Planning for climate change and a carbon-reduced economy

Organizations that factor climate change into their long-term business plans are more resilient. Discover strategies to enhance sustainability in your practice and meet investor demands for greater financial transparency.

While some traditional business plans include instruments to deal with extreme weather events, many rely on historical data. They do not account for climate change, which heightens the unpredictability of intense environmental conditions. That’s why a long-term approach that addresses the implications of global warming is so critical. It can increase your organization’s resilience, protect profits and make risk management strategies more effective.

TIPS FOR ADAPTING YOUR BUSINESS MODEL

In 2011, severe flooding in Thailand disrupted supply chains that feed into businesses like Ford, Toyota and Dell. The Centre for Climate and Energy Solutions (C2ES), an independent not-for-profit that works on practical solutions to global climate change, reports that these companies lost a combined total of $15-20 billion.

Such hits to the bottom line are a reality check for businesses and organizations. Extreme weather disrupts manufacturing, reduces the supply of resources and cuts off transportation routes and communication channels.

To build an effective climate change strategy, C2ES recommends:

  • developing flexible risk management solutions that integrate new information as it becomes available
  • taking your entire production and supply chain into consideration: operations, manufacturing, resource availability
  • creating alternative sources for supplies and stock up on essentials
  • strengthening or relocating facilities to areas less vulnerable to climate change

BUILDING A COMPETITIVE EDGE WITH MITIGATION AND COMPLIANCE

In addition to preparing for the unpredictable effects of climate change, institutions must move towards a greener future by mitigating GHG emissions. The upfront costs of retrofitting facilities and equipment pay for themselves in less than three years, according to the Business Development Bank of Canada (BDC). After that, the savings from energy efficiency, which can range from 5 to 15 per cent, will boost your profit margins.

Greenhouse gas mitigation makes even more business sense now that the federal government is including carbon tax to meet its commitment to the Paris Agreement. Starting in 2018, businesses will pay a federal carbon tax of $10 per tonne of carbon emissions. That tax will increase by $10 each year until it reaches $50 per tonne in 2022.

Now that the U.S. has pulled out though, will carbon pricing put Canadian institutions at a disadvantage? Many prominent economists argue that carbon-reduction plans actually drive innovation. Green technology also has a formidable international market for investment: the 153 signatories to the Paris Agreement.

ECONOMIC INCENTIVES FOR MITIGATION AND TRANSPARENCY

Increasingly, investors and stakeholders are pushing business toward greater climate change accountability. They want to know how financially resilient your organization will be in a carbon-reduced economy. Since many businesses still don't report on mitigation or carbon pricing, investors may seek that information from third parties. In a recent review of 75 Canadian TSX companies, CPA Canada found that only 24 per cent presented a plan for business sustainability in a low-carbon economy.

But opportunity abounds: when you take control of your organization’s climate change narrative and present a plan for adaptation and mitigation, stakeholders will turn to you first for insights on financial performance and sustainability reporting.

Learn more about the impact of climate change on your organization and how to update your strategic approach in this upcoming professional development opportunity:

The Impact of Climate Change on Business Model and Strategy
Online learning – virtual classroom | October 19, 2017
Noon to 2 p.m. EST | CPD: 3 hours