Top Ten Effects of Global Warming on Business

At some point there is a transition from trying to avoid the collision to bracing for the impact.

That could be an excerpt from a driver’s education manual. Then again, it could be the outlook for the business climate given the now inevitable changes and effects of global warming.

According to the world’s largest professional services firm, Pricewaterhouse Coopers (PwC), “Now one thing is clear: businesses, governments and communities across the world need to plan for a warming world – not just 2C, but 4C or even 6C.”

Their warning comes as the result of an assessment of the global community’s inability to make the needed reductions in carbon emissions to avoid the greatest effects of global warming. PwC’s latest report claims that a reduction in carbon intensity of 5.1 percent per year is needed if we are to meet the target of limiting temperature rise to 2 degrees Celsius. However, last year, despite the economic slowdown, we saw a reduction of only 0.7 percent, which has been typical of every year since the turn of the century.

“We have passed a critical threshold,” says the report.

Earlier this week, Admiral Samuel Locklear, told the Boston Globe that global warming, “is probably the most likely thing that is going to happen . . . that will cripple the security environment, probably more likely than the other scenarios we all often talk about.”

Even if we were somehow able to double our rate of de-carbonization, we would still be on track to hit a 6 degree increase by the end of the century. The only chance we have to hold temperatures to 2 degrees, would be to come up with a six-fold reduction in carbon emissions, which may be possible eventually, but it’s not going to happen anytime soon.

So, given this cheery prologue, what are the challenges and opportunities that businesses should be preparing for as we look forward to a destabilizing climate thanks to the effects of global warming?

1. Uncertainty

Without a doubt, the number one impact on business will continue to be uncertainty. Businesses will need to become far more agile and far more strategic, with contingency plans in place that must look bravely into the upcoming crisis without blinking and relegating as little as possible to the realm of the unthinkable.

According to Malcolm Preston, PwC’s global lead on sustainability and climate change, “Even with progress year-on-year in emissions reduction, the reality is that the level of corporate reduction is nowhere near what is required. The new normal for businesses is a period of high uncertainty, subdued growth and volatile commodity prices. If regulatory certainty doesn't come soon, businesses' ability to plan and act – particularly around energy, supply chain and risk – could be anything but 'normal.'”

Of course, uncertainty and risk are two sides of the same coin. According to John Steinbruner, Professor at the University of Maryland and Chair of the Committee on International Security Studies of the American Academy of Arts and Sciences, speaking at the World Affairs Council Summit on Climate Change last week (video), “The consequence of climate are certainly going to be very large. We know that without any uncertainty whatsoever. But unfortunately, the character, magnitude and timing and location of those consequences cannot be predicted with sufficient confidence to really tell us what to do about it.”

2. Crowded

If we hit the 6 degree Celsius increase we are now on track to meet by 2100, even if we double our current rate of carbon reduction, according to Mark Lynas, author of the book Six Degrees: Our Future on a Hotter Planet, southern Europe, north Africa the Middle East, and the American Midwest will be uninhabitable due to excessive heat and drought. At the same time, inundated coastal cities will need to be evacuated. Roughly one-tenth of the world’s population live in low-lying coastal areas. Admiral Locklear spoke of entire nations being displaced by the rising sea level. All of these climate refugees will need some place to go. It’s likely that there will be some negative feedback effect as we pass 2 degrees at mid-century, as the latest Shell scenario report predicts. This will hopefully lead to substantially enhanced efforts to deal with the problem, once impacts have become truly undeniable, which could steer us more towards a 4-degree increase, if it’s not already too late by then.

3. Disrupted

All of this dislocation will put a tremendous strain on all kinds of services unless action is taken in advance that anticipates the challenges. Robust and resilient systems need to be put in place that can withstand the weather impacts while building in enough capacity to serve all of those who will be in need. Heavy weather events will cause injuries, deaths, days of work missed, as well as damage to infrastructure such as bridges, tunnels, roads, power lines, hospitals, power plants, etc.

4. Wet and dry

Water will be the primary vector through which climate change will make its presence known. Because a warmer atmosphere can hold more water, precipitation patterns will change dramatically, with the trend being towards more water coming down at once, leading to increased runoff and flooding, with less water being absorbed into the ground. Other areas will be deprived of rain altogether, becoming deserts as a result. There is a saying, “You don’t miss your water till your well runs dry.” The same can also be said for the precipitation patterns that until now, made such a large portion of the planet viable for human activity.

5. Hungry

In addition to existing farmland falling prey to heat waves and drought, low lying coastal regions also face contamination from salt water. All of this will place tremendous stress on our ability to feed a steadily growing population. This, in some regions of the world, has already led to social unrest.

These will be the primary impacts. The secondary impacts, which are the human responses to these conditions, could potentially be even more severe, depending on our abilities to navigate through these challenges. Secondary impacts will include:

6. Civil unrest

People are going to be unhappy. They will protest, they will demonstrate, they will riot, they will sue. As Admiral Locklear said, “If it goes bad, you could have hundreds of thousands or millions of people displaced and then security will start to crumble pretty quickly.” People will want someone to do something about all of the things that are making them unhappy.

7. Government action

Given the increasing severity of these impacts, and in some cases, you might say, finally, governments around the world will have no choice but to issue increasingly stringent regulations in an attempt to manage continuing emissions, as well as any scarcities of food and water and other services that might be occurring, while at the same time maintaining security. These regulations will undoubtedly add to the unhappiness of a great many people. It will certainly strain our leaders' ability to lead, far beyond anything that is being seen today.

Rather than end on such a gloomy note, I would add that there are a few positive impacts that might be expected as well. These include:

8. Longer summers

This will not only provide more time for outdoor recreation, but more importantly, given the increasing population, a longer growing season. This could well prove to be critical in meeting the demands of feeding all these people.

9. Milder winters

According to some studies, warmer winters will mean lower mortality from disease. One Stanford study says, "Most people would enjoy higher temperatures, and the evidence supports the proposition that humans would live longer and avoid some sickness."

10. Open trade route

A melted Arctic will provide an open trade route from the Atlantic Ocean to Asia. This will allow much shorter transit times and will, somewhat ironically, save energy.

It’s not too late to try and avoid the collision, or at least reduce its severity, and at the same time, it’s not too soon to start bracing for the impact, either. As Admiral Locklear said, “The ice is melting and sea is getting higher. I’m into the consequence management side of it.”

[Image credit: Andy Lederer: Flickr Creative Commons]