Preparing for a climate nightmare: Assessing the implications of climate change for businesses

As of recently, navigating weather patterns is the equivalent of a sailor trying to sail amid a raging storm. Unpredictable, messy and headache inducing. While we are still using the AC on cool temperatures in November, we are undeniably living in strange times.

The threat that lies within climate change effects all aspects of a country’s wellbeing. Be it food supply, air quality or extreme weather conditions, climate change has been at the centre of many problems. This has also caused businesses and leaders to question what steps should be taken to mitigate the consequences of climate change.

Compared to other continents or countries, Malta suffered fewer devastating complications due to extreme weather over the years. America and Australia, for example, faced multiple wildfires, while Florida’s Gulf Coast is notorious for hurricanes, forcing people to pack up essentials and leave everything behind when a storm starts brewing.

Nonetheless, even though not in the extreme, local businesses have also been impacted. How?

• The extra need for AC has arisen as the country faced hotter and longer summers, invariably leading to increased electricity costs, even with energy subsidies in place.

• Unfortunately, Malta tends to flood when rain pours and this has a number of implications:
  • Food couriers endanger themselves to travel from one area to another. Because of this, restaurants, cafeterias and even the food delivery companies have suspended their services to prevent any risks, affecting both couriers and businesses’ incomes.
  • Other workers might find it difficult to travel to work with their cars or public transport, therefore making it difficult to reach the office.

• Strong winds effect many operations such as construction, individuals working in road infrastructure or anything sea related. This can affect boat tours and ferries from Malta to Gozo, among others.

• Malta is surrounded by the sea and many restaurants offer sea-views. Nonetheless, with extreme weather conditions this can either flood their shop – increasing costs to fix any damages – and/or drive away business, since not many people go out in such weather or choose such restaurants/cafes knowing that they might have to leave anyway. In the long run, with extreme weather conditions persisting and increasing by time, businesses might not find it sustainable tending to these inconveniences and have to consider shutting down.

COVID-19 has left HR professionals and companies focusing primarily on short-term strategies and are forced to prioritise long-term strategies less, including how to tackle climate change consequences.  

Rita Trehan, founder and CEO of DARE Worldwide, a global transformation consultancy, said that businesses should firstly assess the area that it operates from. Subsequently, she recommends laying out all possible issues that might arise and use the red, green and yellow scale to determine which should be monitored most and given priority.

She also highlighted the need for leaders to engage with local communities and workers who are facing such conditions to understand the implications.

Ms Trehan also pointed out that sustainability efforts should not be important solely for branding.

“Really think about what’s important to your organisation. It’s impossible for any company to tackle it all. Laser focus on what is going to make the biggest difference for your business and the communities you serve, because you have a responsibility to help the communities in which you are actually either present, sell to, and or a part of. Put that lens on your investments,” Ms Trehan said to business leaders.

Others have recommended businesses to use the PESTLE analysis technique, a model which is made up of six factors, all affected by climate change.

• P – Political: Shifts to political landscape can impact suppliers, human resources and market volatility.

• E – Environmental: Changes to physical landscape can pose threats on water scarcity, to name a few. In this case water scarcity can lead to mass migration, panic and violent conflicts that can have global ramifications.

• S – Social: Companies should be aware of the employees’ needs and how to support them, so they can in turn support the company that they work for.

• T – Technological: Today’s work force and day-to-day life activities are highly driven and dependent on technology. Companies should assure that they plan for technology needs (also to communicate) and prepare for scenarios where access to it becomes difficult. For example – power cuts experienced last summer put a strain on Wi-Fi based technology. Whilst 4G and 5G are good alternatives, these can drain the battery life of devices and also create a financial strain for both employees and companies.

• L – Legal: If politics, social circumstances and technological infrastructure are affected, this can lead to mistakes, often resulting in legal ramifications. Therefore, businesses must be prepared for these types of situations.

• E – Economic: In this scenario, this model also highlights that such preparedness can cause financial strain on businesses, even when having an excellent insurance policy in place.