If you’ve noticed an uptick in in the occurrence and severity of heat waves, droughts, hail storms, heavy rain or flooding near you, you’re not alone. Many companies are experiencing the impacts from extreme weather events or expect to in the near future, according to the US-based nonprofit Center for Climate and Energy Solutions (C2ES). Nearly all of the companies surveyed experienced a greater intensity and variability of extreme weather than they did in the past.
Climate volatility is posing big problems for big business. Ninety percent of the S&P Global 100 Index companies see extreme weather and climate change (including warmer temperatures, more extreme weather and greater water scarcity) as a current or future risk to their business, C2ES reports.
Climate costs are rising
Climate volatility is expected to take its toll on communities and businesses across the country. In Canada, annual insured losses as a result of extreme weather events have already gone from an average of USD $400 million per year in the 1980s to around USD $1 billion per year this decade. On a global level, extreme weather events are projected to cost the global economy USD $700 billion annually by 2030, according to the Climate Vulnerability Monitor, as reported in Business Insider.
Canadian business impact
The failure of climate change mitigation and adaptation is the most impactful risk for the years to come, according to The Global Risks Report 2016, and the impact will likely be felt in businesses across the globe.
Whether it’s rising sea levels and melting glaciers in Western Canada, flooding in Manitoba and Calgary, hailstorms in Alberta, or drought and wildfires in other parts of the country, businesses throughout Canada are feeling the effects of weather volatility exacerbated by environmental changes.
And it’s not just climate change effects in Canada that can affect your business in profound and sometimes unexpected ways.
“We no longer have the luxury of assuming that an event in another part of the world will not impact our ability to function at home or elsewhere abroad,” write Dante Disparte and Daniel Wagner in CFO Magazine.
Climate changes globally can affect your business in the shape of rising costs, supply chain vulnerabilities, distribution and transportation infrastructure, business interruption and market volatility.
The internationalization of business can increase exposure to global risks. The Global Risks Report 2016 finds that companies are increasingly vulnerable even if they have no immediate presence in the area where the risk arises. The resilience of a business depends on the resilience of their suppliers and purchasers, whose supply chains can span many countries.
Zurich North America Commercial CEO Mike Foley traveled to the White House in 2014 to take part in discussions around climate resilience and extreme weather.
“Part of our Zurich Commitment is to deliver insights that empower our customers and the communities we serve to understand and protect themselves from risk. For climate change, that's helping better understand ways to mitigate risk of catastrophes before they happen and become more resilient for the future, as well as in recovery,” said Foley.
Businesses should factor potential environmental risks and their contingencies into their business planning, proactively address climate challenges and reduce vulnerabilities to climate and other hazards.
Helping to build greater climate resilience
The UN Environment Programme (UNEP) in its GEO-5 for Business Report encourages business leaders to do all of the following:
- Conduct a deeper, company-specific analysis, taking a lifecycle approach.
- Continue to mitigate the impacts of the business on the environment.
- Think strategically about how the business must change to reflect changes in the global and local environment.
- Report to stakeholders (investors, employees, customers, communities, NGOs, and others) on the company’s impacts on the environment, the risks and opportunities posed by environmental trends and the strategies to address them.
- Work with policymakers to craft public policies that encourage sustainable business practices.
- Collaborate with others to create powerful solutions to challenges created by changes in the environment.
At Zurich Canada, we help customers attempt to mitigate the risks and understand the opportunities associated with climate change, as well as other environmental challenges. This includes placing more emphasis on risk reduction, preparedness and resilience, in addition to recovery and rebuilding.