The rise of new sectors and industries is not always obvious or predictable, although hindsight often makes it seem that way. The onset of climate change has spurred demand for solutions to the crisis such as renewable energy technology, energy efficiency measures and sustainable business practices.
The reality of climate breakdown means that ever greater efforts will be made to adapt to a changing climate and develop resilience at a local, national or international level.
Across the globe extreme weather events, hurricanes, cyclones and flooding will increase in frequency – resulting in ever more devastating disasters.
Changing weather patterns such as declining rainfall will affect crops and planting seasons hitting farmers hard, forcing them to adapt or lose their livelihoods.
Funding Shortfall
While climate change mitigation can be achieved by reducing greenhouse gas emissions through increased uptake of renewables, lower energy use, changes to agriculture and tackling deforestation. Adaptation has been described as the poor cousin of climate change policy, receiving only a fraction of the overall funding and resources.
Currently only US$22 billion of climate finance funding or 4 percent of the total is flowing into adaptation. This figure is set to rocket as countries, businesses and individuals are forced to adapt and become more resilient.
Climate adaptation involves a complex set of solutions which will vary from place to place, industry to industry. Areas facing water scarcity and drought will have to adopt water efficiency measures, change crop types to more drought resistant varieties and a multitude of other strategies to cope with a changing climate.
Areas which face flooding will be forced to build on higher ground, develop water resistant infrastructure and consider how to mitigate against flooding such as reforestation to help absorb flood waters.
For some ventures involved in products such as desalination and renewable energy technology climate change is an obvious opportunity to provide products which will assist in the adaptation process.
New Business Opportunities
For other firms that specialise in threat surveillance or incident response there are rich pickings in a world increasingly concerned about the damage inflicted by climate breakdown.
The global demand for adaptation creates a golden opportunity for socially conscious entrepreneurs to help communities and countries adapt.
The developed world will find adaptation and resilience easier thanks to greater resources, while regions like Africa and Southern Asia have fewer resources and will be harder hit by a changing climate.
The Upside of Disruption
Disruption is generally viewed as a negative and there is little doubt many will suffer from the ill effects of climate breakdown, but other communities and companies will adapt successfully and thrive.
For example if clothing manufacturers experience shocks to their supply chain because of drought destroying cotton crops they depend upon. Forward thinking firms will have alternative suppliers lined up or will invest in their suppliers by helping them develop drought resistance supplies.
In the end firms which are nimble footed and resilient to change will be best placed to adjust to a radically new environment. Others who fail to adapt risk going out of business thanks to unforseeen shocks.
As climate change acts as a hazard multiplier increasing the risk of typhoons, floods and extreme heat could all strike business operations in different ways. Firms that consider these risks to their assets can limit their exposure to a changing climate and gain a competitive advantage over rivals.
Climate change poses physical risks but also legal and reputational – a rising tide of climate based litigation is emerging aimed at firms which are considered to be emitting greenhouse gases or to firms for failing to disclose risks to business models.
Reputational Risk
Companies that do not attempt to mitigate their climate emissions and adopt sustainable business practices will find themselves at the bottom end of public opinion, perceived as undesirable employers and displaying poor business ethics.
The attempts by oil majors to adopt green energy slogans and (such as BP’s rebranding as BP – Beyond Petroleum) and shift to renewable energy while still reaping the rewards of pumping oil might work for now, but in the future consumers and citizens will increasingly punish firms that fail to act as responsible corporate citizens.
