Why Businesses Need Climate Change and Sustainability Services?

Shivi Gupta

30 Jan, 2020

We are in the middle of extreme environmental crisis – climate change has emerged as one of the most serious threats to the human survival. The rapid increase in greenhouse gas emissions, rising temperatures and unpredictable weather conditions have posed a great threat to the survival of businesses as well. Opting for climate change and sustainability services is the need of the hour if a business wants to survive in the long run. Let’s have a look at how climate change impacts the business sector and why companies need to steer toward corporate sustainability.

How Climate Change Impacts Businesses?

The detrimental effects of climate change are fairly visible in the form of turbulent weather patterns like floods, tsunamis, earthquakes, droughts and the recent uncontrollable wildfires. Such destructive weather conditions are directly responsible for annual global loss that ranges in billions, and disrupt the economic development of the affected countries. This ripple effect of climate change also halts the entire agricultural, infrastructure, healthcare and other industrial activities.

The direct outcome is a destabilised market that affects the business’s performance, causes a shortage of raw material circulation, alters demand and supply of products and services, and leads to a rise in prices to operate and sustain businesses.

With a change in climatic conditions, the demand from consumers change too, for instance, regions with severe temperatures have witnessed shutting down of seasonal industries that deal with winter goods. Also, the consumers are becoming more educated and aware of the negative environmental impact of certain goods and hold the manufacturers liable to opt for a sustainable approach in their processes.

It has become critical for businesses across the world to quickly react to climate change and incorporate the principles of Corporate Sustainability in their functioning. The sustainability compliance of a company is related to its financial performance. This means that a company also needs to set its investment priorities to ensure its growth even amidst a climate shift.

However, many businesses are yet to realise climate change as a financial risk and continue to operate without a Corporate Sustainability framework. A business is susceptible to financial risks associated with climate change in the form of:

• Structural damage to infrastructure like factory, business outlets and machinery;
• Production damage due to affected production cycles;
• Digital damage in case of loss of company’s IT hardware;
• Price risks associated with fluctuating costs of raw material and transportation services.
• Compliance risks in case of non-compliance with the government and regulatory requirements.

Climate change not only impacts businesses financially, it also presents risks associated with political instability and stringent regulations. Ignoring the need to adopt a sustainability policy can also have repercussions on the company’s reputation, how customers perceive it and interact with it.

When it comes to India, the government has aligned its national goals, policies and regulatory framework in accordance with the United Nations Environment Programme to deal with climate change, improve its own carbon footprint and resolve the environmental crisis the country is currently facing. Businesses are required to incorporate such policies in their own framework and align their goals in accordance with these environmental initiatives and regulations.

When a business fails to incorporate a Corporate Sustainability framework that focuses on environmental protection and sustainable development, it can face regulatory action from the authorities and heat from not only its customers, but also its employees and shareholders.

What Is Corporate Sustainability?

Corporate sustainability is a term used for the integration of economical, environmental, ethical and social aspects of business management and implementation of different preventive methods and policies to adopt good environmental practices and reduce wastage and emissions.

Implementing corporate sustainability requires a business to calculate its own carbon footprint and ascertain the extent of Greenhouse gases emitted by it while manufacturing its goods or extending its services. Carbon footprint is the amount of GHGs produced by a company directly or indirectly through its operations. A company’s carbon trail is expressed in corresponding tons of CO2 emitted from its human activities.

However, the scope for sustainability is different for different kinds of industries. Thus, there is a need for businesses to rely on industry expertise and opt for climate change and sustainability services.

The first step for a business towards corporate sustainability is to perform an in-depth analysis and evaluate the impacts it has or can have on the environment and the effects climate change can have on the business.

Once an impact audit is conducted, the business needs to have a Sustainability Strategy in place which includes the following:

• Sustainability in corporate governance by holding itself accountable and including sustainable development in its business goals.
• Performance analysis and reporting on sustainability goals and actual achievements.
• Onboarding consultants and industry experts for climate change and sustainability services.

Climate Change and Sustainability Services

Businesses play the most important role in wealth creation, investment and employment opportunities, and therefore, have the responsibility to innovate their policies and functioning to reduce their carbon trail, utilise their resources sustainably, and implement strong Company Sustainability strategy.

An organisation needs to integrate voluntary Corporate Social Responsibility (CSR) activities, long-term solutions and strategic advice from experts to plan and implement corporate sustainability. The primary purpose of consulting climate change and sustainability consultants is to understand the best strategies on environmental sustainability and effectively implement them in the organisation.

The main components of climate change and sustainability services can be summed up as:

• Risk assessment and evaluation of available opportunities.
• Assessment of the impact business’s products or services.
• Defining the Key Performance Indicators (KPIs).
• Due diligence and waste management strategies.
• Developing low carbon strategy.
• Label certifications.
• Assessment of reporting standards
• Greenhouse Gas (GHG) Assurance.
• Internal performance management.
• Environmental impact assessment and audits.
• Energy efficiency and renewable energy policy.
• Supply chain sustainability.
• Environmental, Social, Health and Safety (ESHS) performance assessment.
• Waste minimisation audits.
• Carbon and Water footprint assessment.
• Sustainability reports and social accounting.

In addition to opting for sustainability services, businesses can also take measures such as

1. Utilising better technological infrastructure to reduce their carbon footprint;
2. Appointing Chief Sustainability Officers and establishing a Corporate Sustainability Committee.
3. Reallocating budgets with broader authorisations.

Conclusion

A business can deal with challenges that come with climate change by adopting the right mitigation measures and investing in good environmental practices. Formulating and implementing a policy for climate change and sustainability requires industrial expertise, technical know-how and territorial advantage to understand the company’s requirements and deliver the best services for the company’s environmental compliance. The first step to achieve this is finding the right climate change and sustainability services from an organisation that provides umbrella solutions and implements good sustainability policies itself.

Enterslice  has a team of Finance, Tax, Advisory, and Assurance experts who hold years of industry expertise and extensive knowledge of climate change and sustainability. We can assist your organisation in understanding the complexities of corporate sustainability and formulating a robust sustainability programme to help you in synchronising long-term sustainability objectives with your organisation’s corporate policies and strategies.