This is the dilemma that many CEOs across almost the entire spectrum of businesses around the world have been facing for a few years now. They see risks that require new capital, investment and costs, but at the same time, they realize that they need to secure short-term profit pressures from shareholders and executives. The climate crisis, among other things, presents alarming natural phenomena that last a few hours or a few days, and open "wounds" in businesses that will take a few or many years to heal. The long-term economic crisis and the pandemic have made matters worse.
Climate change impacts will amount to $1 trillion for the world's 215 largest companies
An estimate suggests that the impacts of climate change will amount to $1 trillion for the 215 largest companies in the world and are likely to occur within the next 5 years. [1]
In general, the economic impacts of climate change are due to existing or emerging risks to which a business is exposed. However, despite the challenges, also growth opportunities may be presented for businesses. The term 'opportunities' describes any positive impacts of climate change on a business. It refers, for example, to economic activities and technological innovations that make a positive contribution to tackling the crisis, increasing the efficiency of natural resource use, adopting and using low greenhouse gas emission energy sources, developing new environmentally friendly products and services.
Therefore, it is beginning to be recognised that exposure to climate risks and the methods of dealing with them (Risk Management) are elements that are taken into account when assessing the viability of a business, whether by investors, banking institutions, other stakeholders or public opinion.
The issue of climate change/crisis, while going beyond the traditional one-year or five-year business planning, may and does require businesses to look at their processes, finances and other performance indicators over a long-term horizon, with appropriate tools and in a multi-disciplinary and collaborative spirit.
Climate crisis mitigation actions require preparation at an adequate level so that "damage" is kept to a minimum
In any case, climate crisis mitigation actions concern "today" as they require at least one short-term action: preparing at a sufficient level so that the immediate "damages" that may occur are as minimal as possible. Finally, the analysis of risks and scenarios thereon allows for a better strategic positioning and/or identification of climate change related opportunities (e.g. investments) while continuous monitoring of future developments is required to revisit issues and repositioning.
At e-On Integration we take a holistic approach to the issue of the climate crisis and the identification/management of risks arising from it. E-ON RIBIA is an integrated ERM system, designed to serve the objective of Risk Management. It includes all the necessary tools to highlight areas of high climate change risk and provide the companies and organisations using it with analysis and extensive information, contributing significantly to their performance and sustainability. At the same time, we extract data from large databases on changes in both socio-economic conditions and physical variables of climate change.