Extreme weather events, water scarcity, biodiversity loss and other global warming-related changes in the environment will increasingly affect businesses and how they operate, according to a report released by the United Nations Environment Programme.
The report, GEO-5 for Business: Impacts of a Changing Environment on the Corporate Sector, says the private sector’s operating costs, markets for products and availability of raw materials will be affected by climate change.
Businesses that adapt by developing goods and services that can reduce the impacts of climate change, water scarcity and emissions as well as seize the demand for sustainable technologies, investments and services will be successful, the report says.
The GEO- 5 report, which outlines the specific liabilities of such changes to the construction, chemicals, food, finance and other industries, shows the rising frequency of extreme weather events, often linked to climate change, poses risks to all sectors.
For example, severe floods in Australia in 2010 to 2011 resulted in more than $350 million in claims to re-insurer Munich Re, which contributed to a 38 percent quarterly drop in profit for the company. The same period of extreme weather in Australia contributed to a loss of $245 million in earnings by mining group Rio Tinto.
While risks facing businesses are significant, climate change also offers significant opportunities, the GEO-5 report says. For example, the construction industry faces higher material costs due to availability constraints (see depleting forest graphic). However, there will also be increased market demand for sustainable infrastructure and buildings, storm damage repair and reconstruction, energy efficiency retrofits and technologies and climate-resilient structures.
The GEO-5 report builds on UNEP’s fifth edition of its Global Environmental Outlook, a report released last year that warned the world continues on its unsustainable path in spite of hundreds of agreed-upon environmental goals. UNEP assessed 90 of the most important environmental goals and objectives and found that significant progress had only been made in four.