Business impacts of climate change: Q&A with Tensie Whelan

by Linda Low, ClimateCAP Fellow, MIDP'18, Duke University

Photo - Whelan, Tensie.jpg

Tensie Whelan, Clinical Professor of Business and Society and Director of the Center for Sustainable Business at NYU's Stern School of Business, and one of the speakers at ClimateCAP 2018, is helping companies understand how to model the financial impacts of sustainability issues like climate change.  We asked her to share her thoughts on how climate change affects business. 

Is climate change a business imperative? If yes, why? 

Tensie Whelan: Climate change is a business imperative because it creates material risk and opportunity. On the risk side, it disrupts transportation, distribution and supply chains.  On the opportunity side,  those companies that develop  climate change strategies, technologies, products and services to tackle climate change will create financial and societal value.

How have you seen the conversation on business and climate change shift over time? 

Whelan: Yes, business now sees addressing climate change as a material issue that they have to address, partially because government is ineffective and because employees, consumers and investors are beginning to demand business engagement.

How has engagement of executives changed over time? 

Whelan: A younger generation of business leaders is more concerned about the issue, both for themselves and their descendants.  They are setting science-based targets, holding themselves accountable through public reporting, and embedding it into their core business strategy.  

What would you say is the biggest risk to companies when it comes to climate change? 

Whelan: It varies depending on the industry.  For any industry dependent on natural resources, there is a big risk of quality and quantity challenges -- e.g. crop productivity is already being affected.  For real estate insurers, there is a risk in terms of huge claims due to extreme weather. 

What do you want MBAs to know about climate change and how it affects business?

Whelan: Climate change will affect all industries and all positions within companies, whether they work in finance, marketing, HR, or investing.  MBAs will need to understand and manage for the risks but also proactively hunt for the solutions.  And they need to be prepared to work with a broad variety of stakeholders on the issue from NGOs to communities to employees.

~

Economics + science in climate change is good business

by Linda Low, ClimateCAP Fellow, MIDP'18, Duke University

On Saturday, participants from 16 MBA schools, business leaders, and global experts will convene at ClimateCAP – a new conference from Duke’s Fuqua School of Business – to assess the implications of climate change on business and investment. I spoke with panelist Maggie Monast, Senior Manager of Economic Incentives with EDF’s Ecosystems Program, to understand how climate change is shaping industries and markets.

EDF deploys economics and science to tackle issues with practical solutions. Is climate change a pressing business issue?

Photo - Monast, Maggie.jpg

Maggie Monast: Absolutely. Customers, employees, and investors are demanding strong sustainability commitments from businesses. It’s that simple. If sustainability wasn’t good for business, so many companies would not be engaged in major environmental initiatives. For example, we work with Walmart to support their implementation of Project Gigaton, an ambitious initiative to remove 1 gigaton of greenhouse gas emissions (GHG) from Walmart’s supply chain by 2030. We also work with Smithfield Foods, the world's largest pork producer, who has pledged to cut GHG emissions 25 percent by 2025. McDonald’s, the world’s largest restaurant company and one of our oldest partners, is taking steps to achieve 100% of its packaging from certified or recycled sources by 2020. While we work with major corporations such as these, we also work with farmers to understand how they can be part of the solution, and scientists to make sure that the environmental improvement is real.

How have you seen the conversation on business and climate change shift over time?

Monast: In my seven years at EDF, I’ve seen more and more businesses transform what it means to do “business as usual” by incorporating environmental goals into their products, operations, supply chains and advocacy. Sustainability goals have gone from being “nice-to-have” to “must-have” for businesses of any industry, size or location.

How has engagement of executives changed over time?

Monast: Our EDF+Business team works with leading companies and investors to raise the bar for corporate sustainability leadership by setting aggressive, science-based goals; collaborating for scale across industries and global supply chains; and publicly supporting smart environmental safeguards. From this work over the years, we’ve had the chance to work with executives from all types of companies including IKEA, Walmart, KKR and FedEx. We decided to share a few of our recent conversations with these executives through our EDF+Business blog series. I’d encourage anyone interested in exploring trends in sustainability leadership to give these a read.

What would you say is the biggest risk to companies when it comes to climate change?

Monast: As we saw from the onslaught of extreme weather events in 2017, absolutely no business is immune to the effects of climate change anymore. Disasters brought more than $300 billion in damages this year, a 60-percent increase over 2016, Swiss Re reported. Every business leader knows that severe storms and wildfires threaten to disrupt a company’s operations and growth at any given time and could affect a company’s entire supply chain. It’s important for companies to factor resilience to climate change into their operations.

What do you want MBAs to know about climate change and how it affects business?

Monast: Thriving businesses and a healthy environment are crucial to each other’s success, and to a thriving world. It’s important that we forge solutions that benefit both. It’s imperative that we understand the implications of climate change.

~

 

 

Vanguard, BlackRock, HSBC call for climate risk disclosure

  • BlackRock, the world’s largest asset manager, called for investors to factor climate change risk into investment decisions in a much publicized move in 2016.  Read more >
  • Vanguard Group announced in Aug. that that it is urging companies to disclose how climate change could affect their business and asset valuations.  Read more >
  • In Nov., HSBC announced it will provide $100 billion in financing by 2025 for clean energy and lower-carbon technologies and that it will adopt the recommendations of the Task Force on Climate-related Financial Disclosures.  Read more >

CNBC: Why Walmart is doubling down on its commitment to climate change

"Data shows that if U.S. businesses make investments now towards a diversified clean energy economy, they and consumers will save an average of $366 billion per year on fossil fuel costs by 2050. There will be many more U.S. jobs overall—particularly in sectors like utilities, construction, and manufacturing."  Rob Walton, a member of Walmart's board of directors, shared his views on the company's bold commitment to work with its supply chain partners to reduce supply chain emissions by 1 gigaton by 2030 (Walmart's "Project Gigaton") in an article on CNBC in Dec. 2016. 

> Read the article

 

Is business school failing my generation?

"What I want to talk about is how climate change, or more specifically, action to address climate change, will affect business and why I believe that this is something that every business school student should be aware of."  At a London Business School TEDx event last year, MBA student Tiiram Sunderland said paying attention to climate change measures is critical because nearly every business will feel the impacts of climate change mitigation and adaptation initiatives in the future.

Watch his talk (15:03 minutes long).  Tiiram is now a consultant with Bain & Company in London.

PDF: "Climate Change in 2017: Implications for Business"

Harvard Business School faculty and researchers recently released this updated Background Note: "Climate Change in 2017: Implications for Business" (PDF) .  Useful as background reading for students or a teaching resource for business school faculty.