Editing IPCC:AR6/WGII/Chapter-6 (section)

==== 6.4.1.3 The Role of the Private Sector in Local Adaptation ====

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There is weak evidence of private sector involvement in urban adaptation ( [[#Pauw--2015|Pauw, 2015]] ; [[#Heurkens--2016|Heurkens, 2016]] ). The absence of private sector investment in adaptation is particularly visible in rapidly urbanising countries (Nagendra et al., 2018). Business continuity describing private sector preparedness notes that firms underestimate the impacts of climate risks on their business models (Goldstein et al., 2019; [[#Forino--2021|Forino and von Meding, 2021]] ; [[#Korber--2017|Korber and McNaughton, 2017]] ; Crick et al., 2018b). There is little research on how businesses can play a leading role in urban adaptation (Klein et al., 2018). A global assessment of the private sector’s role in urban adaptation using data from 402 cities shows that most adaptation projects focus on the public sector and do not address private sector concerns or local people’s participation (Klein et al., 2018). Recorded private sector action is recognised through partnerships and participation ( [[#Peterson--2017|Peterson and Hughes, 2017]] ; [[#Hughes--2018|Hughes and Peterson, 2018]] ). There are a few examples of studies of private sector-led adaptation action which adopts a national focus (Crick et al., 2018a; Crick et al., 2018b). This lack of evidence contrasts with a well-developed body of literature on private sector-led mitigation (Averchenkova et al., 2016).

Businesses have an essential role in urban adaptation actions, through the collective formulation of adaptation strategies, the provision of critical adaptive interventions and collaboration in partnerships. Businesses in the property sector, such as real estate developers, are on the frontline of climate change impacts but display differing attitudes toward climate adaptation. A study of property businesses in cities in Australia (Taylor et al., 2012) showed that speeding up planning approval processes facilitated adaptation actions, and joint private–public decision-making was the preferred mode of governance for responding to climate concerns. Property businesses in cities in Sweden had a limited and reactive engagement in climate issues and resisted regulation ( [[#Storbjörk--2018|Storbjörk et al., 2018]] ). Corporate, private sector interventions in urban risk reduction more broadly remain limited, with a mix of public and private responsibility for planning, implementing and maintaining adaptations in the built environment, and yet limited engagement of private sector actors in providing healthcare measures for heat prevention ( ''medium confidence'' ) ( [[#Mees--2017|Mees, 2017]] ).

There is little published literature documenting the heterogeneity of business and the private sector’s responses to climate impacts (Linnenluecke, Birt and Griffiths, 2015; Doh, Tashman and Benischke, 2019). Firms have varying abilities to introduce climate adaptation measures related to staff availability, levels of awareness, perceptions of responsibility and duration of contracts (short-term projects implies less interest in adaptation outcomes) (Shearer et al., 2016). The impact of COVID-19 has serious but uncertain implications for both access to finances for sustainable development by LMICs and sub-national governments, and the possibility of stimulating maladaptive infrastructure and policy responses (OECD, 2020; Sovacool, Del Rio and Griffiths, 2020). The response of businesses to disasters influences the resilience in the communities in which they operate ( [[#McKnight--2016|McKnight and Linnenluecke, 2016]] ; [[#Linnenluecke--2017|Linnenluecke and McKnight, 2017]] ). However, at the same time there is a growing literature that warns against the conflict interests that businesses may have in their adaptation strategies. For example, real estate responses to flooding have led to processes of climate gentrification, whereby lower income populations are displaced toward higher risk areas which stablishes racialised and class-based patterns of inequality of exposure to risk, with hard evidence rapidly growing specially in US cities (Keenan, Hill and Gumber, 2018a; Shokry, Connolly and Anguelovski, 2020; [[#De%20Koning--2020|De Koning and Filatova, 2020]] ; Aune, Gesch and Smith, 2020). Private-sector participation in adaptation solutions depend on having mechanisms to enable transparency and open reporting on the nature of support and the solutions proposed. For example, businesses adopting ‘community-centric’ disaster management strategies can assist local recovery efforts by protecting employment, provision of emergency supplies and participation in reparations ( [[#McKnight--2016|McKnight and Linnenluecke, 2016]] ). Private sector actors engaged in community climate responses can play a role in funding and managing programmes that address public health and education concerns. The potential of ecopreneurship, social enterprises, cooperatives and other sustainability-oriented business models (Schaltegger, Hansen and Lüdeke-Freund, 2016; Lopes et al., 2020; Battaglia, Gragnani and Annesi, 2020) for urban adaptation remains under-explored in the literature on urban climate governance.

The private sector also constitutes a key stakeholder group involved in collaborative processes to develop adaptation strategies. The inclusion of private sector actors in deliberative policy-making processes in urban adaptation can lead to higher procedural legitimacy levels, as witnessed in Rotterdam’s case (Mees, Driessen and Runhaar, 2014). Rotterdam has created an institutional environment that favours eco-innovation ( [[#Huang-Lachmann--2016|Huang-Lachmann and Lovett, 2016]] ). The municipal government works directly with the private sector to enhance protection against flooding constructing a marketing strategy around a ‘floating city’ concept. A ‘floating housing’ market has expanded, with benefits for the local real estate and construction industries and knowledge-exporting businesses that provide consultation expertise, delta technologies and architectural models. Nevertheless, these new trends raise new governance challenges to deliver adaptation.

There are obstacles associated with reconciling private sector interests with public priorities and justice agendas in local climate programmes. The involvement of the private sector in adaptation actions may lead to the appropriation of land and natural resources, and to the exclusion of vulnerable populations (Anguelovski et al., 2016; [[#Rumbach--2017|Rumbach, 2017]] ; [[#Scoppetta--2016|Scoppetta, 2016]] ) (see also [[#6.4.4|Section 6.4.4.2]] ). Navigating the inclusion of businesses in urban planning processes requires local authorities to engage in ongoing negotiations, to reflect on constantly shifting power balances and to move delicately between the role of regulator and facilitator in the process of defining and maintaining long-term objectives (Storbjörk, Hjerpe and Glaas, 2019b; Storbjörk, Hjerpe and Glaas, 2019a).

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