The Repercussions of the Climate Crisis on the Business World

Climate change is the observed gradual change in large-scale weather patterns and global warming directly caused by human emission of greenhouse gases–gases that trap heat in the atmosphere. The Intergovernmental Panel on Climate Change (IPCC) is a body for the United Nations constructed to assess the science of climate change. They release reports every couple of years to disclose the results of thousands of studies related to the changing climate as a direct result of human activity, such as gas emissions and other forms of air pollution. The sixth and latest one is the grimmest thus far, painting a dark future for the planet and humanity, and is a sharp curveball for businesses and industries (Meyer, 2021.). In a nutshell, the report points to a climate crisis happening right now– not as far away as we might have imagined. The planet is likely hotter at this time than it has ever been since the beginning of the last Ice Age, some 125,000 years ago. The world has warmed about 1.1 degrees Celsius since the Industrial Revolution, and at current rates of pollution-backed climate change, is set to reach an increase of 3 degrees by the end of the century. The effects of these changes are visible throughout various parts of the world as they battle against floods, wildfires and heatwaves. The U.S. alone underwent 22 separate severe weather-related disasters that summed up to a shocking $95 billion in damages in 2020. The news has many pointing their fingers at major oil companies, such as ExxonMobil (NYSE:XOM). Oil and gas companies as a whole are responsible for about 9% of all human-caused greenhouse gas emissions. The fuels that oil produces go on to account for 33% of global emissions (Beck et al, 2020). It takes an immense amount of global effort to reverse or at least stop the march of climate change and will take humanity reducing its greenhouse gas emissions to zero (Holden, 2020). This is no easy feat and requires the toppling of oil, coal and gas as the central energy sources powering the worldwide economy, so businesses are scratching their heads on how to make this change while remaining profitable. 

With added mandated transparency for companies’ emissions data, most industries and businesses no longer see dodginess and turning a blind eye as an option for surviving the climate crisis. Instead, many have their eyes on green energy and sustainability checkpoints. Here are some of the big moves observed by industries:

• Auto Industry: Gas-fueled cars comprise an estimated 75% of carbon monoxide emissions in the United States, thus serving as a leading cause of harmful emissions and a significant contributor to climate change (Brinson, 2012). However the recent efforts of big automobile companies to become more environmentally sustainable are quite impressive and show a desire for positive change in the industry. Leading car manufacturers Audi, Honda and GM, among others, all have sustainability goals of going completely electric before 2040, meaning they will cut gas-vehicle production entirely. Based on an International Council on Clean Transportation report in July of this year, “cars registered today, battery-electric vehicles have by far the lowest lifecycle greenhouse gas emissions.” (EPA). In other words, the net emissions are far less than that of gas-fueled cars even when considering the heavy production of electric cars and their batteries, the net emissions are far less than that of gas-fueled cars. Many companies, including those mentioned, are aiming to become carbon-neutral, a net-zero release of carbon dioxide to the atmosphere, by 2050 (EPA).
• Green Bonds: Another rising business move following the climate crisis is the rise of Green bonds. Green bonds are a designated bond that is specifically designed to raise funds for the climate or environmental-related projects and a more sustainable economy. These bonds are soaring in popularity as the world strived to build the economy back up in a more sustainable way in the recovery from COVID-19. The issuance of green sustainability-linked bonds doubled in the first half of 2021 compared to the same period a year earlier, totalling $248.1 billion in issued bonds (Willige, 2021).
• Oil Companies: Large oil companies such as BP PLC and Royal Dutch Shell PLC are spending millions on reaching long-pursued goals of using hydrogen energy to reduce carbon emissions (McFarlane, 2021). While the striving for sustainability is already a strong motivator for companies, oil companies will likely be forced to go green at some point to stay competitive. Over 50% of oil and gas companies pay attention to climate change when making business decisions or in the process of planning to reduce emissions. 

• Tech Companies: Many tech giants have already transitioned to using 100% renewable electricity, be it solar, wind or other green energies, and many more are well on their way. Among those that are already waving their green thumbs in the air are Apple (NASDAQ: AAPL), Facebook (NASDAQ: FB), Google (NASDAQ: GOOGL) and Microsoft (NASDAQ: MSFT). Several financial industry giants aim to be powered by 100% renewable electricity too (Re100 Members.).
• Overall Outlook and Next Steps: As described above, many companies have been setting foot into a more environmentally conscious environment, whether it be through the implementation of electric or hybrid cars from auto-companies or the transition to renewable energy sources by technology giants. The movement of going green in various business sectors is ongoing and will hopefully continue seeing large improvement in the years to come, especially due to immense public and institutional pressure.

Climate change is scary and should be taken seriously; with changes already being made in the last decade, it seems like humanity has the means to alter the economy into a more sustainable state. Regardless of choosing to reduce emissions on transportation or pushing for greener energy to take over oil and gas, we can have an impact to stop climate change from completely ruining our future. Individuals may feel useless in the matter as they cannot single-handedly make every business go green, but it’s wrong to say there’s no way to help. It’s in consumers’ hands to alter the demand for non-renewables and emission-heavy products. Holding higher expectations for a company’s sustainability, we can help sustainable companies grow and a greener economy to take shape.