Climate change is a hot topic all over the world at the moment. But what does it mean for your business? The reality is that climate change, and the resulting global legislation and changes associated with it will have an impact on everything in our lives – business included. As leaders, we need to be thinking about the impact of climate change on our business and preparing for it now. Here are some ideas about how climate change may affect certain sectors of the economy.

Insurance & Financial Services

Insurance companies could find the need to raise their estimates for future premiums due to the worsening effects of climate change. Firms that operate in areas where natural disasters are on the increase and cause a growing amount of damage are likely to see the cost of cover rise by as much as 100% in the next 10 years, according to the Association of British Insurers. There are fears that the consequences of changes in weather patterns have been underestimated by the insurance industry and worsening weather could cause the loss of billions of Rands in the future. In the past, insurance companies quantified risk by looking at historic trends like flood activity over the past 50 years, and then modelling it in the future. But in a fast-changing world with population migration and climate change, past trends become less relevant. Companies with operations in higher risk areas will be worst affected by higher insurance premiums. Governments are also at risk as worsening weather could affect government-owned infrastructure.

The financial services sector can reduce its environmental impact by increasing energy efficiency in all its buildings and vehicle fleets. However, the largest sustainability impact will relate to where the sector directs its investments.

Healthcare

The largest challenge to the healthcare sector is to try and shift from curative health to preventative healthcare. Trying to treat your way out of epidemics is unsustainable and we need to get to a place where we are preventing disease rather than treating it. This requires a policy change in health education at schools and clinics to focus on healthy lifestyles, exercise and good foods.

IT & Telecoms

IT and telecoms companies have a large role to play in an increasingly warm climate. While natural environmental elements become more hostile, IT and telecoms can help business continue operating across the world without the need for real-life presence. Teleconferencing facilities can reduce travel as more aeroplanes are grounded due to worsening weather in the future. As networks and bandwidth become more efficient and affordable and the IT network becomes better equipped to handle data-heavy video, these methods of conducting business will become more mainstream. The chief risks to the sectors are the energy crisis and the management of e-waste. However, implementing energy-efficient IT systems and practices in a business can bring down a company’s total energy bill as much as 7%.

Regarding e-waste, companies need to use their assets to their full potential and avoid a ‘rip and replace’ approach when upgrading hardware. Companies need to dispose of redundant equipment through legitimate channels that follow SA’s legal waste disposal requirements to avoid the growing problem of e-waste leaching toxic mercury into our groundwater. Information and communications technology companies can increasingly begin marketing their products as not just good for business, but also able to save energy throughout the business.

Overall, South African businesses need to look beyond their own carbon footprint, to include wider social and ecological impacts such as water scarcity, waste sinks, and soil health and community well-being. This systemic view means every sector needs to see the landscape in which they operate, understand the ecosystem services from which they benefit and the risks posed by changes in those ecosystems. They also need to understand how different sector’s use of ecosystems impact on each other. Resulting sustainability choices then need to be built into the business model.

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