incumbent upon leaders in both the public and private sectors to take bold action in order to protect their communities, businesses, and natural systems from the impacts of climate change.

A new generation of data-driven and digital technologies has emerged to help in this effort. As the first movers in this space are learning, the use of data-driven technologies and AI not only guards against climate risks but also generates competitive advantage.

Research by BCG and the World Economic Forum shows that digital technologies will increasingly play a key role in adaptation, as they’re uniquely suited to tackle the complex problems climate change poses. They can deal with the interconnectedness of natural, economic, and societal systems; cope with multiple variables and degrees of uncertainty; and help align actions across time horizons.

The technologies on which the BCG-WEF study focuses are artificial intelligence (AI), drones, the Internet of Things (IoT), earth observation systems, augmented reality and virtual reality systems (AR/VR), and advanced computing. Together, they make up a first-of-its-kind toolkit for climate adaptation.

Digital technologies can play a role across the three strategic imperatives of adaptation, which together constitute the “adaptation cycle”:

• Understand Risks—and Opportunities. AI, satellites, IoT, and drones are transforming how climate-related data is gathered, processed, and analyzed. The technologies monitor how the world is changing and the changes that companies and people must tackle.
• Build Resilience. AI helps build resilience into critical infrastructure, such as flood management systems, through optimization and preventive maintenance. Earth observation technologies and IoT are bringing greater precision to much-needed systems such as early warning systems.
• Respond Dynamically. Earth observation systems, along with drones, provide data on hard-to-reach areas in the aftermath of extreme events. Drones can also be used to make emergency deliveries and support rescue operations while AI’s prediction and optimization capabilities improve decision makers’ situational awareness at times of turmoil.

It’s important to understand that technology-based climate adaptation requires policy development, community engagement, and international cooperation. Adopting a multistakeholder approach is critical if adaptation efforts are to succeed. Business leaders must focus on developing open source technologies, aligning adaptation and innovation to attract more financing, and catalyzing policy and regulatory environments that support adaptation.

Recent years have seen some progress in the development of national adaptation plans (NAP), with five out of six parties to the United Nations Framework Convention on Climate Change having submitted at least one NAP instrument, according to United Nations Environment Programme’s Adaptation Gap Report 2023. Climate adaptation is also gaining momentum worldwide, with governments using regulations, policies, and standards to accelerate private sector adaptation while capital markets and investors are rewarding companies that use these strategies. The future is likely to belong to leaders who see climate adaptation not as an obligation but as a catalyst for transformation.