Why it pays to be sustainable…
The major non-renewable resource for humankind is time which is why we urge businesses to take control and strive towards putting the United Nation’s environmental Sustainable Development Goals into action. (Goals seven, nine, eleven, thirteen and fifteen to be exact.)
Fossil fuel energy consumption is skyrocketing at an exponential rate; all businesses (and individuals) produce and are responsible for their own distinctive carbon footprint. Businesses should be considering the SDG agenda within their business activity in order to avoid risks that will affect them in relation to climate change.
‘An economy that destroys our home is no longer an economy’Vandana Shiva
The Risks to your Business if We Enable the Climate Crisis to Continue
According to McKinsey’s Value Risk Chain for the impact that the climate crisis will have upon businesses shows six potential but very real dilemmas. Here are a list of the three main McKinsey risks that will pose an economic threat to your business.
The Three P’s:
- PHYSICAL RISK
The most tangible risk is the physical impact that climate change will have upon your business. Extreme weather will have significant effects on the assets, infrastructures and jobs of the company. The ecological disasters that will be affecting us will present obstacles that prevent our efficiency and cost us in the process. Honda Motor Company, a multinational corporation lost over $250m in 2011 when car manufacturing plants in Thailand flooded. Even the largest and strongest of corporations aren’t immune to the climate crisis.
‘There are no jobs on a dead planet’Bill McKibben
The Metropolitan Transportation Authority recently staged a fake flood in a New York City subway entrance to convey how ‘climate change is real’ and that it will physically prevent us from going about, not only our day, but our business.
- PRICE RISK
With the recent Paris Agreement and UN framework prevention, climate-related regulation can increase the cost of energy thus having an impact upon fixed costs. Similarly, the cataclysmic repercussions of climate-related drought can raise the prices of water. The commodification of raw materials due to their volatility during the climate crisis means that prices will increase with material rarity. Many companies are aiming to become self-sufficient and switch to 100% renewable energy such as HP and Ikea.
- PRODUCT RISK
On a business to consumer level, the public is becoming increasingly more conscientious about the environmentally ethical features of the products and services that they invest in and consume.
Adapting your business to fit consumer needs should go above and beyond simply satisfying their physical needs but must also aim to satisfy ethical needs. We as a society are utilising our awareness of the current climate crisis and reject environmentally harmful produce. An example would be the rejection of battery-produced chicken eggs. If we allow climate change to continue we will inevitably have to resort to battery-food production in order to address the food shortage. Furthermore the risk to the raw materials also poses a threat to business; for example, businesses that rely on snow as a part of their business experience will be completely wiped out.
Why Corporations Will Suffer
With the modern, efficient and reliable infrastructures that cities provide organisations and individuals with; frequent and unwavering energy use in urban communities is to be expected. Electricity and power is available at the flip of a switch, this is simply a cultural norm for urbanites thanks to the enhancement of technology; now urban cities are reported to consumer over two thirds of the world’s energy. This provides an array of opportunities. With such convenient accessibility to power, this enables us to be more connected and thus more efficient, which is exactly what we want as a GDP-led society.
We have had access to electricity for 0.07% of our time on planet Earth and this ease of access is significantly greater in urban communities compared to rural communities suggests recent urbanisation trends. Due to plethora of opportunities that city-life opens up, rural-urban drift is an expected subsequent effect. Over the past fourteen years there has been a significant spike in rural to urban migration and it is predicted that by 2030, 60% of the global population will migrate to urban communities.
It needs to acknowledge that with the promise of power that the city provides businesses and citizens with, there are also consequences for this mass usage of non-renewable energy. Consuming two thirds of global energy-usage is an immense responsibility and with great responsibility in this case equates to 70% of global carbon dioxide emissions. The size of the city as a global concept is equal to almost three quarters of all CO2 emissions produced that are rapidly aiding to the climate crisis (and potentially the extinction of humankind as we know it).
If businesses continue to consume energy without having a reactionary thought process on how this will affect not only those who are at the brunt of the climate crisis, but also their own enterprises, self-destruction will be inevitable. Before we brush over those in the firing range of climate change, Pakistan contributes less than 1% to global greenhouse gas emissions yet they are in close proximity to the rapidly melting Ultar glacier above the town of Karimabad, set to cause immense destruction to the lives of local residents. Those who contribute the least will be on the receiving-end of the harsh consequences as a result of mass consumption of non-renewable energy at a 70% responsibility rate. The word unfair does not even begin to cover this issue.
Business Extinction Prevention
Encouraging the concept of ‘sustainable living’ and ‘sustainable business’ would be one way to go about it. Assessing global city sustainability in regards to the 70% CO2 emission production, cities are being categorized as being an ‘ageing infrastructure’. This concept indicates that urban societies values and prioritizes economy and cost-effectiveness over environmental sustainability because we are GDP-led in our attitude. This is not necessarily bad because economic growth and prosperity is also an aim in the 17 SDGs (goal number eight for the reference) but the issue is that the climate crisis will cause a multitude of economic complications and difficulties. Solving climate change goes hand in hand with the goal of economic growth because solving climate change will alleviate a major future economical obstacle for your business.
Businesses in the current environmental landscape, where climate change is increasingly rearing its ugly head, should be aiming towards shaping cities into sustainable infrastructures (or as we like to call them eco-districts/cities), overcoming collective denial that climate change will get in the way of your business.
85% of the public commented that they were actively concerned about the climate crisis and 52% of this percentage conveyed that they were deeply concerned. Businesses should be hearing public demands and concerns and developing strategies for providing solutions in order to achieve the goals of prosperity, fairness and environmental sustainability.