Climate change is undeniably one of the biggest challenges of the 21st century, with projections indicating a significant rise in global average temperatures.
The Intergovernmental Panel on Climate Change (IPCC) has outlined specific scenarios for the trajectory of climate change, depending on the extent of the increase in global average temperature by 2100, relative to pre-industrial levels: 1) 1.5°C increase, 2) 2°C increase and 3) 3+°C increase.
Each of these scenarios depends on adherence to the necessary measures for mitigating greenhouse gas emissions in the atmosphere. Their analysis provides valuable insight into potential climate outcomes and the long-term effects of our current actions—or inactions.
But why should businesses care about all this?
Climate change impacts businesses in varying degrees, depending on their region and sector. Its effects can be both negative (risks) and positive (opportunities).
Negative impacts may include production disruptions from extreme weather events and natural disasters, higher operating costs due to new environmental regulations, and shifts in consumer preferences towards more sustainable products. On the other hand, positive impacts can include longer tourist seasons thanks to warmer Spring and Autumn temperatures, growth in renewable energy development as part of the transition to sustainable solutions, and a rising demand for consultancy services to help businesses implement green practices.
Ultimately, how businesses respond to climate change will shape whether they experience more risks or opportunities.
Analyzing global warming scenarios and their potential impacts is a strategic decision that directly influences a business's competitiveness and long-term success.
Scenario analysis and climate forecasting enable businesses to adapt their operations, invest in sustainability, and ensure long-term resilience. Moreover, the Corporate Sustainability Reporting Directive (CSRD) mandates that companies proactively assess, understand, and transparently report on climate-related risks, opportunities, and sustainability strategies. As a result, climate analysis and forecasting have become essential not only for risk management but also for meeting regulatory requirements and positioning a business for future success.
To illustrate an example of possible risks, we present a map from our company's department that deals with big data modelling and analysis, where we see that if the 3+°C temperature increase scenario applies in the year 2040, many areas of Greece are predicted to be at significant and calculable risk of fire, endangering the safety of workers, buildings, infrastructure-equipment, as well as the operation of a number of businesses.
At E-ON we undertake studies that support compliance with the CSRD directive. Disclosures on future climate projections require the use of climate simulations and the development of models to calculate risks for the time horizons 2030, 2040 and 2050.
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