As you may know, we live in a changing world. The climate change conversation has moved well past hypothetical and is now about the effects that it’s having on our planet. From the direct effects like rising sea levels to the indirect effects like loss of biodiversity, it’s clear that the world is going to look very different than what our parents knew when they were kids.
What you might not expect is how much those changes are going to affect companies and their business models. As these trends are likely to continue for long into the future, it’s time for companies to focus less on short-term gains and more on long-term sustainability—quite literally!
We’ve put together this guide to help executives see how climate change will affect their businesses going forward and what they should be doing today to prepare their organizations for tomorrow. If you’d like to chart the short-term changes in weather patterns, this API can provide a comprehensive archive of the weather for the past seven years, along with a number of other services that can help with running a business as the climate continues to shift.
Climate Change Is a Challenge That All Businesses Have to Take Into Account
Climate change is a global phenomenon, and businesses have to adapt to this changing environment. Ignoring climate change would be like ignoring changes in customer needs or market conditions. Climate change is not just an environmental problem; it’s also a business challenge.
Businesses need to take action to reduce their impact on the environment and should look at ways of reducing their carbon footprint by cutting energy use and emissions, buying renewable energy where possible, reducing waste, and recycling more effectively.
Responding to Climate Change Can Help Companies
As the world continues to warm, the cost of doing business will rise. Companies that take steps now to reduce their carbon footprint can save money, enhance their reputation and improve long-term prospects.
Organizations are already beginning to respond: In 2018, more than $25 billion was invested in clean energy by companies around the world. A major reason for this shift is that climate change is a threat to business operations — as well as society at large.
Understand How Climate Change Will Affect You and Your Stakeholders in Detail
To respond effectively to climate change, you need to understand the impact it will have on your business. This means understanding who your stakeholders are and how climate change will affect them. It also means understanding what the impact of climate change will be for your company, including its employees and customers.
Climate Change Means More Severe Weather Events and More Extreme Temperatures
One of the most direct impacts of climate change is that it can increase the frequency and severity of extreme weather events, such as storms, floods, and droughts. These types of events can result in damage to infrastructures like roads and buildings, increased energy costs, and disruption to supply chains. While these factors may seem small on an individual level, together, they can have a large impact on businesses bottom lines.
Climate Change Can Affect the Financial Bottom Line of a Business
Climate change impacts your business in two ways—directly and indirectly. Directly, businesses are affected when the costs of insurance premiums and other expenses rise due to changes in weather patterns or natural disasters.
Indirectly, businesses are impacted by higher costs associated with raw materials and energy consumption as well as transportation issues that arise from climate change-related supply chain disruptions. Depending on the industry you’re in, you’ll likely see some combination of these effects on your bottom line.
A Changing Climate Can Reduce the Availability of Natural Resources
A changing climate can reduce the availability of natural resources or force up the price of raw materials or transportation costs. In the past, businesses have often been able to pass along these costs to customers in the form of higher prices.
However, in recent years we’ve seen a backlash against companies that use their pricing power to raise prices without providing better service or value for customers.
Oil Companies and Airlines Are Already Facing Increased Costs Due to Climate Change
Oil and gas companies are already facing increased costs due to climate change, but they are not the only sectors at risk. As global temperatures rise and sea levels rise, coastal cities will become increasingly vulnerable to flooding. Rising sea levels and storm surges can cause billions of dollars in damage to property, infrastructure, and equipment that is directly tied to oil production.
For oil companies to remain competitive in a changing landscape, they must consider how climate change could impact their bottom line moving forward. Increased costs from regulations or weather events may force some companies out of business while others adopt new ways of doing business that is more sustainable for both people and the planet.
For example, pipeline companies that operate near oceans must find ways to protect infrastructure from rising tides; otherwise, they risk losing millions if this important mode of transportation is rendered unusable by flooding or storm surge damage.
Oil and gas producers will need higher quality data about where their operations reside so they know where future risks might lie; this information could affect everything from distribution routes (i.e., roads) used by trucks carrying materials between facilities.
Oil refiners require heat exchangers (devices used during the refining process) that work under extreme temperatures and pressure conditions; ensuring these devices operate within safe limits during normal operations helps ensure safety across multiple industries associated with delivering petroleum products.
Changes in National and International Regulations Can Make Some Activities Impossible
Changes in national and international regulations can make some activities impossible or unprofitable–and public opinion may begin moving against your company long before governments do anything.
For example, Shell Oil has announced that it will cease drilling for fossil fuels in Arctic waters (while still maintaining its other interests, like offshore wind farms). And while it’s not necessarily the case that this move was motivated by climate change concerns, it’s clear that Shell sees the writing on the wall regarding how public opinion is shifting.
Similarly, Shell has also announced plans to reduce its carbon footprint by more than half over the next ten years; if they’re going to be successful at reaching this goal, it’ll need to find new ways of producing energy without burning carbon-emitting fossil fuels.
It’s up to you whether or not your business follows suit: but if you don’t take steps now, you may end up following along behind others who have already changed their behavior–or worse yet: have found themselves forced into changing their behavior by regulatory changes down the road!
Understand the Risks and Opportunities Associated With Climate Change
As an entrepreneur, you need to understand how climate change affects your business. This is crucial for your success. You also need to understand how your business can respond to climate change. Finally, you must know how you can adapt to climate change and mitigate its effects on your company’s operations.
As a leader in this new era of economic development and sustainability, you must have an understanding of the realities of a changing world and how they may affect the trajectory of your company over time.
As we mentioned in our introduction, climate change is affecting businesses in many different ways. We’ve taken a look at some of the most notable impacts on specific industries, as well as how individual businesses can take action to reduce their carbon footprint and those of their suppliers.
Ultimately, this is an issue that affects all of us—not just people who work in certain industries or own certain types of businesses, but every human being on earth. We encourage you to learn more about these topics and consider how they affect your industry or company.
If you’re looking for a good place to start, we recommend checking out the EPA’s Climate Change site, which offers information and resources on these issues from both global and local perspectives. We hope this guide has been informative for you!