Nandini Dalai
Delhi
Traditionally, organizations have guesstimated the health of their business based on how much profit they generated and how much value could be delivered to investors . As the threat and impacts of climate change escalate for organizations and communities, investors are demanding an immediate change to this mindset.
The world is seeing increased impacts from extreme weather events, from devastating
drought and wildfires in Canada, the U.S. West and Brazil, to severe flooding in Europe and China. Human lives are being lost, business supply chains are being severely disrupted, and dramatic energy supply and pricing volatility can be seen in many markets.
Taking action on climate change is more urgent than ever. The challenge of climate change is not something that can be addressed by a single organization, industry, country, or government. For many businesses, effectively responding to the urgent call for climate action and the transition to a net-zero economy will require a fundamental transformation of their way of doing business.
Climate change-related business risks and mitigation plans are on the minds of almost all business leaders, according to our research. Of the senior leaders who responded to Schneider Electric’s survey, coming from organizations around the world with over $250 million in annual revenue, 63% said that their organization has already identified where they are exposed to potential climate change risks and begun developing an action plan. In addition, 30% said that they are becoming aware of these risks and impacts.
The threats that these organizations are assessing and building plans to mitigate and adapt to are diverse, but rising to the top of our respondents’ minds were cybersecurity, extreme weather events, insurance costs and lack of insurability, supply chain issues, and natural resource scarcity.
The intersection of climate change and cybersecurity is particularly interesting and continues to rise in relevance to businesses based on our research. The impacts from climate change act as a destabilizer for societies and economies, and have a trickle-down effect for most businesses.
Our research indicates that although business leaders are familiar with sustainable business concepts, such as purpose-centered business and sustainable development, their awareness of practical solutions to actually transform and mitigate climate related risks is more mixed. As customers, investors, and regulators demand greater action on climate change, this research validates that organizations need to rapidly increase their knowledge about practical climate solutions and actions towards transforming their business to be climate change resilient. Building a business that is resilient to climate change is not only required to meet the demands of your investors, but also to ensure your business can stand the test of time.
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