Environmental degradation has stopped being a mere subject of scholarly projections and is becoming an increasing part of our common experience. Developing countries have long been seeing the effects of climate change and other serious environmental concerns, but the rapidly deteriorating state of the environment is now exposing developed countries to the risk of reversing decades-long gains.

From the business point of view, environmental risks can cause supply chain disruptions, dipping consumer demands, as well as loss of investors for vulnerable enterprises. Aligning decisions with environmentally conscious practices is a present reality to business survival.

Key environmental considerations

Climate Change

The majority of worldwide electricity consumption is a result of business operations. Power generation, which is still predominantly from the burning of fossil fuels, is a major contributor to global warming, and by extension, climate change. The world has seen a tremendously climbing average global temperature since the 1980s. The melting of glaciers induces sea-level rise, resulting in high tide flooding. In the United States alone, high tide flooding is becoming more frequent and is projected to continue this upward trend in coming years. Outside of its direct impact on properties, studies also show that high tide flooding creates substantial revenue loss.

Depletion of Natural Resources

According to a report from the International Energy Agency, industrial activities accounted for 42% of the total global electricity consumption in 2019. Meanwhile, in 2017, the Food and Agriculture Organization of the United Nations estimated that roughly 19% of global water consumption was attributed to the industrial sector. Businesses extensively use natural resources (whether water, soil, air, minerals, and fossil fuels) to keep supply chains up and running. However, as natural resources deplete, pressure continues to build for businesses to opt for more sustainable raw materials and processes.

Pollution

Operations by-products such as harmful emissions and hazardous and non-hazardous wastes are also putting businesses in the ESG crosshairs. Discharge of industrial wastewater needing further treatment, smoke released from stacks, and copious amounts of solid wastes are all becoming reporting standards for environmental impact disclosures.

To accommodate for long-term stability, businesses must now pay attention to multiple investment opportunities that bring protection from environmental, social, and financial risks as well as opportunities for gains.

Influence of Key Environmental Considerations on Business

Risk

Physical risks such as supply chain disruptions from natural calamities (now stronger and more frequently occurring) have visibly impacted supply chains. Days and even hours of delay can mean considerable revenue loss.

Transition risks are also finding their way into business models, as countries embrace a commitment to sustainable practices that protect the environment and preserve natural resources. The Sustainable Development Goals adopted by United Nations countries have created an expectation for those governments to promote sustainable practices in the private sector, reduce subsidies for polluting industries, and support ESG initiatives through tax credits.

Reputation

Customers perceive sustainable businesses more favorably than non-sustainable competitors. Environmentally responsible companies are drawing a wider consumer base. Additionally, the alignment of employee values with environmentally conscious companies promotes loyalty, reducing costs incurred from high turnover rates.

Profit Margins

Investing in sustainable practices may seem to incur an initial large expense, but real-life company experiences indicate the opposite. Acknowledging the scarcity and increasing costs of natural resources, businesses that are in it for the long haul are compelled to make their processes more efficient, thus reducing costs and boosting profit margins.

What Can Businesses Do?

Pollution Measurement and Control Technologies

An effective starting place is leveraging modern management software to carry out standardized emissions measurements, set targets, and outline pollution mitigation protocol resulting in increased compliance with disclosure requirements set by investors and regulatory agencies.

Research and Development Departments

The rapidity of environmental deterioration is now fuelling worldwide clamour for industries to provide actionable responses to currently available data. Businesses must therefore invest in research and development to explore alternative raw materials and processes within the supply chain.

Achievable goals that meet current industrial requirements include:

• Developing protocols that prevent environmental damage from business activities,
• Setting sustainability targets in business operations,
• Incorporating ESG reporting standards in measuring environmental sustainability performance, and
• Tapping the power of asset management, tracking, and monitoring software to standardize procedures, reduce human error, and increase efficiency.

What was “business as usual” is now “playing catch up” regarding current ESG trends. Environmental degradation is occurring more rapidly, with a worsening impact on lives and properties. As a result, investors and consumers are now paying more attention than ever before to business environmental sustainability. The unavoidable factors of physical risks associated with stronger storms, rising global temperature, glacial melting, and transition risks all combine to leave the fate of non-environmentally conscious businesses hanging in the balance. Compliance with environmental regulations and support for national and global initiatives are critical for businesses to survive.

Author Bio

The SafetyStratus Research Advisory Group (RAG) brings together thought leaders from the global environmental, health and safety community to promote best practices and provide key insights in the profession and the industries they serve. The Research Advisory Group also advocates, where practical, the intersection of and advances with the use of technology, such as the SafetyStratus enterprise EHS software platform. Group membership consists of representatives from across varied disciplines and market sectors as well as select members of the SafetyStratus team.
The primary objectives of the SafetyStratus RAG partnership are to:

• Build a strategic partnership between EHS practitioners and the SafetyStratus team.
• Provide engaging and practical content to the global EHS community.
• Provide discipline and market feedback specific to SafetyStratus products and services.

While the objectives of the RAG are varied, the primary public-facing outcome will be available through engaging and practical content found on the SafetyStratus resource pages. Various articles, papers, and other valuable resources will be produced and shared as part of an ongoing effort to cultivate a robust community. Ultimately, the SafetyStratus RAG will expand to have a broader reach and provide opportunities for more inclusion by all interested EHS professionals in a collaborative community environment.

References

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Electricity in the U.S. – U.S. Energy Information Administration (EIA). (2021). Retrieved 27 August 2021, from https://www.eia.gov/energyexplained/electricity/electricity-in-the-us.php

Giese, G. (2017). Has ESG affected stock performance?. Msci.com. Retrieved 27 August 2021, from https://www.msci.com/www/blog-posts/has-esg-affected-stock/0794561659

Hino, M., Belanger, S., Field, C., Davies, A., & Mach, K. (2019). High-tide flooding disrupts local economic activity. Science Advances, 5(2), eaau2736. https://doi.org/10.1126/sciadv.aau2736

IEA (2021). Electricity Information: Overview, IEA, Paris https://www.iea.org/reports/electricity-information-overview

Shaftel, H. Overview: Weather, Global Warming and Climate Change. Climate Change: Vital Signs of the Planet. Retrieved 26 August 2021, from https://climate.nasa.gov/resources/global-warming-vs-climate-change/.