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Business and Climate: The Role of Sustainability in Mitigating Risks and Creating Opportunities

We live in an era of continuous and expanding growth: Producing, distributing, trading, consuming, and other economic activities improve people’s quality of life, upgrade communities, and allow nations to thrive. However, we tend to forget that the economy and society are embedded into the biosphere. Businesses cannot operate and thrive without a healthy biosphere.

According to the World Meteorological Organization, the number of natural disasters has increased by a factor of five over a five-year period. These disasters and extreme weather events do not happen without a cost. They cause physical and transitional risks for businesses, which can end up in huge financial losses if not dealt with properly. Sustainability creates an economic and environmental balance, by which businesses develop continuously. Business owners should be aware of climate-related risks and understand the role of sustainability in mitigating them and creating opportunities.

Climate-Related Risks

This section is an overview of potential climate change impacts on businesses. These projections were inspired by a Harvard Business Review article.


More hot days and more frequent heatwaves. A global BBC analysis found that the annual number of extremely hot days with temperatures reaching 50°C has doubled since 1980. Heat waves will not only increase energy demand for cooling but also lead to unreliable electricity generation due to the lessened ability of transmission lines to carry power and the reduced efficiency of thermal power plants,

as highlighted in an analysis by the International Energy Agency. In June 2021, a heatwave in US and Canada melted power cables and caused power outages, which forced many businesses to suspend their activities.

Extreme heat is also linked to air stagnation that traps pollution and can cause respiratory diseases such as asthma. The human impacts of air pollution is responsible for huge opportunity costs on businesses due to decreased worker productivity, reduced consumer footfall, and premature mortality. According to a report elaborated by Clear Air Fund, air pollution costs Indian businesses USD 95 billion, which is about 3% of India’s GDP each year.

Given that the agriculture sector is a primary producer of industrial raw materials, heat stress can also impact plant growth, limit yields in desirable crops, strain supply chains, and cause financial losses.

More frequent heavy precipitations. The most immediate consequence of heavy precipitations is flooding. A loss of human life and property damage are not the only consequences. Businesses also heavily suffer from flooding impacts………….

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