The Costs and Consequences of Climate Change for Business and Society

What is Climate Change and its Consequences

Climate change or the phenomenon of deviations in climate patterns from the norm is having a noticeable and immediate effect on the world. What was a warning in the 1970s and a gradual trend in the last decades of the 20th century has turned into an immediate impact factor on the ecosystems and the climate of the world. For instance, the recent cloudbursts, flooding, and landslides in India are being blamed on extreme precipitation of rainfall in some areas, which leads to the kind of events that we have seen over the last month. It is no longer the case that we can deny the effects of climate change that manifest themselves as extreme heat, extreme cold, and global warming that result in the rising of mean temperatures across the world and the rise in sea levels threatening the existence of several coastal areas. In other words, climate change has gone mainstream and hence, it cannot be ignored any longer.

The Costs of Climate Change on Businesses and Society

The effects of climate change on businesses can be seen in the way companies in the oil and gas sector, manufacturing, and resources along with those that are dependent on seasonal aspects like agriculture have to factor in the effects of climate change into their operations. For instance, drought caused due to extreme heat and lack of rainfall can make the agri-based companies suffer losses, as is the case when extreme precipitation and rainfall can cause flooding of the fields or the area under cultivation leading to losses. Further, businesses have to be prepared for wars between nations that manifest as a result of climate change or “climate wars” as they are called. These climate wars happen because of migrations of people from regions that are inhospitable to those regions that are relatively better off. This is happening in Africa where because of the effects of climate change, forced migration and extreme weather is causing many countries to fight with each other. Apart from that, climate wars can also result because of scarcity of water in particular regions, which make them invade or encroach into other countries in search of arable land for cultivation.

Are we beyond the Point of No-Return ?

The point to be noted about climate change is that incidents like the melting of the Polar Ice Caps or the melting of the glaciers in hilly areas can cause damage to ecosystems and precipitate calamities in the regions affected. As we have mentioned earlier, the recent incidents like the one in India and the drought in the US along with Hurricane Sandy in New York are all manifestations of climate change. These events can cause dislocations in societies and cause Black Swan Events (events with low probability, but high impact) which can cause havoc in the financial markets as well as having a noticeable economic impact on the countries. The key aspect here is that we are already past the point of no return and hence, we cannot stop the effects of climate change but can ensure that we manage them better.

Reducing our Carbon Footprint

The way to manage the impact of climate change would be to minimize the carbon footprint or the carbon emissions per head. This is an indicator, which tells us how many tons of carbon dioxide that we are emitting because of our vehicles, our transport, and our work and living conditions. As mentioned earlier, we are at a stage where we cannot reverse climate change but can mitigate it. Therefore, we should minimize our consumption of oil, make our offices and our homes eco-friendly, and in general, desist from using too many resources that need energy in one form or the other. These are some of the practical steps that we can take to minimize the impact of climate change. Finally, we must prepare for lives that are symbolized as “After the Car” which means that we need to move to a sustainable form of living and working as opposed to overconsumption and overuse of carbon emitting methods.

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