Climate change threatens to destabilize global markets and significantly shift consumer preferences. Today, 69% of consumers have changed their behavior in response to climate change, as 50% now say they reuse more products to reduce their waste.
The link between the climate and the economy is clear, too. Recent reports show that global production will fall in the face of a climate disaster, many major insurance companies are preemptively changing their policies, and decreasing crop yields are straining the global food supply chain.
Businesses must adjust to the new reality of climate change if they are to survive. A robust ethical, social, governance (ESG) policy is necessary for any firm that wants to survive in the 21st century, and many companies will need to change their standard operating procedures to weather the climate storms to come.
Climate change will have a profound impact on the typical weather systems that we’ve grown accustomed to. Scientists at NASA predict that heatwaves will become more extreme, hurricanes and tropical storms will become more intense, and the wildfire season will last longer.
The recent July heatwaves are a testament to the power of global warming, as many climate scientists say the high temperatures would have been “almost impossible” without human-induced climate change.
Businesses feel the pressure of rising temperatures and changing weather patterns, too. When temperatures are sore, supply chains get disrupted and consumer behavior becomes unpredictable. Folks are extremely unlikely to follow predictable patterns when a hurricane is inbound or a wildfire is sweeping the area, too.
Unpredictability and disruption are almost always bad for business. Many firms will fold in the face of changing weather patterns, as only the most agile or lucky companies will be able to reposition themselves in ways that suit current consumer trends.
Climate change is an existential threat to us all. While governmental change has been frustratingly slow, some regulatory measures have been taken to change the way firms conduct themselves. Climate-conscious companies can protect themselves against fines by developing more sustainable operating procedures (SOP).
Firms that want to clean up their act and get ahead of regulatory changes should communicate openly with all their stakeholders. Companies must get employee buy-in before rolling out a host of SOPs and will see a boost to their brand loyalty if they communicate openly with consumers.
Every firm should take a unique approach to implementing SOPs but, in general, companies can adopt sustainable practices like:
- Tracking and reducing waste, including up-stream materials;
- Implementing water conservation practices;
- Prioritizing energy-efficient equipment and renewable tech;
- Fostering a low-impact supply chain via ethical sourcing and lifecycle assessments.
Businesses that adopt these SOPs will find themselves ahead of the game. This can save companies money in the future when regulatory changes will force them to clean up their act.
For example, climate-conscious firms have already been tracking their carbon use and greenhouse gas (GHG) emissions. So, when the proposed Securities and Exchange Commission (SEC) climate disclosure legislation is enacted, these firms won’t need to scramble to catch up with new laws.
These changes can form the basis of a robust ESG policy, too, as policy-level changes are necessary for any firm that claims to care about its impact on the environment.
Big brands around the globe have used environmental, social, and governance criteria to appeal to investors and improve their brand reputation. Without a clear ESG policy, many firms will simply fail to raise the kind of capital they need in times of climate change and global warming.
Companies who want to clean up their act and attract climate-aware investors can improve their ESG metrics by investing in natural resource stewardship programs and conservation efforts. These firms can double down on their commitments to climate change by adopting biodegradable packaging and products while simultaneously using waste management systems to reduce pollution.
Climate change will have a significant impact on the global community, too. This means that modern firms need to take a robust approach to social governance. Companies that want to boost their ESG score can host eco-friendly community events and source more of their materials from climate-conscious suppliers.
Progressive firms can also reinvest their profits into proactive protections, like levees and clean water systems, for communities that source their raw materials. This shows consumers and investors that the business understands the far-reaching impact of climate change and is taking measures to protect its people against the threats that global warming presents.
Climate change will have a widespread, highly-unpredictable impact on all businesses around the globe. Markets will become more volatile and consumer preferences will change in the face of rising temperatures and extreme weather events. Businesses can protect themselves against the brunt of climate change by making progressive changes to their standard operating procedures. This will boost their ESG score for investors and will help firms save costs when new regulations finally come into place.
By Indiana Lee, BOSS contributor