Climate change: Impacting the bottom line?

Not so long ago it was largely assumed that climate change was an emissions oriented issue. Extractive companies and major manufacturers bore the brunt of the world’s concerned citizens and were forced to reduce the amount of CO2 and other greenhouses gasses they emitted into the atmosphere during the creation or lifetime use of their products.

Over the past year or two previously unsuspecting service oriented companies have also joined the emissions reductions game – we now have banks, advertising agencies, and government ministries that are operating as ‘carbon neutral’. All doing their part to reduce the pollutants that may cause the global climate to warm.

But a new aspect to climate change management has landed squarely on the agenda, and has come as a surprise to most. Climate change is already having an impact on company’s bottom lines.

A study released this week in Canada found that recent mild winters and dry summers has caused the mountain pine beetle population to increase to epidemic levels in some areas, devastating forests of lodgepole pine. If the warming persists, the beetle infestations could spread north to the Jack pine in the boreal forest across Northern Canada. This is an enormous current and future risk to the financial stability of one of Canada’s most important industries.
(Click the title of this blog entry to be redirected to the study).

The benefit of relying on a multi-stakeholder consensus seeking process to create the GRI Guidelines means that we are able to capture the cutting edge of sustainability trends. As a result of stakeholder interest in this new aspect of risk associated with climate change a new indicator was introduced in the G3 version of the Guidelines released in October last year:

EC2: Financial implications and other risks and opportunities for the organizations activities due to climate change.

As we start to see companies report on the new G3 Guidelines, this indicator will not only serve as a useful warning signal that climate change may be more material than companies previously thought, but will also elicit some interesting information that can help bolster the precautionary approach.