Sustainability Finance 101: Climate Related Effects on Business Model & Value Chain

In the last Sustainability and Sustainable Financial Success 101 Post we discussed climate-related risks (physical vs. transition) and opportunities.

In this post, we’ll discuss some current and anticipated effects (both positive and negative) of climate on your Business Model and Value Chain.

·       What are the effects of acute or chronic climate change-related risks and opportunities on your business operations and outlook?

·       Is your business already experiencing these effects (current effects) or do you anticipate experiencing them in the short-, medium- or long-term future?

·       What is the nature of these climate effects on your business, whether positive or negative?

·       Where in your business model and value chain do these climate effects occur?

Some examples of negative effects could be similar to the following:

·       Your business uses one or more low-cost resources or raw materials that are increasingly limited by the effects of climate change in a region that was once abundant in these resources.  This increases your cost of manufacturing, hence your profitability.

·       Your business relies on suppliers located in geographical regions that are prone to flooding, hence their productivity and profitability is at risk, in turn threatening yours.

·       Your business has facilities in geographical regions with frequent grid outages due to natural disasters caused by climate change.  This reduces your productivity or forces you to use unclean backup power running on costly fuel which emits GHG emissions and further increases the frequency and intensity of natural disasters.

·       Your most productive or cost-effective employees live in areas frequented by natural disasters and/or are prone to health issues caused by pollution from GHG emissions.  This reduces their productivity, resulting in losses to your bottom line.

On the positive end, as a sustainability leader your business could be gaining market share because it made the early decision to invest in clean energy, innovative technologies and processes which have given you the resilience and sustainability that insightful investors and customers seek.

SELE Solutions can help your business identify the custom solutions unique to its business model to mitigate the negative effects and increase the positive effects of climate change and protect you for sustainable financial success.  Reach out to SELE to get kick-started on your journey to sustainable development!

info@selesolutions.com; +1(248)975.7353; www.selesolutions.com