According to data gathered by NASA, the world is warming at a rate faster than has been seen in the past 10,000 years. The oceans have warmed by 0.67 Fahrenheit, and we’ve lost around 427 billion tons of ice per year since 1993.
This has caused an uptick in the frequency of extreme events like floods and wildfires, as the world becomes both wetter and warmer. These events pose a serious challenge to the global risk management community, which must pivot toward climate-resilient strategies in the face of weather events that disrupt continuity plans.
Forward-thinking firms can take a proactive approach to combatting global warming, too. For example, investing in solar power can offset some of the carbon emissions companies produce, while innovations like water harvesting systems can reduce the strain placed on the water table during times of drought.
Sustainability and Risk Management
Adopting a more sustainable approach to business operations and risk management is a no-brainer for firms that sell to consumers. 56% of American consumers have made changes to the way they shop due to concerns about climate change, and more are likely to start switching their spending habits as global warming becomes more evident.
Adopting sustainable practices can help firms get ahead of the inevitable rise in climate-oriented regulation, too. This is key, as profit-oriented businesses can’t afford to pay out fines and penalties for failing to declare their carbon use or their impact on the environment. Other benefits of adopting sustainable risk management include:
- Reputational risk management
- Market opportunity creation
- Improved ability to attract and retain top talent
- Increased access to climate-conscious investors
- Partnership formation with climate organizations
As the world creeps ever closer to climate catastrophe, companies must increase their investment in sustainable operations or risk being left behind by the competition. Championing initiatives like renewable energy and recycling can aid firms’ efforts to build better relationships with younger customers, too, as young consumers tend to place higher importance on climate responsibility and will remain loyal to brands that try to limit their impact.
Investing in Renewables
Initiatives like community clean-ups and recycling programs can help companies achieve their Environmental, Social, and Governance (ESG) goals. However, the biggest threat facing the world today is spiraling emissions. This means climate-conscious companies must take a proactive approach to capping their carbon emissions, or risk being accused of greenwashing.
Investing in renewables like solar panels makes businesses more resilient. This was made clear during the 2021 Texas winter storm, also known as the Great Freeze. The Great Freeze shut down the central power grid and led to a surge in power pricing. This meant millions could not afford to heat their homes while temperatures plummeted outside. Solar power can combat this eventuality by diversifying the grid and mitigating the reliance folks have on utility companies that are unable to properly manage power themselves. Additional benefits of solar panel use include:
- Structural Resilience: Solar panels are resilient against extreme events like hurricanes and cold snaps. They do need proper mounting and insulation in areas likely to experience high winds but are designed to see through the storm.
- Ending Emissions: The emissions cycle is pushing us ever closer to catastrophe. By switching to solar, we can limit global warming to 2.7° F.
- Economy: Supporting the local sustainable economy can boost the brand’s reputation and aid efforts to appeal to climate-conscious consumers in the area.
Solar isn’t the only renewable on the market, either. Switching to increased utilization of wind and hydropower is a proactive climate-resilient strategy that all businesses should consider in the face of a warming world.
Innovations to Consider
Increasing the utilization of renewables is only one-half of any effective ESG plan. For firms to consider themselves truly eco-friendly and resilient, they should consider adopting climate-resilient innovations from around the world, including:
- Trombe Walls: Originally from France, these walls work by trapping warm air in the summer and keeping buildings at a comfortable temperature by using the power of the sun. This heats the space naturally and offers companies a way to keep the heating off during mild winter days.
- Water Harvesting: Droughts are a serious threat to life in warmer areas. However, modern firms are working to draw water from the air without any direct precipitation. This can alleviate strain on water firms and produce more water for essential services.
- Green Roofs: Heat islands will make urban spaces difficult to cool in the summer months. Companies can combat this by installing green roofs on their own space, as vegetation can absorb heat and suck up carbon emissions.
These innovations can reduce emissions and limit water waste. This is key, as firms who want to position themselves as climate-conscious need to make major investments in their operations to avoid accusations of greenwashing. Proactive investments can combat the risk-multiplying nature of climate change, as businesses that invest in proactive solutions can insulate themselves against energy price volatility and will find it easier to meet new regulatory standards. Solutions like Trombe walls and green roofs reflect well on the firm, too, and help build a climate-conscious culture at the business.
Conclusion
Navigating climate risks is crucial for today’s risk management professionals. Businesses that care about the environment can get the ball rolling by investing in renewables that increase their resilience and reduce their emissions. Following through by advocating for emissions-reduction systems, like Trombe walls, as these reflect well on the firm and help companies achieve their ESG goals sooner.
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