Why Companies Address Climate Change

Arne Mogren spent over two decades at Vattenfall Energy Company in Sweden. He remembered when he began work at Vattenfall there was just one person working there on wind energy. Today there are 500! Wind is just one of the areas where employment in climate-related industries has exploded. Solar, energy finance, carbon trading, biofuels, energy retrofits, automobiles, carbon capture… all are growing opportunities for employment, and profit.

Not too many years ago, it was unusual for companies to hire climate change experts at the senior level. Now, companies looking for growth opportunities look for a senior level picture of the landscape. And all companies need a strategic vision of how they fit in this new landscape, how they can shape it to their needs, and how they can benefit from the new opportunities.

And even as agile companies jump on the new opportunities for growth through new products and services, they must respond to new internal needs and new structural challenges posed by climate change.

Agile businesses now have climate change to consider.

Let me give just three examples that help to illustrate why your company needs to rethink internal process and infrastructure issues.

Absenteeism is always a concern in a company but successful companies have found ways to address it. Employee health is a leading cause of missed workdays and heat stress is one important contributor. This summer a record setting heat wave extended from Washington DC to the middle of the country. The average temperature for the entire US in June was 2°F above the average for the 20^th century. The most recent twelve months was the warmest ever observed (back to 1895). Such great heat, and for such long periods, is the real culprit in heat stress related illness and employee missed work. How will your company, and your employees deal with this?

This heat hurts employees, and it hurts logistical operations for companies. If you rely on railroads to transport your products, or to get raw materials, you probably noticed some issues in delivery as rails buckled in the heat and trains were slowed, redirected the long way around, or simply unable to operate. Even the Metro here in Washington had to adjust to buckled rails. Smart companies understand that this may become the new normal and have planned for it.  Indeed, really smart companies are planning ways to offer new goods or services because they see this as an opportunity. 

The Metro Green Line in Washington, DC, is inspected for ‘heat kinks’ that cause the tracks to buckle dangerously.

But it’s not just your employees and logistics that the heat affects. It also can impact your infrastructure in many ways. Certainly the cost of cooling was a big issue this month. And if you are dealing with perishable goods such unplanned expense impacts your competitive position.  You may have heard of all the restaurants giving away food that was going to spoil. Did they plan for the heat?  Did they plan for lots more months like this?  Did they think about increasing insurance for this? Do the insurance companies have products for the increased risk? Well, it turns out that the big reinsurance companies like Swiss Re and Munich Re have been developing risk models that incorporate climate change for two decades. They might be a winner in this new world. The restaurant owner: he or she might be a loser. Which do you want to be?