World | Sustainability

Businesses urged to take steps to respond to climate change

We’re way past sounding the alarm: landmark United Nations report shows we’ll need to adapt. CPAs can help lead the charge.

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businessman with briefcase standing in a flooded area outsideOnly 12 years remain for global warming targets to be met before climate change risks worsen dramatically warns the United Nations IPCC report (ferrantraite/Getty Images)

Climate change is one of the biggest risks facing businesses, economies and societies around the world.The effects of climate change are already being felt—with implications for a business’s strategy, reputation and resilience.

Now, on the heels of October’s landmark climate change report, released by the United Nations’ Intergovernmental Panel on Climate Change (IPCC), businesses must confront this critical issue—and decide how to adapt. 

The report warns that only 12 years remain for global warming targets to be met before climate change risks worsen dramatically, with floods, drought, extreme heat and poverty affecting hundreds of millions of people. Given we are already experiencing an increase in the frequency and severity of extreme weather events associated with the one degree of warming caused to date, businesses must mitigate and adapt to climate change—it’s not one or the other, both actions are required. 

“The scale of the change that’s coming—it’s not just for government, it’s not just for business, it’s for all of our society to rethink the way we live, work, eat, travel, you name it,” says Sarah Keyes, a CPA and principal in Research, Guidance and Support at CPA Canada.

WHY SHOULD BUSINESSES CARE?

Mitigating climate change can’t be done by business alone—but it definitely can’t be done without business, Keyes says.

“A large portion of global emissions actually sit within the private sector,” she says.

Big business is already leading the way with companies like Nike, Walmart and Unilever setting science-based targets to reduce emissions. They have the resources, and they have the pressure on them. But Keyes notes that it’s the small- and medium-sized Canadian businesses that are having a harder time figuring out their role in the climate change space.

“Maybe they only have a handful of employees, maybe they don’t have a board of directors, but they represent 99 per cent of Canadian companies,” Keyes says. “Those guys are behind.”

But businesses should be paying attention—not solely because of the role they can play in mitigating it, but because of the various risks climate change poses to business, both big and small.

A report from CPA Canada lists some of the near-term challenges: disrupted construction; unavailable resources or raw materials; unpredictable energy costs due to unpredictable weather; and the possibility of absent employees and customers due to frequent and powerful storms. 

There are two ways to respond to climate change. The first is mitigating it—slowing down our greenhouse gas emissions, for example. But the other way is adaptation.

“Canada really does need to adapt,” Keyes points out. “We’re starting to experience way more extreme weather. Adaptation is very much focused on adapting to the impacts of climate change, which are most commonly experienced as increased frequency and severity of extreme weather events.”

4 STRATEGIES TO ADAPT TO CLIMATE CHANGE

According to Keyes, there are four guidelines businesses can follow when creating adaptation strategies.

1. Determine your risk: What are the possible impacts to your organization from climate change? Map out where you have some vulnerability or some blind spots. Look at the impact and the likelihood of occurrence.

2. Target your efforts: You can’t mitigate every single risk that could possibly happen—but you really want to focus on those high-impact, high-likelihood risks, which would be your most material risks. 

3. Gather data and information: How are you going to know how to mitigate that risk? Be aware of the key performance indicators and monitor them over time to see how well your mitigation strategies are working—and make adjustments where necessary along the way.

4. Think long-term: The impacts of climate change are certain—it’s not if, but when, they occur. Climate change impacts have a long tail—meaning we’ll start to feel today’s changes 20 years from now. But business cycles are quarterly or annual, at best. That time horizon really needs to be extended if you want to get a full picture of your organization’s vulnerability to climate.

“In a climate-resilient world, those who are leaders are going to be really well positioned to capitalize,” says Keyes. “Because this issue, whether we like it or not, is not going away.”

WHERE CPAS FIT IN

CPAs often occupy a strategic position in their organizations because the most critical decisions tend to cross their desks, says Susan Todd, CPA and principal of Solsticeworks, which advises and supports organizations to recognize and address environmental, social and economic sustainability issues.

“They deal with both short- and long-term decision-making, which is significant because climate change works on varying timeframes,” says Todd, who also helps train accountants on their role in adapting to climate change.

Todd also points out that the UN Climate Change Report is just one more piece of evidence that is building an increasingly compelling picture—and as a result, CPAs are taking notice.

“CPAs are showing interest in building their capacity to deal with climate change,” she says. “At this stage, I see them skilling up, taking workshops to enhance their understanding of their role.

“I expect CPAs to play an increasing role in the detailed, multi-disciplinary efforts that are needed to become climate ready.”

FOR MORE

Find out how CPAs enable climate adaptation and resilience, or download the primer on greenhouse gas emissions management.