Businesses are facing a critical challenge as they confront the escalating risks posed by climate change. A new report, titled ‘Business on the Edge: Building Industry Resilience to Climate Hazards’, warns that failure to address and adapt to these risks could result in significant financial losses for companies.
According to the report, the impact of climate change could lead to fixed-asset losses of up to $610 billion per year for listed companies by 2035. This staggering figure represents an annual seven percent drop in average company earnings, which is half of the profit decline experienced during the Covid-19 pandemic.
The report, a collaboration between the World Economic Forum and the University of Exeter Business School, emphasizes the urgent need for businesses to take action. It provides a comprehensive assessment of the risks posed by climate hazards and offers resilience strategies for boards, investors, C-Suite executives, and operations managers.
Professor Gail Whiteman, the report’s principal academic advisor, highlights the importance of bridging the gap between scientific understanding and practical solutions for business leaders. She underscores the necessity for tools that enable businesses to comprehend their impacts on nature and climate, emphasizing the critical role of resilience strategies in ensuring sustainable economic and social prosperity.
Climate hazards are projected to disrupt supply chains at every stage, from sourcing to distribution. Industries such as telecommunications and utilities are expected to be hit hardest, with companies in these sectors facing significant fixed asset losses by 2035.
The report stresses the interconnectedness of businesses, economies, societies, and the natural environment. It emphasizes the need for swift and collaborative action to decarbonize operations, invest in nature, build resilience, and adapt to climate risks.
Five Earth systems are identified as facing irreversible tipping points at current levels of warming. The report provides detailed briefs on the implications for business, focusing on areas such as land ice, sea ice, ocean circulation, coral reefs, and permafrost.
Additionally, industry briefs delve into the implications and recommendations for sectors like agribusiness, food and beverages, utilities, infrastructure, transportation, telecommunications, life sciences, and travel. The report also assesses supply chain risks in key socio-economic systems, including agriculture, the built environment, technology, health, and financial services.
Professor Whiteman, along with a team from the University of Exeter Business School, is at the forefront of driving industry support for low carbon action. The report underscores the critical role of businesses in mitigating climate risks, safeguarding economies, and fostering a sustainable future.
In conclusion, the report calls on business leaders to recognize the urgency of addressing climate hazards and to take proactive steps towards building resilience. By embracing sustainable practices, investing in nature, and collaborating to mitigate risks, businesses can navigate the challenges posed by climate change and secure a prosperous future for all.
This article is based on a press release from the University of Essex and was rewritten to emphasize the importance of addressing climate risks and building industry resilience in the face of climate change.
