In a highly competitive global world where economies are growing in trillion USD and every country is in the race of being top economies. However, all such races are based on industrialization and capitalism which is mainly fueled by fossil fuels. Such high usage of fossil fuels leads to environmental pollution and Climate change.
Climate change itself is a global problem requiring a Global Solution. Just as business operations are important, it is imperative to consider the impact of climate change on business operations, and potential impacts on sustainability. So, the question is how can you deal with climate change? What are the impacts of climate change on business?
Climate change has environmental, social, political, and economic repercussions. Extreme and unpredictable weather conditions, floods, droughts, rapid snowmelt, and rising sea levels are amongst the major climate change challenges for business operations and have direct implications for commerce globally. Companies in developing nations are particularly vulnerable. Climate change will have a domino effect on agricultural and production operations. For example, a reduction in the supply of agricultural products and scarcity of water may lead to reduced food supply and threats to food security, a rapid global increase in commodity prices, social and political unrest, inflation, and finally economic slowdown. With such a scenario, Business will not be as usual.
The business will face challenges as never before if climate change impact has not properly foreseen and measures taken to avoid the adverse effects of the same. NOW, it is time for corporate leaders to rethink very carefully their business models, business priorities, and business sustainability to consider what climate change may mean for their objectives.
How can companies minimize the impact of climate change, lower their risk, adapt to the change, and take advantage of the opportunities that are available?
Acknowledging climate change as an inevitable factor, and recognizing the need to adapt and involves bold decisions by an industry. The core message is to know that adaptation adds costs, but lack of adaptation certainly will cost much more.
Climate Change, Supply Chain Management, and Enterprise Adaptation:
Implications of Global Warming on the Economy aims to provide one among many diverse responses to a growing sense of urgency fed by climate change and experienced by international institutions, governments, local authorities, and enterprises. It provides an interdisciplinary treatment of issues raised by climate change in connection with its implications for society, environment, and economy, particularly at the company and the supply chain levels.
The Major Impacts of Climate change in Supply Chains:
Climate change has the potential to slow down our economic growth in the coming decades as temperature changes could reduce incomes globally by roughly 23% by 2100. Another study found that a 4.5°C increase in global temperatures could cut the global domestic product by $72 trillion. Hidden within these global economic estimates are the effects on individual companies – and unpredictable weather will only intensify these effects, reducing the availability of raw materials and disrupting Supply Chains.
Climate change, as we currently know it, will continue to be a long-term risk to businesses. In the Global Resource Challenges Report, 66% of executives surveyed said climate change had affected the resource challenges their businesses face. However, only 11% said climate change had increased the priority of resource management. Those forward-thinking companies are seizing the opportunity to get ahead of their competitors.
Today, many companies are focusing on sustainability, but it’s time to put a greater emphasis on Climate Resiliency – a focus that is essential to adapt in and thrive in the era of unpredictable weather. Climate resiliency rejects the concept of business as usual and focuses on Continuous transformation.
Change in resource management is needed as evidenced in the outlook for many of those key resources on which our industries rely. We know that we could face a shortage in oil supply by 2025, a 40% shortfall in our water supply by 2030, and a scarcity of rare earth metals used in electronics and batteries today. i.e. Lithium for chargeable batteries.
To ensure the availability of quality resources to support our growing global population, business leaders must develop resiliency in 3 major areas as below:
- Leverage innovation in the form of new materials, services and solutions throughout supply chains.
- Convert raw materials into products more efficiently so we are less dependent on resources.
- Effectively retain and invest in the human capital needed to operate successful businesses
Building climate resiliency leads us toward a Circular Economy. In this concept, most waste would be reused, recycled, or reprocessed. We have already seen this idea gain traction with the European Parliament’s recently passed regulations to ensure 70% of household and office waste is recycled by 2030, up from the current rate of 44%. Such regulations will force businesses to make waste reduction a primary part of their strategy.
Now, businesses have an opportunity to get ahead of such regulations and their competitors. It starts with identifying where they can reduce waste within their operations and then design it into their processes. When doing so, they must be cognizant of the big picture.
Investing in climate resiliency, however, requires the ability to monetize the benefits, which has remained a challenge for many companies. If you are saving on costs at the front end, it’s easy to recognize the financial benefit. But if added costs have an indirect but positive impact on profitability, you must capture that data to show you have chosen the best solution.
If you were to go back and re-plan, you would have optimized differently. So the question is, how do you optimize now when you put new infrastructure in place? And the answer is you need much more engineering than you needed before because any long-lived asset will now go through phases when it exists in essentially different climates. That’s a big change.
Businesses shall proliferate without impacting climate – This will be the prime objective of 2020.