When the Climate Changes, Can Business Carry on as Usual?

13310184 - business man hand shows the earth as green energy concept  elements of this image furnished by nasa

2016 will almost certainly be recorded as the hottest year ever recorded and it has ignited much debate as to the influence that greenhouse gas emissions continue to have in fueling climate changes – creating a threat that is no longer just applicable to the future.

The bleaching of the Great Barrier Reef and rapidly disappearing Arctic sea ice offer evidence that global warming is taking its toll already. “The impacts of human-caused climate change are no longer subtle – they are playing out, in real time, before us,” says Professor Michael Mann from Penn State University in the United States. “They serve as a constant reminder now of how critical it is that we engage in the actions necessary to avert ever-more dangerous and potentially irreversible warming of the planet.”

Those with operations most reliant on the use of fossil fuels and virgin resources to power and sustain their organisation – both in their own scope and along their value chain – are at the mercy of ever-fluctuating commodity prices, an increasingly unreliable supply of raw materials and a shift in consumer and wider stakeholder ideology and affiliation.

Agriculture

For agricultural businesses in particular, maintaining a secure and reliable supply of raw materials and goods coming from fields across the world is of paramount importance. Extreme rainfall, drought and more unpredictable growing seasons – all exacerbated by human-made climate change – continue to put pressure on farmers.

To highlight the unpredictability farmers are facing, consider the Mississippi River, which in 2008 flooded just before the harvest period for many crops, causing an estimate loss of $8bn for farmers. Whereas just 4 year later in 2012, the River was at its lowest level in two decades, 30 feet lower than the previous year. This severely restricted its use as a mainstream transport artery by barges carrying agricultural produce and other raw materials. To cope with each drop in the water level of one foot, barges were forced to offload 200 tonnes of cargo, severely reducing the cost effectiveness and volume of supply transport. According to the American Waterways Operators, in December and January of 2012/2013 more than $7bn worth of goods were at risk of not being delivered via barge transport.

With unpredictable yields, ageing soils, a lack of access to finance to improve farming practices and unstable market conditions, the next generation of farmers are abandoning the family business and heading for the cities in search of alternatives jobs, putting further pressure on commodity supply.

Meanwhile, as they thrive under warmer temperatures, wetter climates, and increased CO2 levels, the bill for controlling weeds, pests and fungi keeps growing (standing at around $11bn a year in the US alone). Forced changes in production and delivery continue to cause supply chain disruption and to drive costs upwards.

Water risks

Meanwhile, organisations with assets and operations in regions of water-stress – where the quality, availability or accessibility of water is poor (or being contested) or there are conflicting demands for it – are threatened with constrained growth. According to the CDP’s Global Water Report survey in 2014, almost a quarter (22%) of responding companies say that issues around water could limit the growth of their business, with a third expecting that constraint to be felt in the next 12 months.

There is a real need for organisations to improve their capacity to overcome the barriers set by the world’s biggest threat to our continued ability to thrive on planet Earth. By boosting climate resilience, businesses will improve their operational continuity, protect their brand and preserve their economic stability.

Today, businesses have a real mandate to take climate action – not only to mitigate impacts and ensure they are not part of the problem, but also in preparing their organisations so they are fit for the future.