Being aware of climate risks is not only about avoiding disasters, but also about positioning a business for long-term survival in a climate-changing environment. Proactively managing these risks can safeguard operations, improve financial stability and strengthen a business's position in the marketplace.
Climate risks are escalating across Europe due to the continent's rapid warming, the fastest in the world, a trend that has become increasingly evident in recent years and is due to a number of factors, including high latitude and proximity to the Arctic. The phenomenon is known as Arctic amplification, where reduced ice cover in the Arctic leads to more heat being absorbed by the ocean, which in turn accelerates warming across the European continent. Rising temperatures are leading to more frequent fires, devastating floods and changing weather patterns, with impacts on ecosystems and biodiversity. The economic costs are enormous, with significant damage to infrastructure and overall economic stability. The European Environment Agency warns that these climate threats are already at critical levels, affecting the operational stability of businesses and their financial robustness.
The time for action is now. Risk assessment, scenario planning, and the design of mitigation actions, as well as understanding the cost of their implementation, are required.
As the impacts of climate change intensify, businesses across Europe face increasing challenges that threaten their operations, their profitability and even their survival. In 2024, numerous businesses across Europe were significantly affected by climate-related events. Climate change is reshaping the business landscape in many different ways. The consequences of warming, changing weather patterns and extreme weather events are no longer distant threats; they are current realities that require immediate attention and strategic action. Extreme weather events, such as floods, heat waves and fires, have caused disruptions in various sectors as we see below.
The agricultural sector experiences the effects of unpredictable weather conditions both in Southern Europe with droughts, seasonal floods and higher seasonal temperatures and in Northern Europe with floods and storms. These events cause significant damage to farm infrastructure and production. And they pose a threat not only to farmers, but to the entire European food supply chain, leading to higher prices and reduced food security.
Another of the industries at risk from extreme weather events is tourism due to prolonged very high temperatures and drought in the South as well as sea level rise, coastal erosion and increased frequency of storms. Not to mention the reduction in snowfall which is affecting winter tourism. All of the above make tourist destinations less attractive.
Manufacturing and supply chains are increasingly disrupted by extreme weather events such as fires, floods and storms that can damage factories, delay production and shipments and disrupt transport networks, increasing costs for businesses.
And because the financial sector is not immune to the effects of climate change, insurance companies are facing increasing claims due to extreme weather events, leading to higher premiums and reduced coverage for businesses in high-risk areas. This is particularly worrying for small and medium-sized enterprises (SMEs), which may find it difficult to afford the increased costs, making them more vulnerable to future losses.
Τέλος οι επενδυτές και οι Τράπεζες συνειδητοποιούν όλο και περισσότερο τους κινδύνους που ενέχει η κλιματική αλλαγή, οδηγώντας σε αλλαγές στις επενδυτικές στρατηγικές. Οι επιχειρήσεις που αποτυγχάνουν να προσαρμοστούν στο μεταβαλλόμενο περιβάλλον μπορεί να δυσκολευτούν να προσελκύσουν επενδύσεις και πιστώσεις, ενώ εκείνες που λαμβάνουν έγκαιρα τα μέτρα τους στην αντιμετώπιση των κλιματικών κινδύνων μπορεί να αποκτήσουν ανταγωνιστικό πλεονέκτημα.
Finally, investors and banks are also increasingly aware of the risks posed by climate change, leading to changes in their investment strategies. Firms that fail to adapt to the changing environment may find it difficult to attract investment and credit, while those that take timely action to address climate risks may gain a competitive advantage.
All the aforementioned lead to the conclusion that businesses in every sector must remain vigilant and take proactive action to assess and mitigate climate risks, as the frequency and severity of these events are expected to increase.
Adaptation requires investments in climate-resilient infrastructure, diversification of supply chains, and the development of sustainable business models that reduce their environmental impact.
To achieve these, businesses must be able to conduct risk assessments and scenario planning to better understand the potential impacts of climate change on their operations as well as the cost of their adaptation.
For this purpose, E-ON Integration recommends its innovative platform, RiskClima, which brings together all the necessary elements in a single platform, such as Risks & Opportunities, Performance Indicators, Mitigation Actions, Dashboards & Reporting, and integrates Prediction Models at Climate Change milestones (years 2030, 2040, 2050, or even longer depending on the available models).
With the right strategies and investments, businesses can adapt and turn risks into opportunities. The time for action is now, and European businesses must take the lead in building a sustainable and resilient future.
Comentarios