Way of life of fishing communities in Indonesia depends on environmental conditions that are already changing dramatically. (Antara Photo/Irwansyah Putra)
Companies in Asia Need to Wake Up to New Normal of Climate Change
BY :JONATHAN DREW
NOVEMBER 16, 2019
These days, the reminders of how rapidly the world's climate is changing come with depressing frequency. In just the past few months, we've had heatwaves in Europe and the US, floods and droughts in India, wildfires in Siberia and Typhoon Hagibis, which killed dozens in Japan.
Added to that, a recent landmark report by the United Nations' Intergovernmental Panel on Climate Change (IPCC) found that accelerating rates of ice melt in polar and mountain regions and big rises in global sea levels will have devastating effects on coastal cities around the world, on anyone who relies on glaciers for water, and on marine ecosystems.
The IPCC has warned that we are already past certain tipping points and that large areas of the planet will become uncultivable and unlivable – fueling climate-related economic hardship and migration.
The warnings are stark – and they cry out for ambitious, wide-ranging and swift action.
Yet despite the evidence, many companies in Asia – Indonesia included – still find it hard to recognize the magnitude and urgency of the problem, let alone act on it.
To some extent, this is understandable. After all, while it’s easy to justify spending money on repairs once a storm, wildfire or drought has struck, it’s harder to rationalize the costs of climate-proofing production sites, office buildings or logistics systems for events that lie in the future.
Similarly, while the immediate physical damage caused by a disaster is easy to see, the indirect, often non-physical implications of the worsening global environmental crisis are harder to grasp or plan for.
Those impacts, however, can be costly and profoundly disruptive. Entire business sectors and communities could be wiped out by climate change. Think fishing communities in Indonesia, whose way of life depends on environmental conditions that are already changing dramatically.
In areas that are simply vulnerable to the effects of global warming, insurance premiums stand to rise significantly at the same time as property valuations fall.
Shifting consumer, investor and regulator expectations also pose reputational, policy, regulatory and legal risks to businesses. Some nations are now discussing introducing taxes on meat and plastic packaging, for example – measures that would have been inconceivable just a few years ago – while the rise of everything from vegan foods and ocean-friendly sunscreens to electric vehicles shows that consumers increasingly care about the environmental and social credentials of what they buy.
Meanwhile, analysts at pension funds and asset managers are already calculating the long-term risks to industries that fail to move away from high-carbon, high-polluting activities – anticipating that changing laws and attitudes may make it expensive to raise capital or access new markets, if not put them out of business altogether.
So while governments and multilateral organizations are making long-term plans to combat global emissions and pollution, it is manifestly in companies’ own interests to step up efforts to help fight our planet’s climate emergency.
This is particularly the case in Asia, which is especially vulnerable. Failure to combat the effects of global warming now could severely dent this region’s growth opportunity.
Yet HSBC’s latest annual Sustainable Financing and Investing Survey showed that, while encouraging progress has been made, Asian financial markets are still not as environmentally and socially aware as those in other regions.
So, whether you are in resources, real estate, retailing or financial services, here are some thoughts:
Think short-term and long-term: decisions made today impact the future. Climate change is not just about the next storm or flood. It is systemic, all-encompassing, and here to stay. Fast forward 10, 20 or 30 years, and the heatwaves, droughts, storms, and floods we’ve seen in recent years – plus mounting pollution and much-reduced biodiversity – will be the norm.
Think holistic: addressing just one aspect of your operation is not enough. Review everything from electricity usage and property portfolios, to where you source materials and how you package and ship products, to your operational preparedness for weather-linked disasters. This means engaging with all layers of your organization. And it means embedding "green" and "social" issues into all your business and investment decision making.
Think global: melting glaciers and rising sea levels are not just bad news for the inhabitants of Greenland or Tuvalu. They have global implications. In today’s interconnected world, there’s no such thing as far away.
Stay up to date: the debate on climate moves fast. Technological changes and green innovations could put more low-carbon alternatives and opportunities within your reach. Stay abreast of the regulatory environment, sustainable financing options and evolving investor and customer expectations. You may well find that climate-friendly action could lift – not drag down – your profits and reputation.
Act now and lead by example. It takes time to climate-proof a factory or office building, switch a fleet of delivery trucks to electric, source more sustainably-developed goods, or change consumption habits.
Business strategies and product line-ups can't be shifted overnight. But we can all at least start the process now, not next week, or next year. Failure to act now means the legacy of this generation may irreversibly be seen as one of failure. We can do so much better.