The climate emergency and its relevance for business strategy. Carles Ibáñez, February 2022

How does the climate crisis affect companies? What is the risk of not taking the climate emergency seriously? My presence at COP26 in Glasgow as part of the FEC delegation tells me that, yes, business and financial leaders now seem genuinely concerned about the situation and want to act decisively. However, the answer to the questions is not obvious, since the impacts of climate change depend on each place and the time horizon that we consider. In this matter, the short-term objectives must be framed in a medium-term strategy. This makes the response of companies to the climate emergency difficult to calibrate and plan, it depends a lot on the sector, the value chain, the location, etc. However, no company that projects itself into the future can ignore climate risks and cannot fail to contribute to the process towards climate neutrality in our economy, for many reasons.

The first reason is rather selfish (in a good way), since the climate emergency can affect companies in many ways, directly and indirectly. The most obvious form is the possibility of damage to infrastructure due to floods or other extreme weather events, but also due to an increase in production costs related to rising temperatures or higher energy prices. But the ramifications of the climate emergency are many and sometimes not very obvious, and can affect the entire value chain. For example, a drought that affects grain-producing regions can jeopardize the supply of raw materials for the agri-food industry and other industries, affecting the availability and price of feed or basic products such as bread or meat (something that has already happened and that will be accentuated in the future). Another example, an extreme flood in Bangladesh can affect the production of the textile sector. In the medium term, the rise in sea level is going to seriously affect the tourist industry on the coast, since, together with the greater frequency or intensity of sea storms, they are going to cause increasing damage to infrastructure and will cause the progressive disappearance of our beaches (which have no room to fit). A medium term that may be relatively short, since recent studies warn of the accelerated melting of a large glacier in Antarctica that in the next 10 years could cause a rise in sea level of 60 cm. A massive diaspora of citizens in countries where temperatures become extreme or sea level floods part of the territories can also be very destabilizing. In short, I could go on with an endless list of examples, but it seems clear that each sector and company must consider its climate risks and set ambitious climate neutrality goals.

We must all get involved in drastically reducing greenhouse gas emissions to get closer to climate neutrality as quickly as possible. We cannot pretend to simply adapt to climate change (which also happens), we must attack the causes. Time is running out and the (increasing) damages can be catastrophic for our economy and for our lives. Furthermore, by contributing to climate neutrality, companies are more efficient, more aligned with society and better positioned in the market. But, again, the difficulty arises in the quantification of costs and benefits. What is the added value for a company when it positions itself in relation to the climate emergency? The benefits are often hard to quantify, but they sure are real and growing. Although we can put it the other way around: what is the price that companies will pay for not positioning themselves in the face of the climate crisis? Surely this is the highest risk for many companies! In any case, there are more and more methods to analyze what are the costs and benefits for companies that intend to be more resilient to climate change.

Resilience implies not only an ability to adapt to adverse conditions but also an understanding of the causes of this adversity and determined action to reduce the factors that provoke it. The Center for Climate Resilience works with this objective, led by the Technological Center of Catalonia (EURECAT) and made up of a driving nucleus of eleven institutions in the scientific-technological field, administrations, foundations and NGOs, among which is the Universitat Rovira i Virgili, the City Council of Amposta, the Government of Catalonia and the Fundación Empresa y Clima. Our objective is to accompany companies, administrations and territories to carry out the necessary ecological transition efficiently. There is no time to lose!

Carles Ibanez Marti

Scientific Director of the Center for Climate Resilience and Coordinator of the EURECAT Climate Change Line.

Company Member of the Private Company and Climate Foundation