Climate change is one of the most pressing issues of our time. Rising global average temperatures, climate events and disasters, rising sea levels, and steady losses of biodiversity are effects already felt around the world.
The effects caused by climate change have a significant impact on companies in all sectors. In order to understand the new global business landscape, identify the challenges faced and the adaptations made by the organizations, we at IBS Americas, together with the partner international institutions, produced a report on the new global business landscape. See a summary below!
Climate change risks for businesses
The risks of climate change are the threats already visible around the world, and are affecting companies in various sectors. For companies, climate change risks can be divided into two categories:
Transition risks
The impacts of different policies and regulations aim to mitigate climate change. These policies can lead to increased energy costs, changes in supply chains, and even loss of competitiveness.
Physical risks
The direct and indirect impacts of extreme weather events. These events can cause damage to infrastructure, loss of productivity, disruption of operations, and even loss of life.
With risks being felt in the corporate environment, the report demonstrated that “Companies sought alternatives to maintain their operations or shorten their interruptions.” According to the survey data, 81% of organizations reported the search for new international suppliers as a measure to face business adversity.
Adapt to the impacts of climate change
Adaptation to climate change is essential to mitigate the negative impacts of these events. It consists of measures and actions aimed at reducing the vulnerability of natural and human systems to the effects of climate change.
Adaptation options are numerous and can be implemented at different scales. Some of the key measures include:
● Improvement in energy efficiency and renewable energy production;
● Investment in infrastructure suitable for climate change;
● Adapt activities in general to climate change;
● Protecting ecosystems.
In terms of changes and adaptations, the report showed that Western Europe was the group of countries that least maintained the changes made throughout the period of turmoil that was faced, with only 15%. In contrast, Emerging Asia kept the changes in place, accounting for 47%.
Adapting to climate change is an ongoing process, which must be adapted as impacts become more severe. All sectors of society must be involved in this process, including governments and civil society.
The Challenges for Businesses to Adapt to Climate Change
Adaptation to climate change is essential to reduce the vulnerability of systems and their impacts. However, there are several challenges to implementing adaptation measures that have shaped the future of globalization. These include:
Scientific uncertainty
Understanding the impacts of climate change is still incomplete, which makes it difficult to plan effective adaptation measures.
Implementation difficulties
Adaptation measures can be expensive and complex, and their success depends on a wide range of factors, such as the availability of resources, cooperation between different sectors, and population participation.
Social inequality
The impacts of climate change are most felt by vulnerable populations, such as poor communities, indigenous people, and traditional peoples. These populations have fewer resources to adapt to climate change and are more likely to suffer damage.
Climate change is already impacting the landscape of companies around the world, and the prospect is that this impact will increase as the effects become more severe. Companies that anticipate change and adopt a more sustainable business approach will be better prepared to thrive in the future.
To understand more about the scenario that is shaping globalization and what are the trends that will shape the future, participate in Global Management Week 2023, which will take place on September 26, 27 and 28, where we will discuss Climate Change, Artificial Intelligence and the Future of globalization. Sign up here.