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Climate change on Global Trade

Having become a global topic of debate, climate change has started to affect us directly in our daily lives.

Perhaps not everyone agrees with this statement, but only if we analyze this issue in depth can we realize that it not only affects us but is also the reason for some of the crises we are facing.

A strong example is global trade. The first step in understanding the issue is to realise that we do not enjoy the country's wealth entirely as most of it is sold to foreign countries for profit. Combined with the need for materials that we cannot afford to produce, one can realize how important trade is in today's society.

Climate change affects companies conducting international trade mainly because of the measures and regulations they are obliged to implement.

But how is trade affected by climate change?

The answer, simple. It is not climate change that is affecting it, but the measures we take to address it. Both the European Union and other global organisations have begun to pay great attention to this issue and have set specific long-term targets. The regulations that have been devised to address the phenomenon are mainly about reducing emissions and pollutants with a later plan to aim for net-zero emissions trade.

The problem is that in order to achieve these objectives, measures are taken which put a burden on the companies responsible for the transportation of goods, raw materials, etc., which, in order to cope with these changes, increase their prices and subsequently the final price of the product.

At E-ON we realized early the importance of this issue and we started a process of translating this into a risk management system in order to give quick answers to companies that are trying to comply with the legislation.

It is important for companies operating in shipping and international trade to identify the risks they face from climate change so that they can implement mitigation solutions in time.

More specifically, as sea trade accounts for about 80% of global trade, we have started to decode the regulatory framework that is in place (and that which will be in place in the future). On this we are identifying both risks that may arise and solutions to them, categorizing these in terms of difficulty of implementation, cost, effectiveness and the need/importance of these.

Ultimately, the goal is to reach a point where these recommendations can be transformed into possible courses of action, each of which will be different and analyzed according to the categories mentioned above. Of course, we are not going to leave out land and air trade so that we can put together a comprehensive risk management template.


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