We’ve seen it on the news again and again: Wildfires are growing more intense, droughts more severe, hurricanes more frequent. This year alone, the U.S. has witnessed an unprecedented 25 weather-related disasters, each resulting in damages exceeding $1 billion.
Climate change, it’s clear, is no longer a distant threat but, in fact, our new reality.
The insurance industry has taken notice, restricting coverage, raising premiums dramatically, or pulling out of some areas of the country altogether. In California and Florida, for example, some homeowners have lost their insurance entirely after insurers stopped covering homes in wildfire-prone mountain towns or low-lying, coastal areas.
Many of the largest corporations in the U.S. have taken steps to achieve “net-zero” status, meaning cutting greenhouse gas emissions to as close to zero as possible. But even businesses that typically don't have large carbon footprints can better prepare for global warming. Here are five ways to do so:
1. Enhance Resilience Through Strategic Planning
- Assess Vulnerability: Begin by understanding how climate change could impact your specific business operations. This involves assessing the risks related to extreme weather events here and overseas, supply chain disruptions, or changes in consumer attitudes due to climate concerns.
- Develop a Resilience Plan: Based on your vulnerability assessment, create a strategic plan that incorporates climate resilience. This may include diversifying suppliers, investing in fire-resistant roofing, or adapting product lines to meet changing market demands.
2. Invest in Energy Efficiency
- Conduct Energy Audits: While shifting to alternative energy sources might not be viable, improving energy efficiency is a practical step. Conduct audits to identify areas where energy consumption can be reduced.
- Implement Energy-Saving Measures: This could range from upgrading to energy-efficient lighting and appliances to improving building insulation. These measures not only reduce energy costs but also demonstrate a commitment to sustainability.
3. Leverage Technology for Sustainable Operations
- Adopt Smart Technologies: Use technology to optimize resource use. For instance, smart thermostats or automated energy management systems can significantly cut down on energy waste.
- Explore Digital Tools: Digital tools can enhance operational efficiency and reduce resource waste. For example, using cloud-based platforms reduces the need for physical infrastructure, thereby lowering your carbon footprint.
4. Foster a Climate-Conscious Corporate Culture
- Educate Employees: Create awareness among employees about the impacts of climate change and the role they can play in mitigating it.
- Encourage Sustainable Practices: Promote practices such as recycling, reducing paper use, and even incentivizing public transportation or carpooling for commuting.
5. Engage with Stakeholders and Community
- Stakeholder Collaboration: Engage with customers, suppliers, and the local community to develop joint sustainability initiatives. This could involve participating in local environmental projects or collaborating with suppliers on sustainable practices.
- Transparent Communication: Regularly communicate your climate change preparedness and sustainability efforts to stakeholders. Transparency in these initiatives not only enhances your reputation but also encourages others to follow suit.
The bottom line? Even companies that are not obviously impacted by weather may be affected by climate change. Columbia University researchers a few years ago found output at air-conditioned General Motors plants dropped by up to 10% on really hot days. In other words, preparing for climate change is not just about reducing emissions but also about building a stronger economy.
Implementing at least some of the tips we’ve suggested above can help you safeguard the future of your business and, yes, very possibly win more favorable terms from insurance underwriters.
The Mahoney Group, based in Mesa, Ariz., is one of the largest independent insurance and employee benefits brokerages in the U.S. For more information, visit our website or call 877-440-3304.
This article is not intended to be exhaustive, nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.