Climate change

It’s time for businesses to adapt to climate change. How should they do it?

Opinions expressed by Contractor the contributors are theirs.

The outcome of COP26 left many disappointed.

Although 151 parties have submitted new or updated nationally determined contributions (NDCs) ahead of the conference, commitments to reduce emissions continue to lag significantly behind what is needed to limit the global warming to 1.5 degrees Celsius by 2030. Calls for drastic climate change around the world have been met by constraining economic realities and tactile choices involving balancing immediate development needs and expectations around the green growth.

Meanwhile, the baton has passed to the private sector, which faces increasing pressure for climate action. Armies of investors, businesses and other non-state actors participated in COP26. More than 2,000 companies committed to new science-based targets for reducing their emissions, a trend that does not exclude the financial sector, which has seen large financial corporations commit to change portfolio net zero by 2030.

As financial portfolios are increasingly expected to align with climate goals, the need for transparency is intensifying. Companies are increasingly expected to publish clear and detailed plans on how they will achieve their net zero commitments.

And businesses are listening. As many brace for the expected deluge of climate reporting and regulations, a growing number have released their own net zero targets. However, a recent analysis suggests that corporate climate goals are vague, unambitious and lack follow-through. Despite the rush to action, most continue to lack a clear understanding of how climate change will affect their company’s long-term strategy and operations. This reality makes climate adaptation planning a real challenge. While it may be easy to proclaim lofty goals, many companies’ climate strategies are much more modest when it comes to defining specific milestones that have a chance of achieving desired results.

While presenteeism abounds, it’s no surprise that many companies have chosen to adopt a “wait and see” attitude, quietly expressing utter confusion about what to do next. And so far, climate-focused policymakers and nonprofits haven’t been much help. It’s easy to get overwhelmed.

Yet the risk of inaction is high: increased droughts and other extreme weather events can threaten the economic base of entire regions, upsetting the way of life of communities; skyrocketing flood insurance rates and equipment maintenance costs can drive long-established businesses out of business; entire regional workforces may become susceptible to previously rare diseases. Even companies least affected by the physical impacts of climate change are exposed to customer boycotts, employee activism, investor pressure, rising cost of capital, and the impact of regulatory sanctions on companies that do not act on the global climate problem.

As the pressure to act mounts, business leaders need to understand the full range of opportunities for climate change mitigation and adaptation. In addition to building your business and strengthening its market position, you need to be able to help others adapt to climate change.

Here are some steps every business can take right now.

1. Assess your company’s greenhouse gas (GHG) emissions profile, set a reduction target, and develop detailed, realistic plans to achieve it.

This may involve changing your production processes, travel, logistics and distributions. It could also mean switching to purchasing renewable energy, improving the fuel or energy efficiency of your buildings and equipment, or subsidizing your employees’ use of public transit options.

Keep in mind that your business has a tremendous capacity to drive change – even small businesses can make change with significant impact. Often, these changes also generate financial savings.

Related: Why is it time to invest in climate tech?

2. Assess your company’s climate risks.

Consider how changing weather conditions or rising temperatures could impact your infrastructure. Remember to change market demand and consumer attitudes. New regulations can also be risky and very expensive to comply with. Assess potential impacts and develop action plans should these risks materialize.

Related: What is corporate climate change and are you prepared for it?

3. Analyze the opportunities that could open up for your business as a result of changing climatic conditions or regulations.

While no one wants to sound like a profiteer, the very survival of your business may depend on your ability to “be in the right place at the right time” and honestly investigate opportunities. For example, if your business provides products or services that can help individuals and communities adapt to the impacts of climate change, you need to think strategically and position your business to continue to do so.

Climate change is our collective challenge and cannot be solved from organizational silos. Think about collecting and sharing relevant data, motivating your employees and their social network, choosing suppliers capable of demonstrating climate awareness and educating your customers.

Most importantly, the risks and opportunities of climate change need to be reflected in your core business strategy – this will enable your organization to adapt and transform to meet the challenges of tomorrow. This can take the form of new processes and procedures and, in some cases, an overhaul of the entire business model. Nonetheless, the essentials of what it takes to stay in business and thrive are still the same: the unwavering pursuit of customer and shareholder value, meeting the needs of the communities where you operate, and staying on the right side of regulators. Your business can continue to grow with ease and momentum if you take the right steps to protect and grow it to adapt to these new conditions.

Related: Catching up on climate change? There is still time to do things right.