By: Steven Winter, Columnist, International Director
Out of the five major challenges facing the world today only one is not related to climate change, according to 750 experts. Those challenges include extreme weather events, water crises, major natural disasters and failure in climate-change mitigation and adaptation. So, due to the massive scale of this change, almost every business is affected by it in one way or another, and we do not yet have the skills to deal with it as we should. A sage prediction would be that demand for climate-change-related skills will increase.
On a more positive note, climate change may have dire consequences, but it is also giving birth to new opportunities for aspiring startups that work on addressing its impact.
A not-so-urgent issue
Climate change is not a phenomenon to be taken lightly. But since the true impact of it remains to be seen over the long-term, many governments and organizations are not yet ready to act. It is not unusual for these entities to prioritize what is urgent over what is important. Yet, the issues of climate change and global warming are no longer issues to be postponed to the distant future. As scientists have reassessed the rate of climate change and discovered that it is going at twice the rate predicted before, and with massive aggressive hurricanes and tsunamis hitting the coasts of the United States and Asian countries, and costing billions of dollars, the issue is as urgent as it is important.
Different impacts on different targets
Yet, not all industries nor all countries are affected equally. Some stand to lose more than others. Industries and sectors have different levels of sensitivity to climate change, and those with thehighestsensitivity need to plan business continuity much more effectively, given the levels of risk to which they are prone. Unsurprisingly, the insurance industry stands to lose the most since it is the industry that bears the costs of most of the damage in most industries. According to Inga Beale, CEO of Lloyd’s of London, the costs of claims could reach £150 billion. Unless insurers invest in low-carbon economies and adopt intelligent premiums, they stand to lose even more.
The second industry that is most likely to be affected by climate change would naturally be agriculture. With rises in temperature, regions with vast agricultural areas are expected to be affected the most. The consequences can far exceed mere drops in agricultural production to social unrest, particularly in regions heavily dependent on agriculture for their incomes. On a global scale, 30 percent of the population is dependent on agriculture for their incomes.
The beverages industry is another industry that could be hit hard by climate change. This is because climate change is affecting pure water levels. Companies such as Coca-Cola, which pledged to counter this issue with their replenishment projects, are not addressing the issue in its entirety. Although they do replenish aquifers, they do not replenish the same aquifers that have been depleted. So, while this solution works at a holistic level, it is not a good solution for communities most affected with depleted aquifers.
Moreover, climate change is expected to increase the instability of transportation systems, as it causes more frequent delays, disruptions, damage and failure in land-based, aerial and marine systems.
Climate change is multifacetedand has many manifestations, only one of which is global warming. This change affects organizations in a variety of ways, and it is difficult to assess this impact and generalize it for all organizations. A better approach would be to look at industries and sector levels. But one thing remains for sure, climate change is a challenge that business leaders must deal with, and many are not yet equipped either in soft skills or hard skills.
Countries most affected
Remarkably, developed countries, which may have contributed the most to climate change with their high levels of industrialization, may very likely be the least vulnerable to it. The vulnerabilityof different countries has been assessed by the Notre Dame Global Adaptation Initiative Index,or ND-GAIN Index. The index ranks countries based on their vulnerability and readiness to adapt to climate change. Vulnerabilityis assessed based on the effect of climate change on six key areas: food, water, health, ecosystem service, human habitat andinfrastructure. Underdeveloped nations still have a long way to go, and they need to act swiftly as they are the most vulnerable. Most of Africa and South Asia fall within this category. Africa, for example, is a great region in which to invest in renewable energies, and many international and local companies are operating there. However, the continent remains one of the most vulnerable to potential impacts.
Regardless of the causes of climate change, the impact is universal. No industry or country is safe, but each differs in its readiness and capacity to act. Businesses are under pressure to change their operating models into more adaptable ones, and developing countries are likely to suffer from climate change more than rich countries. But given the magnitude of this phenomenon, solidarity and involvement are necessary at a global scale as this is a global threat. A global response may carry within it a lot of innovation in the future, and this could be turned into an opportunity rather than a threat.