Why Corporates Need To Incorporate Climate Change In Their Portfolios

Jan 5, 2022

The impact of climate change is hot on the heels of not just communities vulnerable to natural calamities but also businesses whose practices may be making it worse. Not convinced? You might think that a business’s carbon footprint only counts when it comes to those in the non-renewable energy sector, mining, or the food industry. However, studies have shown that carbon emissions from buildings and construction make up about 39% of global carbon emissions and 28% of that, accounts for building operations such as lighting, cooling, and heating. This large percentage will eventually put literally any business with an office or building under the climate change microscope. And it already is. 

Ever since the Conference of Parties for Climate Change (COP26), the decade-long pleas of environmental scientists have finally made their way into global & regional policies & agendas of developed to developing countries with a serious intent & gameplan. 

As the impact of climate change becomes more erratic, many are realizing that each person in business needs to contribute to this cause. Here are a few reasons why corporates are & need to change their business strategies with climate change in mind: 

1. Net Zero Laws Of The Land:  

The impact of climate change being asserted at a policy level, may seem more lenient now, but the pressing need to lower carbon emissions may make it mandatory. Governments have begun to consider levying laws, charges, and bans on corporations so they better adhere to environmental social & governance (ESG) laws to help countries meet their Net Zero goals and keep the catastrophic effects of global warming at bay. It may be in every business’s best interest to become a Net-Zero company before they’re left with no other choice. 

2. Carbon-Free & Relevant:  

ESG investing can help companies be prepared for climate change risks and opportunities by staying relevant for a future we are all uncertain of. Largely because of the drastically rising impact of climate change from natural disasters, rising sea levels, damage to real-estate to drought & food insecurity. If businesses at least improve their energy efficiency for starters, they would be marking a major green flag in terms of staying relevant in the future. This in turn invites opportunities to enjoy great corporate valuation in the market, attract better investments, trust and partnerships from known and unexplored areas of interest. 

3. Low Energy Costs To Lower Environmental Costs:  

Whether a business plans to become a Net-Zero company or not has always been secondary to lowering their costs and improving their capital. Imagine being able to do both. By improving energy efficiency and ESG investing in intelligent energy saving technology, businesses could hit many birds with one stone. They could lower their energy bills & related costs per month thus improving operational energy efficiency and hardware shelf-life. That saved energy capital can go into smarter, more sustainable ESG investments, financial & sustainable ROI and even earn them the reputation & respect for being an environmentally conscious & committed business.

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