The Australian bushfires, extreme water shortages in Andalusia and Texas or floods in the UK, all convey an undeniable message to the world: The Climate Crisis is already impacting our lives and our economy today.
In the 2020 World’s Economics Forums Global Risks Report the 5 most likely and impacting risks listed are environment-related and "Climate action failures" stands on top of it. That's for a good reason: Climate change will impact the economy, from peasants to CEOs. So let’s see why entrepreneurs and companies need to have a plan laid out.
The ABC of economy 经济的基础
Warmer winters, higher precipitation and droughts will hit most obviously tourism, agriculture and the food industry. The snow season in the Swiss Alps is already today 37 days shorter and rising sea levels endanger the coastal destinations in the Mediterranean and Caribbean.
And while shorter winter holidays are not the biggest threat to our economy, food and water shortages are. It’s the very ABC of economy: Extremely hot and dry summer as in 2018, can make water and production cycles more expensive, lead to bad harvests and putting raw materials markets under stress.
Resources depletion, in general, will have plenty of bad effects on companies if they don't plan ahead. Sourcing prices and channels can become uncertain increasing final product prices, which dampens the consumer's lust for consumption, which in combination with dependence on imports of goods sets the economy on a race to the bottom.
Impact on the workforce 对劳动力的影响
Employees are also going to directly suffer from the temperature rise: extreme heat will lead to a loss of labor hours and lower productivity. Big cities which, due to density of people and concrete surfaces, turn into urban hothouses in summer, will suffer remarkably under extreme heat. London, for example, might lose between 1.9 and 2.3 Billion Euros each year due to heat stress, health problems and transportation disruptions caused by heatwaves.
Rising temperatures in combination with precipitation will also promote the spread of epidemics. As we are in the middle of a worldwide crisis due to Covid-19, it's not hard to picture the impacts of such events in a highly globalized world. As China is currently locked down, it's actually the entire economy being weakened. Epidemics as the Coronavirus affect everyone – not only the ones that fall sick, but also consumers, and therefore entrepreneurs and companies depending on a thriving economy.
The vulnerability of our highly globalized economy and infrastructure 我们高度国际化的经济及基础设施的弱点
The impact of Coronavirus also points out the vulnerability of our product chains in a highly globalized economy. Many big-scale companies from the clothing to automobile sector produce in cheap labor countries in Southeast and East Asia, which are more likely to suffer from a rise of floods and other natural catastrophes in the future. Here, the outfall of one small gearwheel might make the whole production collapse.
China’s affluent economy, as well as its rapid urbanization, depend on complex infrastructures. Yet the regions most impacted by climate change also happen to be the most important infrastructural hotspots: Beijing, Shanghai, Shenzhen, and Tianjin.
Although climate change impact on weather is impossible to predict, some costs of climate change in the near future already are. For example, the costs of floods in China will rise by 82% until 2035, and a rise in global temperature of 4.5°C until 2100 could cost the US economy as much as 520$ Billion every single year.
The role of Millennials in a green economy 绿色经济下千禧一代的角色
As our climate is changing, so are consumers’ and employees’ aspirations.
Citizens of tomorrow grow up with a great awareness for sustainability, which also impacts their approach to consumption and fulfilling work.
87% of Americans would purchase a product because of a companies’ alignment on an issue they care about. And young people don’t only get to choose what they consume, but also where they work: Millennials do take a companies’ environmental and social commitment into account when they are offered a job. Those who react too late to these changes will be run out by others, who invest in green techniques, strategies and a more purpose-driven marketing in time.
Young consumers aware of climate change and its impacts have great power over the market which many, especially big companies, realize and try to implement new, green policies. Still, the line between real sustainable effort and greenwashing is thin, and still a lot of businesses seldomly have climate planning on their weekly schedule, nor engage experts on how to incorporate a climate strategy to their business in a consistent way.
A Challenge and a chance机遇与挑战并存
However, climate change is not only a challenge, but also a chance to every entrepreneurs and companies. Entrepreneurs can decide to dedicate their efforts and energy to developing sustainable solutions answering to decisive needs and corporates can get inspired and fueled by their mindsets in order to deeply transform themselves and all the economy.
But bear in mind: it’s happening now, not tomorrow!
Written by: Emily Kossak
Translated by: Suskita
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