Climate Change And Economic Risks: Climate Change Pain Points Every Leader Should Know
The single biggest threat to the economy, our businesses, and our existence today is climate change.
Let us get straight to it - we’ve added 100 ppm of CO2 into the atmosphere in the last half-decade. Every bit of that is going to shrink most of a country’s GDP, a significant portion of your revenues, cost of goods, inflation, food, and perhaps question the existence of the very enterprise itself!
Let us examine this in more detail, in a more relevant context, and look at some solutions we could adopt in the upcoming parts that will follow this article.
2020 was the hottest year ever recorded, with temperatures 1.2°C higher on a global average. Human activities are threatening the delicate balance of climate. Human-made, physiological, and ecological systems have been optimized from time to time to withstand certain discrepancies. But, when these limits are breached, the impact will be incremental, thresholds will collapse, and nature could stop functioning altogether. That is a risk to the economy, a big one!
We have all heard that earth’s temperature is rising on a global scale after millions of years of consistency. The primary reason for this sudden increase is the rising effects of climate change, more specifically due to the spike in emissions into the atmosphere resulting in an enhanced greenhouse effect. With more than a 40% increase in the pollution levels since the industrial revolution began, air quality has never been this bad in the last 800,000 years. What we breathe is impure in 90% of the places on the planet!
One can quickly notice the impact of global warming worldwide, from rising sea levels to melting ice caps. Catastrophic incidents like a tsunami, ocean acidification, season extension, and species extinction are increasingly commonplace. All that loss of land and farms is unfathomable. Topographical changes have also caused untimely rains, severe droughts, and increased heat waves and flooding across the planet. How shall we plan for our next generation?
With effects on society, communities, and the economy, climate change has become a substantially immediate problem at hand that needs the attention of all businesses, governments, and people across the globe. There are plenty of solutions - some are immediate, and others are much long-term in implementation and effect. In these times of uncertainty, there is a need for data to assess the risk at relative levels so we can take the actions of intervention or apply remedies to tackle this threat.
Need for Deeper Risk Assessment
If companies fail to conduct a deeper assessment of climatic risks on their businesses, they may collectively face a loss of more than one trillion dollars in the next five years. Firms need to focus their resources on assessing the risks caused by global warming to stay ahead of the disaster curve. Comprehensive planning and building resilience can help companies mitigate and control economic risks of climate change. For example, changes in the use of technology and an increase in intelligent regulation of greenhouse gas emissions will help bring the quality of air to control.
Large businesses face pressure from their stakeholders to go green and potentially save billions in relief funding. More than 70% of leading CFOs have received pressure from their customers to take measures against the economic risks that climate change entails, as surveyed by Deloitte.
More than 350 out of 500 top companies worldwide are now seriously considering climate change and its effects while making various business decisions to avoid economic risks. A few of those are related to capital allocation, supply chain management, development of products or services, and many other managerial tasks. A complete overhaul in the entrepreneurs’, business leaders’, and executive’s mindsets is necessary to materialize this process. This transformation will become much efficient when accompanied by new-age operating models, tools, and techniques that include factors such as climate risk into decision-making steps. So, what can we do?
All is not lost. There is still something we can do
The most conducive method to manage climate change risks and incorporate their effects into the decision-making process is environmental intelligence. Businesses can now analyze the Earth’s climatic yields by combining remote satellite, on-ground local sensing, and apply AI to gain deeper insights. An approach like this can simplify the decision-making process and predict economic risks in the most precise way for enabling companies to handle the repercussions fuelled by global warming.
Measurable Threat Comprises Remediable Risks
At Ambee, we understand the need for preparing for risk better. Multiple environmental risk factors can be mitigated using Ambee’s actionable, insightful and high-resolution weather, pollen, wildfire, water vapor, and air quality data. Companies can instantly assess risks, form strategic partnerships, engage with customers, build better products, understand the impacts, and better prepare for the risk. A company’s better understanding of various environmental risk factors also empowers it to formulate policies that will assist in future mitigation and recovery.
As we already know, governments and businesses have been making informed decisions for centuries solely based on the stable and reliant behavior of the earth’s climate. With changing climate factors and the associated risks, businesses worldwide need to acknowledge the prevalent economic troubles caused by the changing environment and consider using environmental intelligence to make decisions that will protect their assets and save their planet. The organizations welcome a new era of conscious decision-making by supporting the innovation of tools and expertise related to environmental intelligence. This generation will actively fight to reduce global warming. By adopting more innovative tools and methods, these companies will save billions by avoiding an economic crisis and protecting human beings’ lives.