A Changing Climate Impacts On Business
Updated: Dec 1, 2020
Scientists have been warning us about the dangers of a changing climate for almost fifty years. Climate change is not a new revelation, nor is its cause. Human activity results in the burning of more fossil fuels that release greenhouse gases, like methane, into the atmosphere. These gases create the Greenhouse Effect that disproportionately warms our planet. The Greenhouse Effect refers to the process by which radiation from a planet's atmosphere warms the planet's surface to a temperature above what it would be without this atmosphere. We can measure each individual's contribution to the Greenhouse Effect by measuring their carbon footprint. Carbon Footprint refers to the total greenhouse gas emissions caused by an individual, event, organization, service, or product, expressed as carbon dioxide equivalent. Everything from ordinary people, Fortune 500 companies, and entire countries have Carbon Footprints. So, it is no secret that some industries and businesses play a huge role in the health and future of our planet. Whether it's good or bad, all businesses have an enormous impact on the environment. However, we rarely discuss the impact of a changing environment on businesses around the world.
Climate change is linked to every aspect of society, especially businesses. Businesses around the world are already forced to implement changes and adapt to the growing threat of global warming. And the future will only bring about more drastic changes.
Increased Extreme Weather
Climate change effects are most noticeably seen through extreme weather events from raging storms, floods, fires, heatwaves, and droughts. Extreme weather events are occurring all over the world, like the recent Californian wildfires for example. Thousands have been displaced and many companies are at risk of severe financial and physical damage. Extreme weather events disrupt the operations of many businesses and harm everyone in the process. Increased climate risks will also lead to rising insurance costs and decreasing revenues. Extreme weather events such as droughts, and rising temperatures, can lead to harsh working conditions for many employees. Jobs that require workers to be outdoors, especially ones that require manual work, will become more challenging and potentially jeopardize their health and safety.
As climate change becomes more and more of an issue, the public is starting to recognize it as a major problem. As the public and media grow more accepting of climate change, more people are demanding businesses to cut down on their Carbon Footprint and begin taking climate action. Consumers are taking preference for products marketed as “sustainable” or “environmentally-friendly." Companies that make switches to more ecology-minded practices will experience revenue gains, unmatchable by those who do not. Public pressure is also leading to changing regulations. Governments around the world are putting regulations aimed at mitigating and preventing pollution and carbon emissions. Companies will have no choice but to adapt to these new policies.
Changes in Resources Availability and Cost
As climate change worsens the outcomes of extreme weather events, supply chains are at risk of being disrupted. Severe weather such as droughts and flooding can cause crops to fail, which are an integral part of the food, apparel, and other industries. Resource scarcity is also in real danger when it comes to climate change and regulation. Companies will soon have to switch to alternative materials and recycling existing ones. And with changing climate comes a quickly changing demand. When temperatures rise, demand for cooling increases and vice versa. Similarly, as consumers start to make more environmentally minded decisions, the demand for sustainable products will inevitably increase.
As climate change becomes more and more of a reality, businesses will be forced to adopt more sustainable approaches in their plans if they want to remain relevant and compete in the changing market.
Sustainability in business is the latest trend, and it’s here to stay. By giving back to the planet, businesses can increase their revenues and contribute to the fight against climate change. Transitioning to more sustainable practices will secure a more promising future for our planet and everyone who inhabits it.