It may not be extremely obvious to some, but climate change is altering our world so drastically that all businesses will need to undergo some form of transformation in order to stay afloat. Top investors are increasingly demanding that more organizations create environmental action plans and consider risks to the business that are caused by shifting consumer attitudes.
Climate Change: The Future is Looking Bleak
In October of last year, the United Nation’s Intergovernmental Panel on Climate Change reported that if we continue at the rate we are going currently, global warming of 1.5 degrees Celsius is likely between the years of 2030 and 2052. At this level of warning, there will be irreversible damage and a dramatic increase in climate-related risks to health, food security, water supplies, human safety, and economic development. While it is still possible, this report detailed that steps to limit this global warming will require immediate and extensive efforts related to energy, land, urban infrastructure, and industrial systems.
How it affects Business
With regard to business specifically, there are undeniable ways climate change is altering the way you do business. This should give each and every business owner pause in analyzing the effects and putting plans and efforts in place to mitigate the risks.
Climate Change & Risk Assessment
Some of the ways climate change is altering the way you do business are in how insurance companies are assessing natural disaster risk. This is something that you may not be immediately aware of, but climate change is affecting how insurance companies run as a whole in relation to businesses and homes. Companies like IKEA and Coca-Cola openly promote topics like water scarcity and deforestation, helping to make these topics better known to the general public. These types of impacts are prompting companies to invest in new processes and technologies in order to mitigate risk.
There are also other impacts, like making the transition to a carbon-free economy and new trends related to how customers, investors, regulators, and businesses make decisions. How climate change is altering the ways we do business is becoming a more well-known topic. Because it is evident that this is the reality we are facing, business owners cannot afford to turn their backs on the impending future ahead.
Planning is the Key to a Stronger Strategy
Today, companies that truly listen to their stakeholders and take a significant stand on sustainability, values, climate resiliency, and adaptation are in a much better position to serve and retain customers in the long-run. The truth is, a company’s strategy must include a carefully designed path that helps the company achieve high financial performance. In order to sustain successful financial performance, a business owner has to have a clear understanding of how the business is impacting society. It’s important to understand how trends affect the macro – everything from wage growth levels to climate change – will affect the company’s potential growth.
How the Climate May Affect Your Business
You must assess and act on risks and opportunities related to climate change. More sustainable investments can transform a business, reduce risks, and tap into opportunities. Every initiative is unique and investments in clean energy can help reduce risk. Taking initiative is also attractive to talent and conservation efforts aimed at protecting natural resources. It can lead to discovering new markets as well as full climate-risk assessments that enable investors to make better-informed decisions.
You Can Prepare with Careful Planning
When it comes to the ways climate change is altering the way you do business if you haven’t felt it yet, be prepared. The examples are broad and varied. They may include harsher working conditions, changes in material supply and demand, changing environments and infrastructure needs, public perception, and extreme weather. However, there are ways to prepare ahead of time.
Companies and investors are acknowledging the dangers posed by climate change and extreme weather. Many businesses now consider risks posed by environmental factors to be even more dangerous than cyber-attacks and turbulent markets. You should be analyzing the risks related to your specific business in the present. There is more pressure than ever from consumers to make products more climate-friendly and make other changes related to climate change. This is the new normal and any company leader that does not choose to acknowledge this and act accordingly is very likely to drive their business into extinction.