By: Pia Zevallos - Libélula's General Manager
The World Economic Forum recently published its Global Risks Report 2023, which surveys experts on the main risks for the world in the next two and ten years. The business sector surveyed considers that of 10 risks, 5 of which are associated with the effects of climate change The risks to business over the next two years are: extreme weather and environmental disasters, failure to mitigate climate change, natural resource crises, and failure of adaptation measures. It is becoming increasingly strategic and urgent to manage the impact of climate risks on business.
What can companies do in the face of this scenario?
As a first step, identify risks to be able to manage them and from there, build more resilient and prosperous organizations. However, the Latin America Climate Action Report 2022, publication by Libélula in alliance with business associations in the region, indicates that the private sector is not prioritizing this analysis: only 22% of the companies surveyed have identified and are managing the risks and opportunities that climate change presents to their business. Most link risks to climate disasters, such as floods, which can severely affect physical structures, assets and operations (roads and transportation). Few companies have identified new opportunities to generate value in a context of climate change.
On the other hand, the Report has also revealed that good business practices that are creating new businesses from their management of this context. One example is Ferreycorp, which installed Caterpillar solar panels, which it represents in Peru, at its repair center in Arequipa. In this way it managed to reduce its GHG emissions and generated energy savings of S/246 thousand, in turn promoting the sale of solar panels to its mining clients. Another case is that of Chumbagua Sugar Company of Honduras, that identified that generating energy from its waste was a business opportunity. Today it not only supplies its plant with 100% of bioenergy generated from bagasse, but also transfers more than 50% to the national energy grid. Like these, there are many other examples of companies that by implementing climate risk management measures discover opportunities to generate more value.
In conclusion, the climate crisis is not only a threat: it can also be a huge opportunity to business transformation opportunity that positively impacts the environment, people and drives new business opportunities. Business leaders in our region have the great challenge of incorporating this vision into their strategy, catalyzing innovation in their organizations.
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