No one is immune to the risks caused by climate change, not even corporations who presumably have full-fledged business plans. Let’s take this opportunity to look at what businesses can do to better assess and manage climate change risks.
Earth’s climate is changing, and let’s be honest, we feel it every day. The summers are getting hotter and winters colder. This change is not just harmful to us humans but poses a danger to everything around us as well.
According to the Intergovernmental Panel on Climate Change (IPCC), the average temperature has risen by 1.1 degrees celsius across the Earth since the late 19th century, primarily due to human activities such as release of toxic emissions and leveling forests. A report suggests that Carbon Dioxide (CO2) levels have increased more than 40% since the Industrial Revolution.
Climate change causes catastrophic events such as extreme weather conditions, heatwaves, storms, droughts, rising sea levels, etc. Severe weather conditions can also lead to the mass extinction of species and threaten people’s lives and livelihood.
Scary right?
Nothing is immune to the risks caused by climate change, and in this article, we will dive deep into the details of how businesses are affected by it and what they can do to assess and manage those threats.
Businesses and Climate Change
For years, many businesses, big and small, have impacted the environment either directly or indirectly. They have also relied on natural resources to sustain themselves, mainly due to economic reasons.
Generation of plastic materials, emission of CO2 and toxic gases, non-biodegradable waste generation, indoor air-conditioning, cutting of trees for land, wood, and paper, the list goes on. The planet has been exhausted to a point where action must be taken immediately.
In December 2020, the Climate Accountability Institute released a data set, which showcased the companies that heavily contributed to the climate crisis from 1965 to 2018. It was found that the top 20 organizations named in the list had collectively contributed to 493 billion tonnes of carbon dioxide and methane, mainly from the combustion of their products.
Consequently, Royal Dutch Shell, an oil company, was ordered by a Dutch court to reduce their global carbon emission by 45% by the end of 2030.
But these organizations have started to realize that the impact isn’t just one way. Climate change affects their businesses as well.
A report by Deloitte Global suggests that over 80% of business executives say their organizations are concerned about climate change. Nearly over 30% of them feel the operational impacts due to climate-related events.
Without a proper method of risk assessment and management, businesses with an aim to turn green are often affected by climate change.
Physical Impact: Physical aspects of climate change include resource scarcity, operational delays caused by extreme weather conditions, water shortages, and so on.
Socio-economic Impact: Some of the problems caused by climate change are often invisible. Companies are pressured to shift their focus towards more sustainable and renewable energy resources, which can lead to financial setbacks due to transitional costs as well as an increase in resource costs.
Growing awareness about social and environmental issues also brings potential liabilities in terms of defamation and loss of reputation towards these organizations for the damages done in the past and for the ones that they continue to do. This is the reason why large companies like IKEA, Apple, and Nestle have committed to shifting their focus towards 100 percent renewable energy.
Impact due to the COVID-19 pandemic: Disastrous economic damages caused by the pandemic have either paused or at least slowed the sustainability efforts taken by some companies. These organizations have been prioritizing economic recovery over tackling environmental issues, but may have also been using this opportunity to include sustainable measures in their business plans, according to a survey conducted by Deloitte.
Risk Response - What have these organizations done so far?
The major steps implemented by businesses in the past largely cater towards the awareness and education about the risks associated with climate change. Following this, we have seen a few initiatives to use more sustainable materials and recycle non-renewable ones. Some companies have also taken up concrete actions to reduce their carbon footprint and contribute towards positive change.
For example, a survey conducted by Deloitte Insights states that Adobe has set a goal to run on 100 percent renewable energy by 2035. Similarly, Toshiba has installed motion sensors to control electricity and elevator operations to reduce their carbon emissions by 50 percent.
Socially aware consumers have also been demanding that big corporations come up with sustainable solutions and initiatives. But how can these companies evolve into environmentally friendly organizations while avoiding the business risks that could come along while also ensuring profitability?
One of the key solutions is Data Assessment and Environmental Intelligence.
Risk Assessment - What more can they do?
No company can take sustainability transition decisions overnight. We now know that businesses need to assess risks and come up with a plan to properly shift their priorities before taking any new steps.
Industries vulnerable to these changes are advised to base their strategic and investment decisions on data and environmental intelligence (EI). After proper research on the growing risks of climate change on their businesses, strategies can be formed by these organizations to avoid the possibility of risks and losses.
Environmental Intelligence can be used by organizations to gather environmental data and enhance forecasting cycles. Modern environmental technologies can help businesses assess and analyze the risks by the amalgamation of real-time data from on-ground sensors, satellite imagery, and existing records, and apply Artificial Intelligence (AI) to gather detailed information. Location intelligence can also be used by these businesses to assess the risks. Visualization of spatially-oriented data can help people understand insights and make better decisions.
Climate change also offers business opportunities and a chance for innovation. Businesses can use data provided by environmental APIs to predict the growing market and build eco-friendly products and services.
Growing demands in sustainable ideas and services also promote competitiveness and unlock new market opportunities. With the data provided by EI, businesses can formulate plans for such developments and produce an outcome that can aid both the business and the environment.
Here’s where we come in...
At Ambee, we believe in a modern approach to solving a global problem. To tackle any kind of challenge, existing or potential, the first step is to collect more information about it. With the collection of this data comes analysis and assessment which can help businesses and individuals prepare for the problem.
Ambee provides actionable and insightful data on climate change, including air quality, pollen, fire,soil and weather data. Companies can leverage this data to assess risks, learn about the impacts, form strategies and plans, and prepare for the future.
We are at the brink of an environmental emergency and organizations have started to realize the importance of sustainability, but this realization is just the first step. Businesses need to reprioritize their strategies and development plans keeping the climate in mind.
Using the data from the past, efficient management of them in the present, and better assessment of the future, they can help reduce, if not reverse, the effect they have on the environment and the climate.