What has climate change got to do with businesses? Check this space

By Soutrik BanerjeeMonday July 10, 2023

Climate change is a serious concern these days when it comes to sustaining a future for the next generations. The progress of the society depends highly on industrialization and advancements in technology.

What a more greater question is whether business leaders are cognizant about these climate issues? Are they looking forward to a business model that is sustainable for the environment? There should be a raising awareness among us regarding the hazards of Mother nature.

We are living in an era where technology is embraced and is helping uplift our quality of life. But are they emerging with a higher cost to pay for in the near future? Let us try to understand how climate change affects business strategies.

Understanding in-depth climate impact on society-

We have realized that climate change dictates the way we lead our life. Reports indicate that these changes are already creating an impact on several industries. Looking closely, our objective towards net-zero comes with an accelerated rate of optimism.

This is because in the quest to improve mother nature and restore her health, we are helping ourselves with more job opportunities. We can acquire knowledge to operate under these skills and boost our economies.

In these times of transitions, there are also several downsides that are coming to light. Companies across all industries are thinking about the changes they need to consider while going for a sustainable system of business operation.

There certain categories of risks like liability, transitional along with physical for a company looking for the consequences of climate change on businesses. When it comes to physical risk, those are the ones that are immediate threats that are related to the physical environment.

We can understand a few examples of hurricanes, tsunamis, wildfires and many other natural hazardous phenomena. These incidents cause serious damage to property, communities and social infrastructures.

Reports suggest that about 1.8 billion people or about 23% of the global population is directly associated with flood depths. Also by 2030, there is an estimate that about 700 million can be replaced due to severe drought.

Around the world, harmful weather events are impacting businesses at a huge scale. In 2022, about $313 billion were spent on events related to climate hazards. Out of this only about $132 billion were covered by the insurance companies.

Due to climate change, several leisure industries are at risk. For example, the ski resorts are getting shorter seasons due to less snowfall due to rising temperatures. In The US, by 2050 we might see 50% less ski season and almost 80% less by 2090. Countries like Australia, Turkey and the US are facing challenges in the tourism industry due to increasing events of wildfires.

Climate change risks are a real thing-

The risks that are transitional can be associated with more business costs associated with new policies along with fresh regulations and laws that are designed to understand the pain points of climate change.

Such risks can also come after technological advancements and market trends, where the society can question the ethical perspective of the company. Industries are trying to move from actions that are harming our climate.

So any piece of asset that could be outdated and adds to climate change might tamper the reputation of the company using it. One of the prime players that might be at transitional risk are the energy companies. We are constantly looking to shift towards green energy as we aim for net-zero emissions.

The mining sector is also at transitional risk as policies leading to carbon pricing can pose a challenge for these companies for metal mining. In spite of the resources provided by the mining industry, investors and stakeholders are concerned that climate change could question the reputation of these companies.

Adaptation is a very delicate procedure that demands careful study and a diverse mindset. Failing to mitigate new technologies and changing regulatory procedures for climate change could pose a concern for several companies.

There is a reported increase in climate litigation which is navigating public sentiments. Such advancements in attribution science is allowing lawmakers to focus on inclusive regulations due to the evolving business landscape, having lasting impact on the environment.

Looking towards sustainability-

There are several types of companies in the market, working under various industries. Companies violating climate protection practices are chances of getting subjected to litigation. When structural engineers or land developers fail to put in an efficient drainage system to handle intense rain, there can be legal procedures to deal with such shortcomings.

As a responsible part of earth, we should all be careful about our progressive choices. There are several industries at risk due to climate change. Change in regulations coupled with concerns of losing assets to climate change should be thought wisely.

This significant amount of change in the operational factors of companies could help in better climate sustainability. As a part of understanding business progress in the current economic landscape, the impact of climate change on business strategies should be a detailed study.

With data analytics, companies can adapt to new possibilities to make business and rejuvenate the climate health in all aspects. Businesses could shift to new technologies and shape the industry towards an eco-friendly purpose.

Collaboration and Planning-

We are all in this together and climate change should be dealt with better solutions and partnering with other sectors like academia, local communities, government bodies and many others. Businesses and insurers should improvise on creating lasting relationships with better risk management strategies.

Here, experience and expertise should carry forward optimism towards climate change. Climate risks are challenging a lot of roles in industries. But the green sector is also reported to be one of the most promising sectors to grow by 2025. Transportation industry is playing a pivotal role in curating the climate concerns.

The impact of climate change on business strategies in the vehicle manufacturer industry is a massive area of discussion. Reports suggest that the UK and Europe are planning to stop non-electric vehicle manufacturing in the next 20 years or so.

This should boost the electric vehicle manufacturing industry, where companies are planning to create reliable electric cars that can meet market demands.We should put more focus on recycling and direct ourselves in such technologies.

Climate change is felt in almost every business in the world. Taking action on such issues should create more pathways and help us understand the sustainability of our economy.Efforts should help companies strategize their business model and create better opportunities for the future. We are still unaware of the ultimate consequences of climate change on earth. But the impact of climate change on business strategies is very vocal when we see natural calamities destroying communities and regions. There is no one-plan for all businesses strategy. Our minds are different and so are our perspectives. Every company has a specific system that they follow. It is both the responsibility of policy makers and the companies to come to conclusive evidence that figures out sustainability.

Frequently Asked Question-

How to address climate change for businesses?

Ans– Businesses should mitigate to newer technologies that look towards a greener system of operations and eco-friendly.

What strategies can be adopted by businesses for climate change?

Ans– Businesses should look into decreasing emissions from the value chains and create carbon sinks.

How can we contribute to cleaner air?

Ans– We should start by saving electricity and turn off devices that we are not using at the moment. We should also consider bicycles over transports that are run by fossil fuels.