What is the Impact of Climate Change on Businesses?

21 October, 2020

Climate change is happening all around us and despite those who try to deny it, those who claim it is just nature, and those who bury their heads in the sand, it is here, and it highly likely that is will only accelerate. Fortunately, the general consensus in the real world is that climate change is something we must take action on, and so people make both subtle and drastic changes to their lifestyles, their diets, and their habits in the hope that it will reduce their carbon footprint.

For businesses, their effects on climate change are multiplied by each member of staff, each facility, each fleet vehicle, each device, each delivery, and more. Knowing that they have such an enormous responsibility and chain of effects, many businesses are now embracing CSR, sustainability, and carbon offsetting as methods of doing something positive as a means of reducing their negative effects on the environment.

The environmental consideration of the PESTLE analysis

At the start of the sustainability mission, most businesses will perform a PESTLE analysis internally, or hire a company like Imvelo to come in and show them the ropes. This PESTLE exercise uses a framework of macro-environmental factors to help guide the strategic management of the business. It is used to figure out if there are considerations to be made regarding law and tax changes, trade barriers, demographic changes, and environmental concerns.

The common denominator between all things discussed during a PESTLE analysis is that they are all factors that influence the organisation, but those which they have no control over. The benefit of doing this analysis is to maximise opportunity and minimise risk. For the environment, and climate change, that means there is a lot to be done.

Good to know: PESTLE stands for “Political, Economic, Social, Technological, Legal and Environmental”

How do businesses consider megatrends in resilience planning?

Let’s be honest, there are very few businesses who are able to operate in a geographic or industry bubble, exempt from the myriad of political, economic, and commercial factors that commonly influence businesses. It’s almost impossible. Knowing this, managing risks and putting strategies in place to mitigate these factors has become increasingly challenging, meaning that reliable and duteous partnerships with environmental consultancies such as Imvelo ltd have become the norm.

Businesses must now look at the five major megatrends when putting together resilience strategies:

  • Regulatory or geopolitical uncertainty
  • New technologies
  • Strategy challenges
  • Talent optimisation
  • Operating models

It is under the branch of operating models that environmental consultants can have the greatest impact. Due to the rapidly evolving economic environments that businesses engage in, constant shifts in decisions and strategies are constantly under consideration from even the most resilient businesses. Operating models encompasses things like increasing environmental obligations, exposure to natural disasters, epidemics, social value change, consumer spending power and more. It’s absolutely vital in megatrend assessment to use the latest modelling technology and a thorough assessment of supply chains in order to reduce environmental risks such as climate change.

Climate change and resource scarcity

With growing populations around the globe, the demand for food, products and technology is going to rise and rise, pushing the limits of what the Earth can feasibly provide. Many of these items put a high demand on oil, meat, fish, sugar, palm oil, wood, metal and more. Climate change is already having an effect on productivity for many of these industries, with droughts, bad crops, long winters, and the extreme weather taking their toll. Businesses must account for this, and act accordingly, finding ways to reduce their consumption, generate their own energy, and adapt to newer and cleaner technology.

How are some businesses going green?

Knowing that climate change will force new approaches, what are some of the interesting business evolutions that we are starting to see? For example:

  • Going paper-free in the offices and using digital technology to help accomplish it
  • Committing to zero waste strategies that reduce the overall waste output
  • Reusing items or buying second hand, to reduce pressure on production and extend the value of asset lifespans
  • Generating renewable energy through solar panels and wind turbines
  • Switching to an electric fleet of vehicles and installing charging ports on site
  • Changing manufacturing policies to include more recycled materials, and redesigning existing products to make them either easier to dismantle or easier to recycle
  • Switching to local products, services, and suppliers to reduce their carbon footprint
  • Reducing imports
  • Embedding a green workplace culture

What is the role of business in climate change?

Businesses exist on both sides of the ‘climate change coin’. On one side, they are often the greatest polluters, the heaviest consumers of resources, and the facilitators of over-consumption and wastage, but on the other side, they are the ones with the financial resources to counteract it, the manpower to turn ideas into actions, and the huge voices behind communicating change.

With the UN Sustainable Development Goals for 2030 now set in stone, businesses who believe that they will last that long, and who have a progressive mindset, are not waiting around.

Smart businesses are taking action right now. They’re embracing renewable energy, low-carbon tech, sustainable sourcing, innovations and more.

Businesses are pivotal both to and against climate change, but the side of the fence they sit on depends on the actions they take now in support of a more sustainable future.


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