Climate Risks: What Businesses Must Prepare for by 2030

As the world speeds up its efforts to combat climate change, the business environment are changing. Climate risks both physical and transition related isn’t a risk so far in the future. By 2030, these risks will have compounded to reshape industry, supply chains and economies around the world.

As the pressure from governments, investors and consumers mount for corporations to adopt climate sustainable practices, it is crucial for businesses to have a grasp on both what they’re up against and be proactive about getting ahead. Here’s a guide to the major climate risks businesses will need to be prepared for by 2030.

Physical Climate Risk

Floods, hurricanes and heat waves, as well as fires and droughts is growing more frequent and damaging amid climate change. These can be supply chain disruptions, infrastructure damage or higher operational costs.

What businesses need to prepare for by 2030?

Heat Stress: Warming world temperatures will have effects on industries from agriculture and manufacturing to logistics. Heatwaves can also impact worker performance and crop production, as well supply chain effectiveness.

Flooding and Storms: Coastal and low-lying areas face particular vulnerability to flooding and storm surges. Companies with operations in these areas should while flood-proofing, consider moving and plan for disaster recovery. They can reach out to experts for climate risk assessment so that they can plan better for the future.

Wildfires and Droughts: With hotter conditions, areas that are frequent sites of wildfires will experience worse fires more often. Droughts could also impact water supply, agriculture, and manufacturing that needs water.

Companies will need to do climate risk assessment in their areas and sectors and spend on resilient infrastructure; diversify supply chains; and embed adaptive responses into long-term planning.

Transition Risks Due to Climate

As governments globally are intensifying their efforts to achieve their climate targets (e.g. under the Paris Agreement), transition risks arise from the transformation into a low-carbon economy. These transitions come with regulatory, technological and consumer preferences that businesses have to adapt to.

What businesses need to prepare for

Regulators: Governments will introduce more stringent environmental regulations, carbon taxes and sustainability compliance requirements. New laws on emissions reductions, waste management and energy use will require companies to adapt.

Moving Consumer Preferences: Consumers are becoming more attracted towards sustainable, ethical products and services. As per climate assessment experts, entities that do not have such environmentally friendly practices could lose market shares to businesses more committed to the environment.

Disruptive Technology: The shift to clean energy, electric cars, and other green tech will be accelerated. Companies in sectors that use a lot of fossil fuels, such as oil and gas, could see costs rise or be disrupted; companies that can take advantage of the spread of technology that cuts emissions and energy use may benefit

Workforce Impact and Employee Well-being

And with severe weather events and shifting climatic conditions intensifying, companies will also have to think about how their workforces are doing. Heat stress, flooding-driven displacement and job growth in some categories of the clean energy economy all will affect labor markets. In 2030 companies need to be ready for:

Health and Safety Risks: Rising heat waves and low air quality will impact worker health, notably in outdoor industries such as construction, agriculture, and transportation.

Transition of the Workforce: As we move away from carbon-intensive sectors, work will also change. Re-skilling and up-skilling will be essential for workers moving to new industries in renewable energy and green tech from traditional sectors such as coal and oil.

Attracting Talent: Businesses with questionable or poor records of sustainability may find it tough to attract and retain the best talent particularly from younger environmentally aware employees.

Conclusion: The Road Ahead

Climate-related risks will not be something to consider at some point in the future, but problems that companies face today and in a very real way. Proactive approaches to reducing physical and transition type risks will be key in remaining competitive.

The investment in sustainability, resilience, diversifies supply chains and compliance with regulation will not only protect business from climate related disruption but also as leaders of the transition to a more sustainable future.

The ideal way to remain prepared for the future is by contacting C3S. We provide climate risk assessment services for businesses, and suggest practical ways to improve their resilience against climate change.