Running a successful business entails managing a multitude of risks every day from new competitors to new technology. Climate change itself brings a plethora of business challenges. How can we frame the climate risk? What threats are top of mind for businesses?


In this Episode

  • Introduction to Dr. Kevin Trenberth, a distinguished scholar at the National Center of Atmospheric Research (NCAR) in Boulder and an Honorary Academic in the Department of Physics, Auckland University in Auckland, New Zealand
  • An in-depth discussion on the impact of climate change on business
  • What is Dr. Trenberth worried about most?
  • How far does resilience/retrofitting really go?

Episode Links


Welcome back. Meteorologist Paul Douglas here focused on business risk in a rapidly-changing climate. Climatrends is my 7th company. You’d think it would get easier to launch a business over time. It does not. It’s not like going to a casino and hitting the slot machines, but I’ve found, the hard way, that having a vision, surrounding yourself with great people, isn’t enough. You need to be perpetually paranoid, always have a Plan B, C, and D. One of my companies actually reached Plan K before we finally turned things around and had a viable business model. Because the future never turns out exactly the way you think it will. No matter how good you think you are, there are always new competitors, new technology breakthroughs, and new regulatory hurdles. Running a business is like trying to hit a moving target.
Business risk is a constant, just like in the real world. Nobody likes to think about it, but tomorrow we could be diagnosed with a serious illness, or get hit by a bus, or struck by lightning. Lovely, thanks Paul. When it comes to climate change, smart companies, increasingly, are going on the offensive, connecting the dots, tracking changes in weather patterns, calculating impacts on facilities, supply chains, staff, access to credit and insurance, where they reinvest – how disruptions might impact their bottom lines.

You’ve probably heard about SWOT Analyses. Strengths, weaknesses, opportunities, and threats. Climate volatility and weather disruption represent the mother of all threats, and forward-looking companies are paying close attention to what climate scientists and climate models are predicting for the future. According to a comprehensive report compiled by Risky Business, if we continue our current path, by 2050 between $66 billion and $106 billion worth of existing coastal property will likely be below sea level nationwide. There is a 1-in-20 chance, about the same chance as an American developing colon cancer, that by the end of this century, more than $701 billion worth of existing coastal property will be below mean sea levels. By the middle of the century, the average American will likely see 27 to 50 days over 95°F each year—two to more than three times the average annual number of 95°F days we’ve seen over the past 30 years. As extreme heat spreads across the middle of the country by the end of the century, some states in the Southeast, lower Great Plains, and Midwest risk up to a 50% to 70% loss in average annual crop yields, at the same time warmer temperatures and carbon fertilization may improve agricultural productivity and crop yields in the upper Great Plains and other northern tier states.

Will I be able to insure my company’s operations? Will more inland flooding make it harder to transport my products across the country? Rising seas and stronger storms could make it difficult to operate coastal facilities by mid-century, should I be building new facilities inland – which areas are relatively safe? With longer, larger, hotter fires in the west spewing more smoke should I invest in filtration systems, so my employees don’t breathe polluted air? Will I be paying more for energy in the years ahead? What can I do to take advantage of clean energy and make my operations more climate-resilient, more drought-tolerant, flood-resistant, and heat-proof during the summer months? What smart steps should I be taking today, to lower the chance of disappointment tomorrow? Ultimately where is the return on my investment?

Henry M. Paulson, former U.S. Secretary of the Treasury, said something that got my attention. He said: “I know a lot about financial risks—in fact, I spent nearly my whole career managing risks and dealing with financial crisis. Today I see another type of crisis looming: A climate crisis. And while not financial in nature, it threatens our economy just the same.” The writing is on the wall. Smart companies are paying attention. Former New York City mayor Michael Bloomberg summed it up best, “If you can’t measure it, you can’t manage it.” Step one is analyzing the data and the trends, trying to understand the full scope of climate-related business risk. For that, we turn to the experts.

Climatrend’s Mission

Climatrends conducts climate scenario analyses, analyzing climate risks and opportunities for organizations and communities around the world. Scenario analysis is an essential tool for understanding the implications of climate change on business. Conducting a climate scenario analysis is a critical step to TCFD reporting. With deep expertise in climate, weather, and corporate sustainability, we help build a comprehensive climate scenario analysis uniquely tailored to your business. Learn more about climate scenario analysis. Learn more about our hosts. Music courtesy of Compozly.