Home Top Stories

Climate Change, Water Shortages, Biodiversity Loss to Impact Global Business

 
  • Power

By 2035, global electricity demand could be over 70 percent higher than 2009 levels. More frequent heat waves associated with climate change may impact the reliability of the grid. In 2012, blackouts in Northern India, which were caused by higher demand due to high temperatures and low monsoon rains, left hundreds of millions of people without power for several hours. Power companies will need to harden, or relocate, infrastructure vulnerable to extreme weather, and better prepare for supply interruptions.

Coal’s global share of total power generation is expected to decrease from two-fifths to one third by 2035, while renewables are set to increase from 20 to 31 per cent. The ‘decarbonisation’ of electricity will present opportunities for the sector to advance renewable energy technologies.

  • Extractives

Extreme weather events associated with climate change are influencing operational costs in the sector in many parts of the world. Legislation to extend protected areas that support marine and terrestrial biodiversity may limit the areas available for future exploration and extraction.

Opportunities may come through an increased demand for certain minerals and metals used in renewable energy and energy efficiency technologies. Warming temperatures may open up previously inaccessible areas for exploration, although potential environmental impacts will need to be assessed.

  • Finance

Insurers may experience severe capital losses and reduced profitability if they fail to adequately identify and plan for climate-related risks. Property and casualty insurers will likely see increasing claims due to severe weather. On the other hand, the capital needed to address climate change will result in a greatly-expanded market for financing.

Financial institutions will need to enhance coordination with the scientific community to ensure access to environmental data and analysis that can inform better planning.

  • Food and Beverage

High levels of water use and heavy reliance on ecosystem services render this sector especially vulnerable to environmental change. Growing zones for food crops will shift as local climates change. Marine fish stocks are increasingly over-exploited or depleted, while ocean acidification and higher water temperatures are thought to be major factors in the degradation of coral reef ecosystems, which provide nursery grounds for some commercially important fish species.

New markets are set to open up for more climate-resilient food varieties. Markets for organic food and beverages expanded on average by 10 to 20 per cent per year during parts of the last decade. Companies certified as sustainable food producers can also tap into growing customer demand.

  • Healthcare

Biodiversity loss will limit the discovery of natural compounds used in new medicines or traditional remedies. One estimate suggests that extinctions of certain species mean the Earth is losing one major drug every two years.

Approximately one quarter of the global disease burden can be attributed to environmental factors. Demand for healthcare services could rise further, especially due to conditions linked to air pollution, and water-borne diseases.

  • Information and Communication Technology (ICT)

Datacentres use up to 200 times more electricity than standard office buildings, making ICT companies’ operating costs vulnerable to increases in energy prices. Electronic waste (e-waste) is the fastest-growing waste stream in the world. Its proliferation, as well as concerns about the environmental impacts of the sourcing of key materials in developing countries (e.g., heavy metals), may lead to increasing consumer and regulatory pressure on the industry.

The ICT sector is likely to see growing demand for collecting and processing environmental data. Growth markets will also lie in ICT products that enable environmental improvements in other sectors (e.g., building energy management systems).

  • Tourism

Extreme weather events, impacts of climate change, water scarcity, and declining biodiversity can make particular destinations more or less attractive to consumers, thus impacting market demand for businesses operating in these locations. Stricter regulations on some practices (e.g., fishing and snorkelling on coral reefs) may impact niche sectors.

Overall, tourism demand is set to grow globally, especially the market for nature-based tourism and eco-tourism – for which customers are often willing to pay more.

  • Transport

Extreme weather could disrupt supply chains and infrastructure more frequently. Increasing extreme weather and water scarcity could disrupt supply chains and infrastructure more frequently. Regulations in many countries to reduce greenhouse gas emissions, can increase costs, shift consumer demand, and influence product design. Such regulations will grow more restrictive and widespread as climate concerns increase. Complying with regulations to reduce levels of air pollution (soot and particulate matter) from vehicles could also add to operational costs.

At the same time, governments are introducing regulations and incentives to stimulate demand for cleaner transportation options. Businesses in the sector can take advantage of new and expanded markets for low-carbon and fuel-efficient technologies.

 

Check the following link to read/download the Full Report:
http://www.unep.org/geo/pdfs/geo5/GEO5_for_Business.pdf

 

Source: UNEP.