Companies worldwide are working on reducing their emissions, and the goal of becoming climate neutral has become standard. But reality is catching up with us; it is no longer possible to completely avoid rising temperatures. Heat, drought, heavy rainfall and water scarcity are increasingly impacting Europe as well. This means that a new success factor, climate resilience, i.e. the ability to face up to the unavoidable consequences of climate change and make the necessary preparations is gaining significance.
Climate change as a factor in choosing business locations
Water is becoming a scarce commodity, which is making it a line of conflict, both in economic terms and in society. Companies are in competition with municipalities, farmers and the population at large. The consequences include halted production lines, supply bottlenecks and moves to other locations. Sectors such as chemicals, food production and the semi-conductor industry are already feeling the pressure. The examples of BASF, who develop new ship designs for low water levels, or Google, which was not able to set up a data centre in Brandenburg due to issues with the location, show that adaptability is becoming an advantage for business locations that can offer it. Climate resilience is becoming increasingly decisive in companies’ competitiveness and investment decisions.
Policy-makers and industry respond
The German government’s Climate Adaptation Act has created a framework that is becoming more concrete as federal states such as North Rhine-Westphalia add their own measures to it, for example with a 15-point support plan for small and medium-sized enterprises. The aim is to identify risks at an early stage, reduce vulnerability and precautionary measures into strategic decision-making. For companies, this means that climate resilience will become part of their corporate strategy and at the same time send an important signal to the capital markets and stakeholders. Climate risks mitigation will become a mark of quality of responsible leadership.
Good communications create trust
The demands placed on communications teams increases with growing complexity. Companies must use well-founded risk analyses and scenarios to show how they are adapting. The key factors here are:
- Transparency around risks, measures and progress
- The ability to dialogue with policy-makers, society and the capital market
- Consistency between sustainability goals and real implementation
This is how trust is built, both within companies and externally. Climate resilience does not mean capitulation, but rather strategic vision. After all, climate neutrality and climate resilience are two sides of the same coin when it comes to sustainable, successful corporate management.
Cathrin Sengpiehl, Managing Director
H/Advisors Deekeling Arndt