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Pakistan Flooding Hits Home

Beyond the immense suffering within Pakistan's borders, the flooding is also triggering ripples for America's economic interests, from higher cotton and rice prices to national security costs in the fight against terrorism.
by Mindy S. LubberHuffington Post Posted on Sep 23, 2010

Attention T-shirt lovers: Pakistan's catastrophic flooding is important to you, too.

Beyond the immense suffering within Pakistan's borders, the flooding is also triggering ripples for America's economic interests, from higher cotton and rice prices to national security costs in the fight against terrorism.

While many US companies have been sympathetic - and generous - in helping to ease the human toll from such disasters, they have not yet fully absorbed the hit their companies can take from them. Yet as climate change causes unusual weather patterns and more severe weather, such incidents are expected to become more common.

Companies I work with say climate events are already affecting their business models. Jeans maker Levi Strauss announced this week that skyrocketing cotton prices - partly the result of Pakistan's floods and an earlier drought in China - will force higher clothing prices next spring, whether for T-shirts or blue jeans.

Nike is worried that shrinking water supplies from Asia's Himalayan mountains will trigger higher water prices that will raise production costs. Nike is also concerned about factories in Asia sitting in low-lying coastal zones vulnerable to sea-level rise.

Starbucks is seeing troubling trends in its coffee supply chains. Coffee prices hit a 13-year-high earlier this month. "Climate change poses a direct threat to our business; it puts our supply chain at risk," says the company's Jim Hanna.

All three companies are working with their suppliers to become more climate-proof.

Starbucks is collaborating with Conservation International to help coffee farmers in Mexico and other coffee-growing countries use sustainable growing techniques that prevent deforestation, a key contributor to global warming. They're also helping farmers generate extra income by tapping into carbon trading markets.

Levi Strauss is partnering with big-name brands in an organization called the Better Cotton Initiative, an effort to improve labor conditions and reduce chemical and water use among cotton farmers in Pakistan, India, Brazil and Africa. The company has also joined other retailers, NGOs and investors to stop buying cotton from Uzbekistan, a country where forced child labor is a big problem.

These efforts are encouraging. But the complex challenges our planet faces - whether from population growth, water constraints or climate change - require broader and deeper actions from companies. The poor decision-making that marked the BP oil spill shows that many companies are not prioritizing environmental and social factors across their businesses.

Among those pressing the hardest for action are major investors.

Yesterday, at the Clinton Global Initiative, the nation's largest public pension fund joined a collaboration with Nike, the Skoll Foundation and Ceres to urge the nation's biggest companies to move more quickly to embed sustainability risks and opportunities into day-to-day decision making.

"We expect our portfolio companies to do what is necessary to position themselves to be successful in a sustainable economy," said CalPERS CEO Anne Stausboll, whose office oversees about $200 billion in assets. "Environmental and other sustainability issues are core to business performance in the 21st century."

Read the post at Huffington Post

Meet the Expert

Cynthia McHale

Cynthia McHale is the Director of Ceres Insurance Program. She brings over twenty years of sector expertise working with many of the leading North American and European insurers, re-insurers and industry brokers. In her current role, Cynthia is leading a campaign to promote the insurance industry’s understanding and leadership on climate risks and opportunities. As risk managers, risk carriers and major institutional investors, insurers have a vital interest, and play an important role in fostering society’s response to global warming. Stronger insurance industry leadership on climate change issues will strengthen and accelerate our nation’s transition to a clean energy future while helping to build a resilient and sustainable society.

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