Global warming and, more broadly, climate change are changing the world and the ways in which people live their lives all over the globe. It’s not just individuals who are feeling the effects, as industries and businesses are dealing with the changing weather patterns and living on a warmer planet as well. Most of the effects are negative and include liability and physical risks that can damage corporate reputation. Companies that want to survive and remain profitable must be aware of the world and the factors that could influence how well they function. This is also the only way to come up with the right solutions to alleviate the burden of climate change and the troubles it causes. 

Physical risks 

The physical risk of climate change is perhaps the most obvious of all, as it constitutes all the immediate threats that come from the environment. Drought, flooding, hurricanes and wildfires are all natural hazards whose incidence and intensity have been exacerbated by climate change. Their impact on society is severe, taking the form of critical damage to the infrastructure, property damage or destruction, and loss of human and animal life. Recent data shows that summer burned areas in California have increased five times between 1996 and 2021 compared to the timeframe between 1971 and 1995. The total burned area increased from 32,000 acres in 1963 to 4.2 million acres in 2020. 

Damage from natural disasters led to global economic losses of $380 million in 2023, of which only $118 million were covered by insurance. The agricultural sector is particularly vulnerable in this regard, as flooding and droughts affect crops, while livestock suffers due to the temperatures and quick shifts from extreme heat to extreme cold. The leisure industry is affected as well. For instance, ski resorts need to keep the seasons shorter since there’s not enough snowfall. Many travellers have started taking climate warnings very seriously, especially since some can become trapped in the countries or regions they visit if wildfires or hurricanes are massive enough to disrupt flights. 

Liability risks 

The liability risks appear due to a failure to adapt to local regulatory expectations. For instance, if your business operates in an area where recycling is mandatory, and you refuse to comply, you’ll be eligible to pay fines or reparations. Climate litigation cases are increasing all over the world, with the number doubling between 2017 and 2022. Get a horizontal machine instead of a vertical one since they support continuous loading, automated bale-out and are a recycling solution that operates on a larger scale. You also get the benefit of using just one machine to compact both plastics and cardboard. 

The emphasis on recycling among corporations reflects the changing public sentiment, as an ever-growing number of people are concerned about the environment and want to ensure the businesses they shop from are both ethical and sustainable. Regulators are also asking corporations to be more transparent when it comes to their processes and procedures. The regulatory landscape is constantly changing as well, so providing the necessary disclosures is a necessity. 

However, it’s not only businesses with a large carbon footprint that are exposing themselves to the risk of litigation. Corporations that produce goods or offer services without considering the possible effects of climate change can be held accountable, too. For instance, structural engineers must take into account the increased intensity of rainfall when designing drainage systems. Goods will have to be manufactured using energy-efficient features such as LED lights. Low-powered modes, the use of solar energy, the use of fewer materials and materials that result from recycling or upcycling, sustainable packaging and transportation are a few of the manufacturing trends that will likely become even more important with time. 

The response 

Climate change is a scary process due to its all-encompassing nature. Given the already-visible effects, some may feel that it is already too late to make a difference. And while scientists do, in fact, agree that the damage that has already occurred as a result of human activity cannot be reversed, taking the proper measures ensures that the effects of climate change won’t become even more intense and that nature can actually heal. 

Medium-sized and small businesses are more likely to deal with the economic troubles caused by climate change, such as supply chain disruptions, interruptions or delays, diminishing efficiency and comfort in buildings, and the loss of goods, which naturally results in capital loss. These events are much more destructive and impactful for smaller enterprises than they would be for the larger companies that typically have considerably more resources at their disposal. In order to adapt to the new conditions, businesses need to invest in climate resilience, a concept that anticipates, prepares for and responds to hazardous climate events. 

One of the pillars of climate resilience is to work with other businesses or suppliers that are aware of the effects of climate change and are acting to secure their operations as well in the face of increasingly volatile market conditions. Using climate intelligence, which seeks to integrate information to improve decision-making processes so that outcomes are improved, also helps ensure resilience. For instance, businesses can make more objective decisions when choosing between retiring, retrofitting, or relocating. It can also help uncover the best options for mitigating heat waves, such as cooling rooftops, better tree coverage and the use of natural building materials. 

Joint effort 

Businesses must work together to discover the best sustainable solutions. This can sound unrealistic for some entrepreneurs who are used to a more competitive landscape in which sharing anything with those operating within the same industry niche is far from ideal and usually the result of a mistake or miscalculation. However, global warming is too complex and multi-faceted an issue to solve through individual intervention alone. Moreover, its impact affects everyone, so it only makes sense that everyone should be involved. 

Working with government bodies, regulators, and the community will provide you with additional expertise and insights into what you need to know. Make sure to have an insurer as well, as they are proficient in risk management. They can help you uncover potential hazards and provide you with ways to prevent them or at least minimise their scope and damage. 

Global warming affects everybody, and businesses are not exempt. If you want to ensure your company remains stable, performs well, and continues delivering high-quality products, it’s crucial to be aware of the risk before creating a strategy to mitigate your concerns.

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