Until very recently climate change was seen as a “future problem”. This has changed. We are feeling the physical impacts on climate change already today: more extreme downpours, droughts, record heat, it is all part of the same phenomenon. The policy response to climate change has been felt already for many years. Since 2005, the EU has had a CO2 emissions trading scheme, many countries support investments in renewable energy, and electric vehicles are displacing the Internal Combustion Engine. Climate change is the main driver behind this megatrend. Yet, companies struggle to respond. We have identified four ‘impact chains’ of how climate change can impact your company:
Physical: scientists believe that physical climate risks are increasing resulting in more frequent and extreme weather events, droughts and rising sea levels.
Technological: technological advances and cost declines in renewable power and electric grids, EVs and batteries pose a threat to incumbent industries and demand for fossil fuels.
Regulatory: regulatory risks are increasing as many governments are following through on their emissions-reduction pledges and companies are exposed to litigation risk.
Social: social and corporate awareness of climate change are increasing as the effects of climate change are being felt. The trends are increasingly driving changes in behaviour.
Combined these forces disrupt companies, supply chains and markets across the globe.