Climate change is the next large tsunami lurking behind the COVID-19 wave, causing concern for company management and boards. How will climate change affect our company, our customers, our investors and the image of our sector? What type of risks and opportunities will it bring, and on what timespan?
The topic is particularly critical right now, as for example according to the World Economic Forum, the five most significant economic risks are related to the environment and the climate, and over 90% of natural disasters are linked to climate change. In addition, climate change appears to be happening at a much more rapid timescale than predicted. This highlights new positive feedback loops that make climate change mitigation and adjustment to climate change ever more important.
Roadmaps guide in uncertainty
Now at the latest, strategies aiming towards carbon neutrality, roadmaps and action plans are on the agenda for states, cities and companies. Although its economic effects have been widespread, COVID-19 has not stopped work altogether. Instead, it has improved preparedness, resilience and renewal for many operators. This is an excellent development, as now nothing is more certain than uncertainty. Climate change will make many operational environments even more uncertain, and as a consequence, agile and prepared operators will do well in the future.
I also see positive sides in a changing operating environment: now is the time to critically review and renew our operational models. Currently, our operational models have not been geared towards sustainable continuation over many decades. Combating and curbing climate requires large changes in our actions and paradigms – from every actor and level in our society. Significant changes are needed in energy production, building, transport, food production as well as in consumption. All of this requires investments and changes in operating models and procedures.
This need for change and investments open up prior unseen markets for new business and at the same time creates pressure for changing current business models and sectors. Therefore every company’s climate strategy should be firmly business orientated and take into account new opportunities. In addition, reducing one’s own footprint is of course important, and in this regard many companies have already progressed far through operative developments.
Handprint solutions revolutionise markets
Even though the importance of reducing the carbon footprint of a company has been recognised, the handprint – the effect of the products and services on combating climate change and facilitating adaption -requires a more courageous approach. New business opportunities are mostly related to the company’s handprint. Far too often it is seen as sufficient to make a more energy or material efficient version of an existing product – which is in itself of course important and the right direction. Nevertheless, the question should be poised of whether this is enough and would the market have been ready for a truly new, broader and process revolutionising solution.
From a company’s point of view, what is more important than to turn over those stones that may be hiding potentials for growth? Climate change is the stone that companies need to turn over many times and consider from a business point of view what it means to the company and for solutions.
Climate change must be on the company management’s agenda, in particular on the agenda of strategy, development and R&D management. Climate change must be integrated and weighted in the company’s existing offering development process. Only this way can the continuously changing and continuously increasingly notable business potential be recognised and translated into market ready products.
Originally published in Finnish in Bonfire.