Climate change will influence businesses just as it would on any other part of our life; it is not a new concept. 

Securities and Exchange Commissioner Allison Herren Lee’s keynote lecture to regulators at the end of 2020 was titled “Climate Change as Systemic Financial Risk.”

The Securities and Exchange Commission (SEC) isn’t precisely in the thick of environmental policy in the United States. 

Securities and Exchange Commission (SEC) has mandated that public firms report to their shareholders any climate-related risks that potentially significantly impact their business operations since 2010.

With new leadership taking office at the start of the year, those standards and US environmental policy, in general, are very much open to change.

Table of Contents

Climate change and Business

1. Emission Control System Capital Expenditures

Energy and utility corporations are most affected by these restrictions.
Energy and utility corporations that operate refineries and power plants are the most affected by these restrictions | Image Credit – Flickr

To comply with greenhouse gas emission rules, some businesses have been forced to spend considerable sums of money on pollution modifications and the installation of emission control devices. 

Energy and utility corporations that operate refineries and power plants are the most affected by these restrictions.

2. Regulations on Caps and Trade

Cap-and-trade regimes try to reduce carbon emissions by limiting the amount of pollution a firm may produce while allowing corporations to sell unused credits to other businesses.

Even though numerous countries have implemented them, cap-and-trade regimes have a tumultuous history in the United States.

California has its program, one of the first and most significant globally, with mixed outcomes. 

California’s policy has been criticized for letting the largest and wealthiest enterprises continue doing business as usual, or perhaps pollute more, while purchasing pollution allowances from other companies. 

On the other hand, ten northern states have formed their regional cap-and-trade group. However, during the Obama administration, the last federal cap-and-trade legislation died in Congress.

3. Rising prices for goods and services

Rising prices for goods and services
Rising prices for goods and services | Image Credit – The Kathmandu Post

Energy regulation and the costs it generates can indirectly impact businesses that aren’t in the energy industry.

Suppliers must pass on significant pricing changes in utilities and transportation. And the intermediates must pass these costs on to their customers.

4. Weather Patterns Changing

Edited Nasa visualization of climate change in earth by 2100
Edited Nasa visualization of climate change in earth by 2100 | Image Credit – Flickr

Climate change is predicted to alter weather patterns around the world, according to the SEC’s 2010 report. 

Many additional sources have confirmed this reality, including the United Nations, the National Aeronautics and Space Administration (NASA), and the American Meteorological Society.

Storms are projected to become increasingly severe, causing a slew of problems for businesses. 

These could have far-reaching consequences that go beyond the evident losses. It’s possible that international shipping will become more perilous. 

Agricultural zones that have been around for a long time could be wiped out. These storms harmed coastal communities and infrastructure regularly.

5. Changing reasonable demands

Changes in demand for specific items are caused by a combination of changing prices and changing weather patterns. 

There may be a deduction in demand for cold-weather products such as heating oil and ski equipment.

On the other hand, new opportunities are ventured up for environmentally conscious businesses.

Patagonia, Seventh Generation, and Dr. Bronner have all succeeded by catering to customers who make ecologically responsible purchasing decisions. 

6. Foreign Regulations Requirements

Many, if not all, large public corporations now operate both domestically and internationally, putting them under the jurisdiction of various climate change laws and regulations, whether or not the United States has approved them.

For example, the United States of America withdrew from the Paris Climate Agreement in 2017, while 200 other countries are still a part of it. 

As a replacement for the Kyoto Treaty, which expired in 2012, some people envision a global cap and trade system. When American companies do business abroad, they are subject to those laws.

7. Changing Public Attitudes

Changing Public Attitudes
Changing Public Attitudes | Image Credit – Climate Home News

Businesses value their reputations above all else, and many wish to acquire a reputation for environmental stewardship these days.

With its “Beyond Petroleum” campaign, BP is one firm that has put a lot of money into this movement. 

The corporation has invested billions in renewable energy initiatives to demonstrate its commitment.

“Going green” is becoming increasingly profitable. Salesforce, Nike, Apple, and Disney are just a few companies that have recently announced critical environmental initiatives.

Taking Concerns and Turning Them Into Action

According to sources, Even though 80 percent of executives think that businesses should make even greater efforts to safeguard the environment, many organizations are still hesitant to implement significant operational adjustments to address climate change. Their hesitation is most likely related to their tendency to think in the short term. 

This year, a focus on near-term business challenges or demands emerged as the main barrier to adopting sustainability efforts, rising from 30% in 2020 to 37% this year. 

In fact, due to the pandemic, most executives (65%) claimed their companies had to cut back on environmental sustainability measures somehow.

While it’s reasonable that there may be a short-term delay in addressing climate change due to immediate business continuity efforts, he emphasizes that leaders haven’t entirely lost sight of the bigger picture, which bodes well for the longer-term business activities that will be required.

If we do nothing, we face an alarming escalation and uptick in climate-related calamities, which will undoubtedly influence practically every aspect of life as we know it. That’s why we must act as a group right now to avert worst-case circumstances in the future.

Thankfully, it is not too late to make a difference, with nearly two-thirds of executives polled saying that quick action can mitigate the worst effects of climate change. 

A third of the organizations most worried about climate change aim to increase their sustainability efforts in the coming year.

Environmental initiatives that are vital to encouraging action, according to executives, include education and the promotion of science-backed climate research, as well as collaboration as a critical approach to promote progress and inspire public policy solutions. 

Renjen, on the other hand, feels that industry and government, in addition to education and campaigning, have a more notable role to play in making major environmental progress.

“Businesses are well-positioned to lead on technologies and techniques that will assist curtail private sector environmental effect,” Renjen says, “and government should lead on the major social adjustments required to combat and limit climate change.”

Sustainability is excellent for business in the long run, says Renjen, and companies play an increasingly crucial role in environmental protection.

(Last Updated on April 15, 2022 by Sadrish Dabadi)

Thinley Doma Ghale holds a Bachelor’s degree in Social Work from Kathmandu University. She enjoys writing articles on climate change animals and loves to travel and experience new ideas, places, meeting people, and learning from them. As a social science student, research has always been her area of interest.