What Drives Businesses to Prepare for Climate Change?

on March 09, 2015 at 12:00 PM
Submitted Evidence Of Global Warming From Satellite Imagery

In this handout satellite composite image provided by the U.S. Geological Survey (USGS), satellite images of polar ice sheets taken in July 2006 (L) and July 2007 show the retreating ice in the Chukchi Sea during the summer in Barrow, Alaska. Photos from US satellites, declassified by the Obama White House administration, provide the first graphic images of how the polar ice sheets are retreating in the summer. This location provides a study area where sea ice forms along the coast in the winter, and generally melts or breaks away by mid July. According to the USGS changes in the timing of coastal sea ice breakup, and in the location of offshore sea ice, have significant local impacts; ecological, biological, and human. Information recorded over long periods is required to understand and model the dynamics of sea ice and how changes or trends may develop and influence other systems. (Photo by USGS via Getty Images)

This winter, the US Northeast was constantly pummeled with heavy snow often accompanied by gusty winds that brought arctic air from the High North. The city of Boston, in particular, bore the brunt of these Arctic blasts, but at the same time, parts of Alaska experienced an unusually mild winter.

“Boston is crushed under more than eight feet of snow, with the city’s all-time record just a few frigid inches away,” Billy Baker of The Boston Globe writes and explains how the two phenomena are actually linked through the jet stream: “High atmospheric pressure in the western US and low pressure in the east are combining to draw arctic air down through Canada to New England, literally rerouting Anchorage’s winter to Boston while basking south coastal Alaska in weather warmed by Pacific Ocean currents.”

These conditions caused the 2015 Iditarod Trail Sled Dog Race committee’s  board of directors to change the historic racecourse, as Klas Stolpe of the Juneau Empire reported. “Due to poor snow accumulation and trail conditions in the Alaska Range the traditional restart has been moved to Fairbanks [360 miles north] for the second time in the annual race’s history,” Mr. Stolpe notes. So much for the pathetic attempt by some to still question ‘climate change’ in general and use snowfall totals as well as extreme cold weather to question the scientific reality of anthropogenic climate change impacts.

In this respect, it is useful to recall what is already understood quite well thanks to extensive scientific research. Isn’t it amazing that climate scientists seem to have to satisfy a ‘higher burden of proof’ than climate change contrarians and/or outright deniers? Anyway, allow yourself to get enlightened by what the Union of Concerned Scientists shares regarding the relationship between weather and climate as well as North American winters:

“Weather is what’s happening outside the door right now; today a snowstorm (…). Climate, on the other hand, is the pattern of weather measured over decades. (…) Winters have generally been warming faster than other seasons in the United States [with] spring weather arriv[ing] 10 days earlier than it used to, on average. (…) In the Arctic, frigid air is typically trapped in a tight loop known as the polar vortex. (…) The surrounding high-pressure zones push in on the vortex from all sides so the cold air is essentially “fenced in” above the Arctic, where it belongs. (…) [If] instability [i.e. because the barometric pressure within the vortex increases] allows the cold Arctic air to break free and flow southward, where it collides with warmer, moisture-laden air [the] collision can produce severe winter weather in some regions and leave milder conditions in other parts of the northern hemisphere.”

So, weather patterns have become increasingly volatile during the winter months leading to extreme variation at times. “Climate change represents the new normal. (…) More and more businesses recognize what is at stake and are grappling with this ongoing change. (…) Companies in all industries will need to respond to and manage the risks from more extreme weather events. However, for many companies climate change can lead to new markets and new opportunities,” Eliot Whittington, Deputy Director of The Prince of Wales’s Corporate Leaders Group at the University of Cambridge (UK), points out in an article addressing a crucial question – “How well prepared are businesses for climate change?”

His initial assessment is not a surprise: “While some are demonstrating leadership, too many companies are unprepared for climate change and too concerned with the likely short-term impacts of action.” Moreover, he adds, they “should look up from the floor and speak up about the importance of mitigating risks and seizing opportunities ahead.” Thus, his advice to companies is to try to help shape government policies on climate change instead of sitting back and hoping that nothing is going to change: “Companies who see themselves as gearing up for climate change should ask themselves one thing: how are they going to influence government policies so they align with their corporate commitments of preparing for climate change? (…) The most far-sighted businesses are those that realize this and are actively taking part in efforts to shape this conversation and call for a well ordered and business-friendly response to the risks of climate change.”

In this context, the ‘WE MEAN BUSINESS’ coalition published the report “The Climate has Changed – Why bold, low carbon action makes good business sense.” It also includes a great chart – based on companies’ responses – depicting the reasons why companies pursue corporate climate action.

roman UCS1

Source: WE MEAN BUSINESS Coalition; Read the entire report with more informative details.

Unsurprisingly, public companies’ business action on the climate change front is both directly and indirectly connected to future earnings and revenues. Note, the mention of ‘reputation’ tops the chart – obviously coming straight from a PR department ‘talking points’ memo. Actually, ‘reputation’ has to be viewed in tandem with a close second ‘customer demand’, which both can negatively impact the bottom line to the dislike of shareholders if the public’s perception of the company on these measurements is unfavorable vis-à-vis its competitors in the same space. What really drives companies’ ‘motivation’ is the fear of ‘costly’ government policies (gets 9 mentions overall with 6 of them considered a ‘risk’) as well as – to a lesser degree – ‘costly’ changing weather patterns (gets 6 mentions overall with 5 of them considered a ‘risk’).

Nevertheless, it is clear that companies’ executives now regard climate change as strategically critical for their respective business operations and as necessary to be considered in any future key business decision given its impact on future government policies.

Finally, the graphic and list below from the ‘WE MEAN BUSINESS’ report highlightsthe most financially attractive low carbon opportunities and the measures that have resulted in the highest levels of emissions saved across key regions and sectors”:

roman UCS2

Source: WE MEAN BUSINESS Coalition; Read the entire report with more informative details.