“Climate change is not just about polar bears and melting icecaps, but also about increased risk and decreased certainty,” which makes it an economic and business issue that cannot be ignored, said Eleanor Fort, senior associate for the Policy Program at Ceres, a non-profit focused on mobilizing businesses “to build a thriving, sustainable global economy.”
During a Feb. 19 webinar hosted by the Sustainable Food Trade Association, Fort acknowledged that creating green business procedures can be expensive and resource intensive, making it a hard sell for food and beverage companies that already operated within limited margins. But establishing environmentally-friendly production practices now will save firms money in the long run, she noted.
The risks
“There are a lot of ways climate change impacts businesses,” some of which are more apparent and immediate and others that are less obvious and longer-term, Fort staid.
“When we are talking about climate change, we are talking about increased risks that trickle down and percolate through a lot of different predictable patterns,” she added.
For example, emissions from manufacturing facilities are causing greenhouse gasses to increase at a much faster rate than have historically occurred in nature, she said. This translates to higher temperature and more “hot nights,” which are nights that are 98% hotter than the minimum temperature between 1971 and 2000. Most states will experience 50 to 80 more hot nights per year from 20171 to 2099 than during the last three decades of the 20th century.
This becomes a business concern because it places stress on livestock and lowers grain yields, which impacts the commodity prices that food and beverage companies pay, Fort said.
For example, the production of wheat has fallen 2% in China, 14% in Russia and 5% in France in the 2010s due to climate change, according to the Fifth Assessment report of the Intergovernmental Panel on Climate Change.
Corn yields in the U.S. also fluctuate due to extreme weather, with bushels per acre dropping between 16% and 29% a year due to drought, floods and other unusual climate events, according to data from the Environmental Protection Agency.
Climate change also contributes to water stress and can reduce labor if communities on which companies rely are unable to provide sufficient water and resources to workers because of weather, Fort noted.
“All these factors really do have an impact on business. When we are talking about heat or drought or hot nights or [increased] pests or [decreased] nutrients, we are talking about dollars and cents for business,” Fort said.
For example, she noted the financial impact can reach into the millions for individual companies. Fresh Del Monte Produce lost $4 million in the second quarter of 2010 when heavy rains, strong wins and flooding lowered banana yields in Guatemala.
Take action
Manufacturers can proactively address and potentially minimize these risks by evaluating and improving their companies’ resilience to climate change with a tool created by Oxfam International and several corporations, including Starbucks and Keurig Green Mountain.
The tool, ADAPT, is a five-step process that serves as a best practice that can be modified based on a company’s resources, explained Heather Coleman, climate change policy manager at Oxfam.
She explained ADAPT stands for:
- Analyze the issues – This includes assessing the impact of recent and historic weather-related events in the company and identifying the most vulnerable projects or parts of the business. In this step, firms also look at the positions of their local and national governments and the overall ability of their immediate communities to adapt to weather challenges and how these impact operations and supply.
- Develop an internal strategy – Companies build on their analysis in this step to create business cases for incorporating climate resilience actions. The also should evaluate potential partnerships with other stakeholders at this time.
- Assess risks and opportunities – Companies should evaluate the efficacy of any steps the already take to reduce climate change. This involves “engaging suppliers along the way and identifying hot spots … where changes are most relevant,” Coleman said.
- Prioritize actions – During this step firms zero in on concrete steps for change.
- Tackle actions and evaluate progress – Firms need to create a budget, ensure necessary approvals are in place and assign responsibility to specific individuals to ensure actions run smoothly. They also should engage with other stakeholders to create accountability.
Coleman acknowledged the last step can be a sticking point for companies because it requires financial commitment. But she has found that creating a financial case is easier when companies consider the risk to their reputation is they do not take action.
Also, addressing climate change places companies in leadership positions and improves their standing in the eyes of consumers, many of whom purchase products based on company’s values, she concluded.