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Climate impacts on consumer business

Tom Butcher
Head of Industry Consultancy

Contents

Since the Industrial Revolution society has been on a trajectory towards increasingly significant climate change. After 170 years it’s too late to turn back, because climate change is already with us -impacting the daily lives of many people. We are now forced to make some decisions on how to plan for a future, conceding that we have to accept some level of climate change.

Net Zero – the milestone in 2050 to cease putting greenhouse gases into the atmosphere - will help society avert the worst impacts of climate change. But adapting to current and future levels of climate change is also key.

Ahead of us lie a number of options: some seemingly easier than others. Do we take the path of least resistance and continue our dependence on fossil fuels? This means that the 1.0 C rise we have seen since pre-industrial times could lead to more than 4.0 C of warming by the end of the century. Or, do we take a more ambitious route? A path requiring more determination, but one to a low-carbon future realising the aims of the 2015 Paris Agreement to keep global temperature rise to under 1.5 C when compared with pre-industrial times.

What does climate change mean for consumer businesses?

Climate change affects every business. The impacts on some industries, such as global agriculture, have received significant attention. Up to now the potential impacts from climate change on the consumer sector haven’t received the same level of interest, especially when you consider the financial impacts to businesses and consumers.

A new report - produced in collaboration with Deloitte - brings together a wealth of experience of business and finance and our latest understanding of climate change impacts. The report paints a stark picture that business either needs to change to help deliver a low carbon economy or be changed and shaped by climate change.

Using scenarios as a framework for planning

We explore the potential impacts of climate change on consumer business, highlighting four plausible future scenarios. Each one takes account of society’s potential responses to climate change as well as the direct impacts associated with changing climatic conditions.

Mike Barber, UK Sustainability and Climate Change Lead at Deloitte, frames the challenge for business: “The inevitability of change is now apparent: either we change our behaviour now, by cutting emissions, or we wait to be changed by a less stable, reliable climate.”

What makes the scenarios explored in the report such a useful tool is they provide a framework for businesses to test the resilience of their strategy to different potential futures and enable them to make better climate-related decisions. The most successful businesses have always been those which adapt their operating models to suit the economic climate. Climate change presents many challenges but preparing for an uncertain future will provide the greatest resilience. The four scenarios woven through the report demonstrate the value that scenario planning can bring to operational planning.

Four plausible future scenarios

The four scenarios used in the report are centred around two dimensions: societal response to climate change; and global dynamics, where the operating environment will be characterised by international cooperation or independent action.

The four scenarios are:

  • Fossil-fuelled global growth
  • An unequal world
  • Regional rivalry
  • Steady path to sustainability

We do not advocate that one scenario is more likely than another and it is impossible to cover all possibilities in a single report. The scenarios are merely intended to provide a framework for businesses to consider some of the possible impacts of climate change on their infrastructure, operations, supply chains and markets.

Our role is always to provide world-leading and independent weather and climate science and to enable businesses to apply this information in the best possible ways to support risk assessment and adaptation decision making. Through the report we highlight some of the issues that could be considered in this context by consumer businesses.

To learn more about our work with industry customers to understand and manage current and future risks associated with weather and climate change, get in touch. To read the full report, visit the Deloitte website.

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