Climate change means changes in the environment in which entrepreneurs and companies act. Each individual and entrepreneur will have to face the impacts of climate change. Although these impacts are often associated with problems, many of them can also create new opportunities for business.
Key results generated by the activities in the BalticClimate toolkit include new, innovative business ideas which cover both mitigation and adaptation aspects. The focus is on the local and regional scale, but of course the broader global climate trends, not only the changes in the local weather, will have impacts to the area.
The BalticClimate toolkit helps to identify the challenges and chances for business in terms of climate change
mitigation and adaptation.
After this, individual companies can go into more details on the climate change’s impact on their product or service. The Climate SWOT gives useful answers on strengths, weaknesses, opportunities and threats generated by climate change. These can be directly integrated into the strategic planning of the company (see the figure).
Climate change is often referred to as the next major force shaping the business environment in which companies operate. It is often compared to globalization, being a slow, but powerful and unavoidable force that has an impact on prices and costs, as well as on structures of demand and production. In addition to being a scientific and an ethical issue, climate change is also an important economic issue, given the scale of the costs falling on society and business. Climate change will affect regions and business sectors differently: climate change will result in important winners and important losers. It is therefore evident that climate change can bring about both challenges and opportunities for business. Those who are among the first to recognize the significance of climate change, foresee the implications to their business, and plan appropriate mitigation and adaptation strategies, are expected to be the winners in the new business environment.
The relationship of business and climate change is a two-way interaction. Business affects climate change: it can have an important role in either advancing or controlling climate change. However, climate change can also have major impacts on business through physical exposure resulting from temperature rises and extreme weather events. Read more about climate change scenarios and impacts on the Baltic Sea Region.
Indirect impacts of climate change to business are caused by national and international climate policies and regulation designed to reduce greenhouse gas emissions, rise in the costs of energy-intensive processes, and decline in demand for energy-intensive products. On the other hand, new technological and business opportunities result from increased demand for low-carbon, energy efficient products.
Integrating sustainability concerns, including climate issues, into business activities and business strategies can create value for the company. The value of sustainability can be materialized in various ways:
- When the focus of sustainability is in regulatory compliance, the main value is derived through protection of license to operate on the market (e.g. meeting the climate targets set in the EU climate policy).
- Considering sustainability aspects of business can help identifying potential risks of operations. Therefore, sustainability assessment can be a valuable support for risk management. Prevention of climate related risks reduce costs of emergency response, product liability costs, and insurance premiums (e.g. investments in walls and barriers to prevent damage caused by floods resulted from increasing temperature and precipitation).
- Focusing on operational efficiency often contributes to both cost reductions and improvement of eco-efficiency. Economic benefits are achieved through increased productivity, more efficient resource use, minimization of waste, and sustainable design of investments (improvements in energy efficiency, e.g. energy saving services).
- A typical way to create value from sustainability is to increase competitiveness through image improvement. By safeguarding corporate image and brand, customer loyalty can be improved (e.g. cooperation with NGOs).
- Enhancing sustainability attributes of products throughout the value chain can be a source for market growth (e.g. carbon footprints for products).
- Monitoring and managing strategic sustainability issues in society can be a driving force for innovations leading to redirection or redefinition of existing business concepts. Consequently, new sustainable markets can be developed based on new product or service concepts (e.g. car sharing).
- The value of sustainability can also be observed as improved staff motivation. This can be an extremely important issue in countries with an aging population, which will be forced to compete for qualified and motivated work force in the near future. Sustainable corporate culture can create more attraction on employment markets.
The box on the right provides you with a presentation template for introducing
climate change and the BalticClimate toolkit to business people and for
identifying their role in dealing with climate change. The template can be
downloaded and modified according to the users` needs.
Start with Challenges and chances for business.