It can’t be sugar-coated. Climate change is the biggest challenge humanity and the global economy faces. The increase in emissions will lead to rising temperatures, decreasing resources, extreme weather events, rising sea levels and biodiversity loss.
It’s a lot to take in and it can be easier to stick our head in the sand. As a business owner though, even if you disregard the societal implications of climate change, you must still consider sustainability and the associated risks and opportunities when planning for the future. While all of the aforementioned impacts will obviously disrupt business, there are more impacts to consider.
Climate Savvy Consumers
Public knowledge of climate change is commonplace and knowledge is power. Consumers are more aware of their ability to influence corporate behaviour. They see the choice to purchase sustainable products as ground-level activism to make change. Consumers are holding businesses accountable. They want to see sustainability in a businesses’ values and despise greenwashing.
The power afforded by this knowledge goes beyond purchase. Investors can exert their power to affect change as ‘shareholder activism’ becomes more commonplace. Shareholders are increasingly more aware of the actions and repercussions of the companies they invest in and are taking action by proposing changes to the businesses. Proposals don’t always gain traction, but they can raise awareness. Boards need to align with sustainable objectives or risk these particularly financially detrimental costs of ignoring climate change.
Potentially, businesses will become subject to carbon pricing (or are already). Many countries have already implemented a price on carbon, taxing businesses based on their emissions. The scenario where carbon pricing is enforced and its cost should be explored by businesses. At the very least it may highlight opportunities for reduction.
All businesses are reliant on a supply chain of some sort. Climate change can cause disruption to supply chains through direct impacts, such as extreme weather events limiting the availability of some resources or restricting the transit of goods. Other supply chain challenges stem from its impacts though. Scope 3 emissions, those attributed to the up and downstream of the company, are part of a business’s overall sustainability. They affect the image of a business (remember the consumers are watching). They may also become subject to a carbon price.
Knowing is Half the Battle
These potential impacts don’t have to be overwhelming. See the obstacles as opportunities. By being aware of these potential impacts, you can be ready. First, if you don’t already, understand climate change. Get to know its causes and impacts. From here you can bring it to a local level. How is your business contributing and what are your specific risks?
This is where the opportunities appear. Set targets to reduce your impact. Find ways to be more sustainable and align with consumer and investor values. See the innovation that can come from these initiatives.
Motivation should be beyond defensive tactics against direct and indirect impacts. There are further business advantages to be gained from sustainable business strategies. Businesses with a sustainable focus can have better stakeholder engagement, more reliable supply chains, attract higher calibre employees and foster innovation. Businesses that have assessed impacts and see opportunities in sustainable actions are more successful than those that set general targets. This is amplified when their goals are transparent and they are held accountable.
It’s Time to Take Action
The hidden costs of ignoring climate change are too significant to overlook. There are many levels to the impacts beyond environment. By understanding these impacts, setting targets, being held accountable and incorporating sustainability into your mission, your business can thrive.