'When the Clock Strikes 12': What Your Business Can Do to Adapt to Climate Change
Next week is Earth Day, a date (April 22) when people will be thinking about climate change. NASA defines this term to mean “a change in the usual weather found in a place” -- whether that change involves how much rain a specific region is getting in a year, or a shift in the usual temperature for a particular month or a season.
Climate has been changing since the beginning of time, of course, but never at the alarming rate we are seeing right now. In fact, 18 of the 19 warmest years on record have taken place since 2001, with 2016 being the warmest -- a full 1.78 degrees F. warmer than occured during the previous 50 years.
So, whether you argue the existence and validity of climate change, these temperature shifts matter. Because the reality is that climate affects everything we do -- from the food we eat and the products we manufacture, to our imports and exports, even the way we do business.
And climate change is going to have an adverse impact on our economic growth in the next few decades. According to the Brookings Institution, incomes in the United States may be reduced by 36 percent by the end of the 21st century. Other studies have shown that an increase of 4.5 degrees Celsius in global temperatures could shrink the global domestic product by $72 trillion.
Those are alarming numbers if you’re a businessperson. Regardless of your personal beliefs about climate change's validity or cause, if weather patterns have the potential to dramatically impact your bottom line, you should be paying attention.
Are businesses doing enough to adapt to the threat of climate change? No.
In fact, science has already shown that we’re not doing enough. A survey of S&P Global 100 companies by the Center for Climate Change and Energy Solutions showed that only 28 percent had conducted climate assessments. An even smaller number, 18 percent, actually used climate-specific tools to assess their risk.
As more consumers demand that the companies they do business with implement more sustainable practices, the next logical step is to draw up environmental action plans and implement them in order to keep customers happy. Investors are also getting into the game and calling on CEOs to consider this shift in consumers’ attitudes, and implement real, actionable changes.
In this context, here are three things businesses can do to make sure they don’t get left behind.
1. Forecast a range of scenarios and create an action plan.
Change is inevitable, but we can all do something to curb the effects of climate change -- whether we're in the Fortune 500 or a startup. We can start assessing risks and probabilities pertaining to whatever region of the country we’re in, regarding food, drought, rising sea-levels, temperature and rainfall patterns. We can conduct a thorough assessment to point out vulnerabilities in certain areas of the business that we haven't previously taken into consideration.
A sample assessment could be something as simple as investing in renewable energy. As prices continue to decrease,we can save money and help reduce energy uncertainty at the same time.
That makes sense because, as businesspeople, we’re all about metrics: how much we need to sell to make a profit, our KPIs and our sales-forecasting numbers, among others. Let’s add measuring our carbon emissions and energy consumption to the list. Here are a few areas to start with:
- Supply chain. These types of emissions carry the bulk of the blame when it comes to corporate carbon footprints. While it might be time-consuming to create and implement new processes, such efforts can save us time and money down the line. LEGO reached its goal of ensuring 100 percent of energy consumption, balanced by the production of renewable energy sources, back in 2017. The company is committed to working closely with suppliers to reduce its overall carbon impact, 90 percent of which occurs in the supply chain.
- Energy. This is something anyone can do cost-effectively and on a regular basis: For a start, replace incandescent lighting with LED lights, which use 75 percent less energy. By 2027, LEDs could save 348 TWh of electricity -- the equivalent output of 44 power plants.
- Transportation. Using regional warehouses is a way to help reduce emissions significantly. Allowing ample time to ship products via a different route is another way. Companies should think about implementing a program that incentivizes employees to carpool, take mass transit or rides their bikes to work.
2. Adopt a design to sustainability approach.
If your line of work involves creating or designing new products, your objective should be to lessen the use of non-renewable resources and minimize waste for more reuse and recycle. What are your company’s strategies for mitigatinge change? Whatever those are, the new designs should align closely with those strategies.
Some sustainable design principles include:
- Optimizing site potential
- Minimizing the use of non-renewable energy
- Protecting and conserving water
- Enhancing indoor environmental quality
- Optimizing operational and maintenance practices
Implementing these principles can help reduce your negative impact on the environment without compromising the bottom line. In my latest book The Hero Factor, I wrote that one of the core principles of hero leadership involves aligning corporate values so that they benefit your people without dismissing the power of profit.
Industry giant Siemens is an example of a company that has developed strong sustainable practices with the goal of achieving profitable and long-term growth. Siemens's Strategy Program Vision 2020+ fully aligns with the company values of responsibility, excellence and innovation.
Manage regulation risk.
To manage risk, we need to understand the policies being implemented by government. After all, policies change with every election, it seems; but it’s our job to understand not just the policies but our options. That level of comprehension allows executives to formulate cohesive strategies to respond to all regulations and policy changes that pertain to them.
As more millennials (and Gen Z’ers) join the workforce, they’re demanding that companies make sustainability a part of their daily operations, and investors and stakeholders are listening to those demands.
Despite the rollback of more than 30 environmental rules, consumers are being quite vocal about companies putting forth policies that align with their -- the consumers' -- values, and sticking with them. And that's important: Every business owner knows that satisfying customers contributes greatly to their success.
But ... back to climate change overall. Regardless of your beliefs about this phenomenon, the reality is that it affects us all -- no matter what industry we’re in. The writing is on the wall: Ignoring this shift in the planet's weather systems and ocean levels will only be to our detriment. But companies that are planning ahead may be able to stay afloat and rise above the destruction sure to occur.