Carbon dioxide (CO2) emissions from the burning of fossil fuels (such as coal, oil, gasoline, and natural gas) have created a warming “greenhouse effect” around the planet. The impacts of this global warming are far-reaching, harming people, property, and businesses worldwide. No matter what industry or region you’re in, it is almost impossible to escape the effects of climate change – and damages in some areas are projected to be in the hundreds of billions of dollars annually through the end of the 21st Century.1 It’s critical, therefore, to address the immediate pressures that climate-related issues put on your company’s bottom line.
Here are some things you need to know to help prepare for and mitigate the impact of climate change on your organization.
Natural disasters and climate change
The trend toward higher temperatures has caused an increase in the severity of natural catastrophes, with weather events such as hurricanes, windstorms, and floods becoming more and more destructive. Indeed, the United States saw an unprecedented 22 weather and climate disasters that caused at least a billion dollars worth of damage in 2020 alone. Hailstorms too are on the rise – both in terms of storm frequency and the size of hailstones – increasing the risk of extensive damage to vehicle fleets and buildings.2
Climate change is also contributing to more unpredictable weather patterns. For example, Texas experienced record snowfalls in 2021, resulting in more than 100 deaths, 4 – 5 million people left without power, and an estimated $295 billion in losses.3 Not all weather events are necessarily caused by climate change, but patterns in weather events are indicative of climate trends.
Economic impact of climate change on business
Businesses are facing a transition period where the risks and economic outcomes of climate change are in flux,4 but some of the biggest threats are in the areas of:
Strategies to mitigate the effects of climate change on your business
Consultants and organizations like the United Nation’s Intergovernmental Panel on Climate Change (IPCC) have acknowledged that though there’s no way to predict every peril, you can prepare for and reduce potential adverse effects.
Protect your business from extreme weather
Before natural disasters happen, understand how they might impact your business and follow best practices to mitigate damage. Learn how you can bolster your facilities and tailor emergency preparedness plans for specific natural catastrophes here:
To reduce the risk of water damage consider IoT early warning technologies such as moisture detection systems.
Assess exposures and review your business continuity plan
From weather patterns in your geographic location to hazards unique to your industry, risk engineering services can help you gauge where your business is exposed to climate change-related perils. Having a business continuity plan tailored to your company’s specific exposures will help ensure that a climate catastrophe doesn’t mean irreparable damage to your profits — or the end of your business.
Create resiliency in your supply chain
Disasters related to climate change don’t only affect your facilities, they can also impact the suppliers your business relies on. Guard against supply chain vulnerabilities by assessing vendor risks, potential shipping issues, and having alternate backup suppliers in place.
Review your insurance coverages
Work with your agent or broker to ensure your business insurance policies protect against your most up-to-date exposures, such as liability coverages that help protect your company and your executives against environmental negligence claims. Consider property policies that allow you to repair damaged facilities up to Leadership in Energy and Environmental Design (LEED) certified standards.
How can your company reduce its carbon footprint?
Along with preparing for the negative effects of climate change, your business can also take steps to be part of the solution. Many institutions are reducing their carbon footprint, working toward an eventual NetZero goal, and discovering the economic benefits of doing so.
Don’t forget to measure and communicate your efforts. Corporate reports that reflect sustainable goals help amplify to both your internal and external stakeholders — and the public at large — your company’s commitment to mitigating the effects of climate change both for your business and for the planet.
1 Nature Climate Change Journal: Climate damages and adaptation potential across diverse sectors of the United States
2 Nature.com: The effects of climate change on hailstorms
4 UN Environment Programme: Insuring the Climate Transition Report
5 ScienceDaily: Large, high-intensity forest fires will increase