Climate change is the raging topic across the world. We can no longer deny the impact of global warming - temperature extremes, glaciers melting, increased onslaught of natural disasters like hurricanes, forest fires, etc. From the Amazon Fire to the recent bushfires that raged on for months in Australia, it is taking a toll in almost every sphere possible. Even large corporates to small and mid-sized businesses are affected by the change in weather patterns.
Come to think of it, for various businesses, climate change and sustainability often get treated as an additional layer on top, when it should be the fundamental building block upon which everything else is based upon.
A case in point is the recent heat crisis, which hit in Southern India (2019). The phenomenon forced IT companies to make their employees work from home to reduce water consumption. In a similar vein, let us take a look at how climate emergencies can impact your business, and what are the strategies you can implement to combat this inevitable beast.
Studies, like the one conducted by SealedAir, reports that climate change could reduce global incomes by as as 23% by 2100. Another report suggests that the increase in global temperatures could cut the U.S.’s domestic production by much $72 trillion! If these statistics don’t show the impact climate emergencies can have on businesses, we’re not sure what will!
Also, sample this - extreme climate fluctuations can impact crop production, availability of natural resources, and overall efficiency and growth of many regions. In 2018, the natural disasters over the Asia-Pacific subcontinent affected over 80 million people and cost $56.8 billion.
It is obvious that these phenomena are going to bring about a rise in the costs. Something, which you got to be prepared for beforehand.
Climate change is not only transforming how consumers interact with companies, but also how potential employees and stakeholders evaluate them.
Top talent, especially millennials nowadays prefer working with companies that have sustainability and carbon footprint reducing policies and values. The new recruitment pool prefers to turn away higher pay in favour of working with companies that have honest and well thought out policies. For businesses, this change results in longer recruit times (read increased costs), and increased competition for top talent.
Japanese electronics manufacturer, Hitachi, recently expressed its concern over increased rainfall and flooding in the Southeast region and its potential to wipe out the company’s supply chain.
Similarly, Alphabet, Google’s parent company, noted that the gradually increasing temperatures will increase its costs associated with cooling its data centres. A hard disk manufacturer reported losses due after its entire production in Thailand was affected by floods.
With unpredicted weather, you never know how and when a climate emergency could impact your company supply chain.
This leads us to ask the question:
A lot of companies are integrating sustainable practices, but they also need to recognise the importance of building a business model that can thrive in an era of unpredictable weather.
Don’t panic, it is not all grim. Here are some practical measures your business and marketing team can take to take climate emergencies by the horn:
Start with identifying where you as a business can optimise or reduce wastage in all areas of the supply chain. Companies should “design for sustainability.” Saint Gobain, a packaging giant, has put sustainable housing at the core of its design and development. Likewise, Siemens has developed a dedicated “environmental portfolio” of carbon-efficient products. Today’s consumers are aware of a company’s sustainable practices and are willing to pay a premium for those products. This should be the safety net that your business can look forward to.
You might not be able to predict everything, but you can reduce your risk or at least plan for them by using climate modelers and forecasting. According to McKinsey Consulting, “Climate forecasting can highlight high-level risk probabilities by region, such as for flood, drought, or sea-level rise, and for long-term changes in such factors as temperature, humidity, or rainfall patterns. The scenarios should help reveal which parts of the business are vulnerable.” Your business can use this data or similar data to decide how to mitigate the physical risks of resource planning, supply chain, etc.
Another proactive measure you could take as a business is to understand the interdependency beyond the company or brand itself. For example, Tata Chemical started a center for marine biodiversity in India where it is increasing the knowledge of eco-systems that play a major role in its business model. Additionally, it is also working towards protecting it. Such cases of creating a wider, positive image also aid in building a positive brand image that helps with customers and employee recruitment.
It might sound like a no-brainer, but a lot of smaller businesses don’t have a significant online presence. People tend to purchase more online when it comes to extreme weather conditions or natural disasters.
Start using capitalising on this opportunity.
If you already have a strong online presence but choose to ship or stock all your products from one main warehouse or location, then it is time to evaluate your risks and consider diversifying. This will help reduce the risks manifold.
As Co-Vid 19 scare looms large with WHO declaring it a pandemic, a lot of firms are opting for remote work.
While this is the need of the hour, telecommuting can also be effective in tackling climate change.
This not only creates a distributed workforce but also reduces your company’s carbon footprint. Today’s workforce thrives on having this flexibility, and this can be a bonus in your recruitment pitch. The rise of climate-related health risks also favours flexible working options.
The science is clear - all businesses, regardless of industry, need to prepare for climate emergencies.
Additionally, climate change is changing how consumers, employees, and shareholders evaluate companies. Reducing your carbon footprint shouldn’t be an afterthought; integration of sustainable and climate-friendly practices need to occur from the core of the business. Understanding and mitigating risks will allow your business to not just survive but thrive in times of climate emergencies.
Transfunnel Consulting can help you identify marketing related risks and opportunities related to climate change and sustainability. Get in touch with us to know more today!