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Climate Change: deadlines are narrowing, needs are pressing

The threat of the negative impacts of Climate Change is a genuine reality. The global community is trying to confront these impacts by adopting a number of measures such as with the UN-sponsored Paris Agreement, which has the overall objective of intensifying actions to address Climate Change and to try to keep the average global temperature increase below 1.5°C.

This goal has been adopted by most countries on the planet, including the members of the European Union and therefore Greece. The objective is also reflected in Directives and Legislative Frameworks that relate to actions by the public sector, businesses, various sectors and activities, as well as individuals. As a result, the National Climate Law 4936/2022 passed in Greece, in May 2022, which sets the legal framework for taking measures and drafting Action Plans to address Climate Change with specific objectives to limit greenhouse gas emissions (mitigation) and to reduce negative impacts adapting to the new conditions (adaptation). Similar actions are being implemented throughout the European Union and other major economies such as the USA, Great Britain, Australia and Canada.

The actual dimension of Climate Change, as opposed to the fluid, and often indifferent, political setting, is the undeniable natural hazards that are increasingly posed by changes in the natural environment (e.g. extreme weather events, floods, droughts, sea level rise). These risks are key issues for businesses and organisations because they threaten their very existence and smooth operation. For this reason, risks require specific measures and effective management systems and a new definition of 'sustainability'. It should be noted here that, according to surveys by the World Economic Forum and Allianz, Climate Change appears at the top of the lists of the ten (10) most likely and most serious risks to business and society.

Therefore, for businesses and organisations, we have two axes of behaviour: (a) the pressure from the legal and regulatory framework that imposes many obligations to report financial and non-financial data related to Sustainability and Climate Change Actions (such as Directive 2014/95/EU-NFRD), and (b) the real need to shield against natural changes and the instability of the Social, Economic and Political framework worldwide. These bring changes, risks and opportunities to businesses and require an integrated approach to collect data, identify risks/opportunities, take appropriate measures/decisions and develop Action Plans.

It seems that the number of companies and organisations that now "care" very seriously about climate seems to be increasing. These companies are aiming to develop and deploy an innovative Software tool product and related services to measure and address the impacts of Climate Change. The same companies have also realized the importance of linking the physical and scientific dimension of Climate Change to business activities and to translate scientific information into actionable data for business. Finally, there is an attempt to integrate climate risks and related performance indicators (e.g. carbon footprint) into the overall Enterprise Risk Management process. These measures will contribute to increasing the resilience and sustainability of any company and organisation that adopts new methods and systems.

Today there are not many software tools available on the market in business planning that address the long-term dimension of climate issues (e.g. forecasting carbon emissions, sea level, heat waves, etc. up to 2050). Traditional micro-economic business planning models and tools, such as business plans, budgets, etc., reach a time horizon of five years. Econometric models of macroeconomic analysis measure and predict parameters such as interest rates, supply/demand, labour remuneration, investment, etc. These, do not measure and examine long-term effects of natural phenomena. In contrast, long-run models of natural phenomena stop at physical dimensions and do not quantify economic impacts. It is therefore necessary to mix technical scientific forecasting techniques of natural phenomena with their economic impacts at the level of the economic unit (enterprise - organisation) in order to understand the risks, quantify them and identify actions to prevent or mitigate them.

The above facts demonstrate the need for businesses to use reliable tools for the management of data related to Climate Change, decision making and the development of Action Plans, which on the one hand organize the information in a structured, systematic and collaborative way, and on the other hand allow the testing of future scenarios for more effective management of issues (adaptation and mitigation). The feasibility of business plans with a focus on Climate Change lies in the development of tools, processes and services for systematic monitoring and addressing Climate Change issues and for business response/compliance to the relevant legal framework and sustainability reporting obligations.


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