Climate Change is an issue that already affects many aspects of business, according to Douglas Smith of Environmental Resources Management Ltd. Businesses around the world are responding at strategic, as well as at operational levels, to address both the reduction of greenhouse gas emissions, and adapting to the changes in the climate that are inevitable.

Scientific models of the climate, predict that in China, there will be a temperature increase of over 3°C, and there will be more extreme temperatures during summer, and fewer extremely cold events during winter. Rainfall is predicted to increase by over 10 percent, and wheat, rice and maize crop yields are predicted to decrease.

The global response to the problem is to cut emissions of greenhouse gases, including carbon dioxide and methane. Businesses are responding to this challenge by completing GHG emissions inventories, quantifying their emissions, reporting their GHG emissions, and setting GHG emissions reduction goals. In many cases they are taking action to reduce their emissions, or reducing their ‘carbon footprint’, by purchasing ‘carbon credits’ (either formally certified by the UN Framework Convention on Climate Change or voluntary) from other companies or projects that have reduced the release of greenhouse gases.

But the evidence is mounting that the climate is already changing, and even if greenhouse gas emissions were entirely halted global temperatures would still be expected to rise over at least the next 50 years. The Intergovernmental Panel on Climate Change has recently reported that there is already evidence that natural systems are changing as a result of climatic change, particularly temperature increases. These changes could pose serious risks for businesses’ operations in high risk areas.

What can businesses do to respond to this challenge? A changing climate is likely to have significant ramifications for many aspects of business, not only operations and engineering issues, but also strategic investment decisions, market development, distribution, investor relations, communications and policy, for instance.

Emerging experience from multinational companies indicates that management commitment and clarity of vision are important to steering the business through the issues of both greenhouse gas reduction, and adaptation to the changing climate. Greenhouse gas management has to be treated as an integral part of planning, and of product development, and treated as much as an opportunity as a challenge, for example through identifying new markets for products that are ‘low-carbon’ or ‘carbon-neutral’. Strategic analysis, of opportunities for carbon offset, or of the implications of a riskier climate for growth strategies, are required.

The extent that the climate will change, and how quickly, is difficult to predict. Businesses that respond by reducing their emissions, and by adapting their operations and strategies to reduce the impact of climate change will be better prepared.

By Douglas Smith

(Douglas Smith is a consultant with Environmental Resources Management Ltd, providing services in carbon footprinting, climate change impact assessment, business and product strategy, carbon offset and CDM project development, and many other aspects of clients' and investors' concerns. )