💫 The August Spark
5 ways all businesses are affected by the polycrisis which are often invisible to leaders
This is the monthly newsletter from Bemari where we talk about how to not get lost in sustainability.
Sustainability isn’t about saving the planet.
It’s really about saving humanity and our way of life - the planet would be fine without us!
Sometimes this reality can get lost behind morality narratives and misinformation. For businesses whose primary aim is to stay afloat rather than ‘save the planet’, planet-focussed framing can make it hard to understand why they need to engage in sustainability. ‘What’s in it for me?’
However, a changing climate, depleted nature and high pollution rates are all serious risks TO a business, not just externalities of business operations. Furthermore, the frequency and severity of these risks are starting to have serious financial impacts on businesses… and investors are noticing.
To help leaders see the urgency of taking actions, change makers need to start helping them ‘join the dots’ between prudent sustainability risk management and a healthy balance sheet. Two areas that really speak to mainstream businesses!
This month, to help you start these conversations, we’re zooming in on what the current polycrisis means for business and how this translates into business risks. Here are 5 ways all businesses are affected by the polycrisis which are often invisible to leaders:
Climate-induced risks have already become material issues with financial implications - this is a present, not a future issue.
In 2022 alone, climate change has already cost the global economy USD 313 billion in 2022. Only USD 132 billion of these losses were covered by insurance. SMEs are particularly vulnerable and a UK study found that the average cost of flood damage ranged between £12,000 - £250,000. Economy affects everyone, even if they specifically didn’t bear the direct loss.
Climate-induced extreme weather events are creating long-term price increases across supply chains.
23% of the global population are now directly exposed to a ‘1-in-100-year’ flood event resulting in flood depths greater than 0.15 m. Flooding of this nature doesn’t just damage commodities and disrupt transportation. It ruins infrastructure, warehouses and is a serious risk to workforce safety. At the current rate of global warming, 15% of UK business premises built between 2008 - 2018 are exposed to high or medium level flood risk by the 2050s.
Climate change is already reducing workforce productivity and wellbeing.
Studies have found climate-induced sick days are on the rise including from extreme heat and wildfires in Australia and North America. Absentee days are also increasing due to climate-induced transport disruption e.g. flooding, heatwaves and snow. Not to mention the impact of climate crisis on mental health.
The extreme temperatures caused by climate change leads to increased operational costs.
In the UK, employers are legally required to keep their workforce at a ‘comfortable temperature’. Prolonged heatwaves and ‘cold snaps’ cost a business money if companies have to spend more money on air conditioning and heating their offices to maintain this comfortable temperature. How about food? Whether at work or at home - summer 2023 record droughts pushed up European food prices by an additional 0.67 percentage points.
Talent retention is becoming harder for businesses not aligned with climate change and climate action.
In a poll, 70% of U.S. workers said that a firm's environmental record is important to them. Whilst in the UK, a survey found that 20% office workers would turn down a job if environmental, social and governance (ESG) factors were deemed lacking. This sentiment was found to be even stronger among Gen Z with over half of 18 to 24-year-olds saying they would be willing to leave a company based on its net-zero credentials - meet the conscious quitters.
In reality, climate change and nature loss cost us one way or another – be it due to regulation, competition, disruption, direct impact – or something else. We can either pay the price of transitioning: staying competitive, decarbonisation investment, and adapting our business models at the same time – or pay the price associated with conducting business as usual, a cost that will likely be higher than the alternative.
It just makes good business sense to not leave things to chance 📉
Do you want to understand climate change but get lost in (or don’t have time to read) the tons of information out there? Do you half understand the science but not get the whole picture? If so, then we warmly invite you to our Climate Fresk workshop.
Do you have lessons learned from your sustainability efforts that someone would benefit from? Please share by emailing [email protected].