Climate change will expose businesses and other organizations to a range of new risks and opportunities. An important strategy for managing risks and exploiting opportunities involves stakeholder engagement and communication: A business that engages and communicates effectively with its stakeholders might be better prepared for climate change.
A Changing Climate for Business
Climate change exposes businesses to an array of risks and opportunities. Some of the new risks and opportunities businesses will face will be common across all business sectors, while others will be organization-specific, depending on where the business is located, what they are doing and what their priorities are.
Many risks and opportunities are already present, including the opening up of new markets and services (e.g. low carbon solutions), emergence of new legislation (e.g. the CRC Energy Efficiency Scheme) and the occurrence of climate-related impacts (e.g. increased incidence of flooding).
However, the future evolution of risks and opportunities related to climate change is hard to quantify, making them difficult to include in formal business and strategy planning. Furthermore, the emergence of "new" risks and opportunities makes it problematic to make judgements based on past experience.
Why Engage and Communicate?
Communicating how a company is managing climate change -- how risks are minimized, opportunities exploited and solutions developed -- is a crucial element of creation. Communicating its approach to climate change can help distinguish a company from the competition and offers opportunities to gain competitive advantage.
For example, construction companies are finding that pre-qualifications and tenders increasingly include criteria relating to whether the challenges of climate change (as well as other aspects of sustainability) are being addressed, such as the embodied carbon of materials used.
Many companies submit to third party sustainability ratings schemes as a way of reporting progress and benchmarking against peers. Yet, these schemes are frequently based on the quality, clarity and transparency of information submitted rather than evidence of actual performance.
Hence, clear communication of businesses' views, strategies and actions on climate change, and evidence that they have engaged with and understand the concerns and priorities of their stakeholders, can be the most important factor in determining companies' final scores and positions.
One of the most high-profile third-party measures of how businesses are responding to climate change is the Carbon Disclosure Project (CDP). Now in its tenth year, the CDP has encouraged 3,000 organizations from across the globe to voluntarily measure and disclose their greenhouse gas emissions and climate change strategies, and it is seen by many as the definitive listing of corporate action on climate change. The CDP's profile was raised further in 2010 when Google added companies' CDP Leadership Index scores to the "key statistics and ratios" section on its Finance pages.