The Climate: Time to Escalate has been saved
The Climate: Time to Escalate
Why the C-suite now needs to take the lead on climate resilience and response
It may not be obvious yet, but the climate crisis is probably impacting your business.
As the new Deloitte report: The Turning Point: A Global Summary makes clear, many organizations are already feeling the effects.
That will continue in both the short and long term, as the number and severity of climate events increase. Nearly half of the respondents in Deloitte’s 2022 Sustainable Actions Index Survey reported experiencing a climate-related event, such as a drought, wildfire, extreme heat or severe storms, in the previous six months. That survey covered 23 countries. Such events could do physical damage to your business, impact your employees, harm your customers and suppliers, and ultimately cost your shareholders a lot of money (see chart).
Today, companies tend to focus on their impact on the climate, but not yet enough on the impact that climate change has on them. They need to start adapting for the long term and be prepared for high-impact events in the short-term.
How do you do that? Start at board level. The C-suite should give a clear view on what assets the organization must have in order to keep doing responsible business in a sustainable way. You have to understand at the strategic level what is critical to your business, so you know what to safeguard in case of a high impact event.
You need a continuity and response strategy that flows through the entire organization. Otherwise your frameworks, policies and plans will not align and your response will be suboptimal. In the field of crisis management, there have been calls to break down silos for more than 20 years. Given the interconnected nature of climate change, health, safety, security and commerce, those calls really need to be heeded now.
The continuity and response strategy should be stress tested to see how resilient your organization will be to a high impact event. Although most organizations already perform business impacts analyses, they are typically being executed at too operational levels. How will our organization survive a specific event? It’s a fundamental question, but you rarely hear it being discussed at board level, let alone be stress tested.
Consider cascading effects and look behind the immediate event
The impacts of climate change are often complex and large, and will involve cascading effects, which can disrupt supply chains and the livelihoods of your employees. The risks need to be understood in sync with other risks and at both a strategic and operational level.
As the climate changes, one shift can trigger a whole sequence of interconnected events. For example, in some parts of the world the snow is melting earlier in the year, which means the rivers are lower in summer (making transport by water difficult) and there are more forest fires. The loss of trees as a result of fires can lead to landslides and more flooding, threatening residential and commercial areas. As ecosystems and landscapes are interconnected in this way, there will be many different tipping points.
As you develop your continuity and response strategy, you need to avoid falling back into traditional silos. Rather than relying solely on your security department, you need to get other departments, such as HR, and health and safety experts, fully involved. Take an integrated approach and consider the broader impacts.
Helping employees cope with extreme weather will become more important. If a severe storm, or flood damages one of your sites, it will likely also hit your employees in their homes, as they will typically live in a 20 to 30 kilometre radius from where you operate.
Some of these impacts may not be immediately obvious. Research has shown that an increase of temperature, for example, can fuel violence and social disorder. In the past, it was sufficient to consider the physical impact of the weather, but now (local) governments really need to start strategizing the social-economic implications.
Finally, bear in mind that your business is part of a highly interconnected global climate system. For example, rising temperatures in Africa and the Middle East are driving migration. People move into Europe, which can have political ramifications and cause polarisation. Your continuity and response strategy needs to look beyond the local impact and consider the bigger picture.
In summary, the C-suite needs to think about long-term strategy and how the business would respond to an immediate event, as well as shifting to a more sustainable way of working. Incorporate climate risks into your strategy and make sure you understand the broad impact of high impact events relating to climate change.
Companies and public agencies that become more proactive will engender greater trust among stakeholders by simply showing they are on top of this issue. To that end, start talking to your employees, your suppliers, your clients and residents in your locality. If people see you taking resilience seriously, and you are actually acting, they are more likely to regard you as a responsible and sustainable business.