BSR Insight | Increasing Costs, Water Scarcity Top Business’ Climate Change Concerns
According to a recent report by the Global Compact, UN Environment Programme, Oxfam, and World Resources Institute, water scarcity and the increasing costs of raw materials and natural resources are business’ two greatest concerns about climate change risks. As the report notes, climate change impacts—including rising temperatures, floods, and extreme weather events—present a variety of risks to companies’ operations and value chains, including:
- Physical and operational risks: unreliable access to core inputs such as water and energy, costly disruptions to production, and increased absenteeism
- Legal and regulatory risks: new land use or zoning regulations to manage resources better and reduce a country’s vulnerability to disasters
- Financing risks: more expensive debt financing for companies at a higher risk of being impacted by climate change
- Market risks: change in demand for inefficient products and a drop in purchasing power as more consumers are forced to adapt to climate change
- Political risks: domestic conflict and instability triggered by issues such as food security
- Reputational risks: negative media coverage or being targeted by civil society advocacy groups for failing to have climate adaptation plans or for being a heavy emitter
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