How Proactive Businesses Prepare for Climate Risks
Depending on a number of variables, your business is either already vulnerable to risks from our climate crisis, or soon will be.
Climate anxiety is not an issue just for families and individuals… it affects organizations too. Especially those whose business models depend on operating in places already seeing significant climate impacts. As with individuals, taking action can alleviate corporate climate anxiety.
For example, your company can invest in flood barriers and drainage systems to protect against storms, and upgrade its heating and cooling systems to handle extreme temperatures. Such actions can safeguard your infrastructure and operational stability from climate-related disruptions.
More and more businesses are responding to the challenges posed by our climate crisis. In PwC’s 27th Annual Global CEO Survey, 47% of respondents said their company had taken measures to safeguard its workforce and physical assets against climate risk – that’s up from 17% the year before.
Risks to Business from Our Climate Crisis
Climate risks are climate change’s potential consequences, which include (but are not limited to):
- Physical risks caused by severe weather events like hurricanes and floods, and chronic ones like rising sea levels and increased temperatures.
- Transition risks when implementing regenerative business practices or deploying new technologies or energy sources.
- Liability risks related to environmental impacts, such as affected communities’ lawsuits and investors’ demands for more transparent disclosures.
According to the Center for Climate and Energy Solutions, nearly 30% of U.S. greenhouse gas emissions come from business operations such as:
- Burning fossil fuels to generate electricity.
- Expanding landfills with waste of all types including electronics.
- Transporting people and goods via cars, trucks, planes, trains and ships.
- Clearing land for agriculture.
Enhancing Resilience
Resilience to the impacts of our climate crisis means anticipating, managing and recovering effectively. Proactive companies take a structured approach to building resilience.
To begin, these companies identify risks relevant to their business and operations, including risks in supply chains. These may extend beyond immediate climate threats to include impacts such as new regulations or changes in market prices.
Once climate risks are identified, proactive companies plan adaptation measures and work with others to implement them. They also look for technology solutions to support production at scale and prepare for rising risk exposures.
Heat is a Killer
As greenhouse gas emissions change Earth’s atmosphere, heat stress and drought risks are posing an increasing threat to construction, mining and farming interests. Workers laboring outdoors are being impacted by high temperatures. To counter these threats, affected organizations must build resilience both internally and across supply chains. Businesses that collaborate can boost their chances of positive outcomes and gain advantages in the market.
Mitigation strategies don’t prepare you for all climate-related events. Developing climate change adaptation plans can help you respond to, prepare for and build climate resilience. Below are a few areas that should be prioritized.
Supply Chain Resilience
Supply chain resilience is critical to your business strategy. According to a World Economic Forum report, companies with socially responsible supply chains can increase revenue by up to 20% while reducing costs by up to 16%.
One strategy to help mitigate climate disruptions is diversifying suppliers to avoid climate-related production delays or quality problems. A diverse supplier base can also improve competitive pricing, innovation and flexibility… enabling your business to adapt more effectively to changing market conditions and environmental challenges.
Energy Efficiency
Investing in sustainable technologies and practices is an effective way to address climate risks (including new regulations). One approach is improving business operations’ energy efficiency, which, according to an International Energy Agency report, energy efficiency improvements will drive more than 40% of the reduction of energy-related greenhouse gas emissions over the next 20 years.
Energy-efficient technologies include:
- Light-emitting diode (LED) lighting,
- High-efficiency heating, ventilation and air conditioning (HVAC) systems,
- Energy management software.
Include a plan (with a budget and a timeline) to transition to renewable energy sources. There are costs… so plan for them. Plan for the inevitable (including the cost savings you’ll enjoy once you’ve made the change).
Aluminum Production and Heat Safety
The International Aluminium Institute, an industry consortium, is helping aluminum producers understand how to mitigate climate-related risks threatening the health of their employees. The institute identified adaptation options that include providing shade or cooling, outfitting workers with protective clothing, and training employees to spot early signs of heat-related illness. It also developed an action plan for mine owners and communities to identify and assess climate-related impacts on workers; and put adaptations in place like work breaks when the temperature and/or humidity reach certain levels.
Capitalizing on Opportunities
Mitigating the impacts of our climate crisis is not just a strategic and operational challenge. It can also catalyze opportunities. Proactive companies are investing in research, exploring innovative products and services, and collaborating to develop and deploy new climate solutions. In the agriculture sector, for example, technology systems (often powered by AI) provide insights on activities such as crop planning, disease control and nutrition.
Farming in India
Mahindra & Mahindra, a maker of agricultural machinery, provides farmers in India with free advisory, digital and precision-farming solutions that can enhance productivity and climate resilience. The solutions enable sustainable practices in crop planning, seed selection, nutrient management, irrigation, disease and pest management, and weed control. They also deliver extreme weather alerts, information on seasonal shifts due to climate, and disease and insect forecasts to help farmers avoid crop damage and loss. The program serves more than 500,000 farmers, and the company plans to scale it across India.
Collaboration Enables Resilience
In our highly connected economy, businesses can progress by collaborating with other organizations. Companies that participate in business ecosystems are more stable and profitable. Increasing numbers of businesses see benefits in working with partners such as governments, investors, academics, local communities… and even competitors. Such ecosystems can help discover and promote ways to build resilient operations. There is joy in coming together to work for a future that benefits all.
We must find the courage to care, to change, to reimagine and regenerate the systems that put us into such a devastating crisis in the first place. And we must act… collectively.
Climate requires all hands on deck. We must come together to solve it. What an excellent way to motivate employees! “I can’t save the world on my own, but we can save the world together.”
