How Does Global Warming Affect My Business?

Now more than ever before, consumers are taking their social responsibility seriously. This shift in behaviours and actions directly impacts businesses as people prefer to choose companies making changes for the better.

Initiatives like the Fair Trade scheme, for example, encourage companies to source materials sustainably and equitably. People want to know that the products they are buying are not coming via the exploitation of producers and workers in different countries.

Animal testing is another huge factor, especially in the cosmetics market, and there is a huge demand that companies operate responsibly.

One of the biggest changes though is the consumer demand that companies take action to decrease their impact on global warming.

The purpose of this article is to investigate the impact of global warming. Namely, how it impacts your business, the regulations in place to reduce the potential impact of industries (particularly the energy industry), the opportunities that will arise from the change in consumer behaviour and industry regulations, and what changes can be implemented.

How Are Businesses Contributing To Climate Change?

As we enter an age where social responsibility is expected and demanded by customers and governments, it is vital to understand how businesses are contributing to climate change. By knowing what the biggest causes are, measures can be taken to reduce the risk.

Here are some of the biggest contributors to climate change caused by businesses.

Greenhouse gas emissions

Many industries contribute to greenhouse gas emissions all around the world, with the biggest percentages coming from transportation, power, agriculture, and industry.

Greenhouse gases are caused by numerous actions across all industries, including the burning and use of fossil fuels and cattle used in agriculture.

Deforestation

Deforestation can occur to create more land for farming, logging, urbanisation, and mining. This can have a massive impact on the area, including soil erosion, flooding, and loss of habitat for endangered species.

As well as having an impact on a local level, wide-scale deforestation can also be a contributing factor towards climate change. Plants and trees store excess carbon, which helps them to grow. This carbon is then released when they are cut down or burned.

Agriculture

Around a quarter of greenhouse gas emissions are a result of forestry, land-use change, and agriculture. The greenhouse gases emitted from cattle and dairy cows are on par with emissions from the United States, according to figures from the 2019 IPCC GHG Inventory.

In particular, agriculture accounts for as much as 80% of nitrous oxide emissions and 45% of methane emissions.

Industrial processes

Large factories can produce vast quantities of toxic and greenhouses gases during the manufacturing process, which are then pumped into the earth's atmosphere.

The processes of industrial production include transforming materials chemically or physically. During this process, the release of many greenhouse gases, including PFCs, N2O, CH4, and CO2, occurs.

Combined with the energy used to power industrial plants, these gases can be a significant cause for concern in regards to emissions and climate change.

How Will Climate Change Effect Businesses?

The impact that climate change will have on the planet has long been debated. Extreme and unpredictable weather conditions are now becoming more commonplace. But how will climate change affect businesses directly?

Extreme weather events

Extreme weather events can affect everything from employees being able to travel safely to work, to the safety of the building in high winds, to damage caused by floods.

As well as the impact on the ability to trade, this will also cause an increase in insurance premiums. Despite improvements in flood defences, prolonged downpours can cause flash-flooding.

As well as impacting how employees can travel to work, it is likely to put off customers who may prefer to resort to online shopping.

Water usage restrictions

Water supplies are also under threat from climate change with increased evaporation due to higher temperatures having an impact on water levels in reservoirs and other water storage facilities.

Alternatively, supplies also face the risk that flooding associated with extreme weather conditions or the rise in seawater could contaminate water supplies.

These issues will significantly impact the agriculture and energy sectors due to their high water usage.

Supply chain issues

Even if a business protects itself as well as it can against any potential issues caused by climate change, there is still usually a reliance on other companies in a supply chain.

Supply chains can encompass businesses from all around the world, and if one of those is in a country with poor infrastructure, the impact of extreme weather or flooding can be devastating.

Breakdowns in supply chains can result in delays, shortages, and rising costs for manufacturers, retailers, and consumers.

Increase in price of goods/supplies

In order for a business to protect itself against climate change or meet regulations imposed on different industries, it may have to make changes to the way it operates. This can cause a rise in prices, so they are still able to trade.

Other impacts on the price of goods and supplies can come directly as a result of climate change. In the agricultural sector, farmers and producers will rely on certain temperatures to produce the best crops possible. A change in weather conditions and temperatures can lead to crop failure, shortages, and price increases.

Governmental regulations and taxes

In 2015, the Paris Agreement saw almost two hundred countries come together to tackle climate change. The aim is to limit global warming to 1.5°C and prepare countries' infrastructures to deal with the impact of climate change.

The countries involved are committed to reducing carbon emissions and are initiating regulations on industries that are the most significant contributors.

This will take place over time as they allow industries to invest in measures that will enable them to reduce their emissions.

Climate Change Regulations For Businesses

To address risks associated with climate change, governments around the world are putting regulations and carbon taxes in place that will force businesses to take environmental responsibility for their emissions.

Here are some of the regulations that businesses will have to adhere to:

Climate Change Levy (CCL)

The Climate Change Levy (CCL) is a tax designed to encourage businesses to operate more efficiently and reduce emissions. It applies to several sectors, including agricultural, public service, commercial, and industrial.

EU Emissions Trading System

The EU ETS scheme aims to reduce the overall emissions from large industrial installations. It works by giving a specific allowance to polluters who can then buy or sell allowances depending on their needs.

These cap and trade programs encourage businesses to run more efficiently and work below their allowances so they can sell these on.

Mandatory GHG (greenhouse gas) reporting

As of April 2019, all quoted companies in the UK are required to report their energy use and greenhouse emissions. This can help provide valuable information on what improvements have been made and what can still be done.

Environmental reporting

Environmental reporting, like Mandatory GHG reporting, provides information about the company's ecological performance that shows what improvements have been made and how the business intends to develop in the future.

It can also provide an excellent way for businesses to be held accountable for their actions and strategies.

Business Opportunities In The Face Of Global Warming

Although many companies face an uncertain future and new expenses, there are opportunities available that could benefit many businesses.

Huge growth in the renewable sector

As the energy sector faces enormous changes, it also has the opportunity to make the most of an emerging market. While renewable energy is not new, it has never before had such a platform.

As the business energy market is being pushed towards more environmentally friendly ways to consume energy, the domestic market is also looking for more sustainable options.

Renewable energy has always had a reputation of being more expensive, but as energy providers continue to develop and improve infrastructure, the prices should start to reflect that in time.

The ability to house renewable energy options such as turbines and solar panels on business or domestic properties has also opened up a whole new market for businesses selling, installing, and maintaining them.

Increased efficiency

Finding ways to run businesses more efficiently will not only help to reduce emissions but will also help to lower energy bills.

Increasing energy efficiency and reducing operational costs can sometimes be overlooked due to time constraints. However, with regulations and possible fines now in place, businesses can't afford to ignore this opportunity.

Higher rates of innovation

The opportunity for investment in new ways to produce energy, become more energy-efficient, and reduce a company's carbon footprint, has never been higher.

Opportunities for businesses to create partnerships will benefit all involved and could lead to whole new markets opening up.

How To Reduce Your Carbon Emissions

If you have a business and are looking for ways to reduce carbon emissions, here are some options that you may be able to implement.

Switch to renewable energy

Switching your business energy supply to renewable energy is a significant step to make. Using our business energy comparison tool will help you find green business energy tariffs that will suit your needs.

Reduce frequency of air travel

Exploring options to reduce air travel for business needs is another crucial step you can make in reducing carbon emissions.

Internal flights are often unnecessary when there are excellent rail options available. Train travel can reduce per capita emissions by as much as 50%.

Nowadays it is also possible to carry out any discussions by video call, especially as these services have improved dramatically in recent years. Being able to carry out international meetings using a live stream will dramatically reduce costs and emissions, as well as save a lot of time that would have otherwise been spent in the air.

Add energy-efficient light bulbs and appliances to the office

Completely replacing electrical items with more efficient options can be costly to do all at once. Phasing in a policy that sees energy-efficient replacements used when needed is a realistic long term plan for a business.

Some energy-efficient lightbulbs can use as much as 75% less energy to run and can last 12 times longer. Replacing old bulbs with energy-saving options is a long term money saver that increases efficiency and reduces energy consumption.

Reduce energy usage in data centres

Increasing efficiency in data centres will help to reduce the energy being used. Powerful computers being run constantly need cooling systems to avoid any overheating.

Unfortunately, the cooling systems used don't tend to be efficient. Changes at this point could make huge savings, and the heat generated could also be harnessed and used.

Because a large amount of energy is needed for data centres, it is important to know where that energy is coming from. If it is powered by fossil fuels, switching to a renewable energy source could have a significant, instant impact.

Use timers for your heating

Efficiently heating a business is challenging to get right since you will want your employees to be comfortable. Working out the best times to run your heating for the maximum benefit rather than having it on for the entire day will help you make the most out of your energy, lower business costs, and curb carbon emissions.

Implement a good recycling system

Waste management for businesses can be costly. Implementing a thorough recycling system though will help reduce carbon emissions as recycled goods produce fewer greenhouse gases than new materials.

It will also reduce waste going to landfills and prove to customers, clients, and stakeholders, that you are a business that is taking its responsibilities seriously.

Avoid printing

Many businesses now run paperless offices. As well as improving security by not having sensitive information on documents, it reduces the cost spent on paper and printer ink. It will also save time for employees who won't have to spend time filing documents, thus making the operation much more efficient.

These are the direct benefits your company will see, but they will also have a positive environmental impact. The production of paper leads to deforestation, greenhouse gas emissions, and water wastage. Shockingly, it takes around 10 litres of water to produce one single sheet of A4 paper.

Reducing the use of paper has benefits across the board. And remember that any paper that is used should be recycled.

Limit single-use plastics

Cutting down on single-use plastic in the office is a relatively simple step to take. Businesses with water coolers can either switch to recyclable paper cups or encourage employees to carry water bottles to stay hydrated.

Will Smaller Businesses Feel The Effects Of Climate Change?

A smaller business might feel the impact of climate change hit harder, despite being able to make changes more quickly.

Issues that could impact smaller businesses include:

Rising costs

The initial costs of switching to a green energy supplier and implementing changes to the business can be difficult for smaller companies.

Other businesses in their supply chain may be facing the same issues and pass on the costs. This will result in smaller companies having much higher running costs, and in order to continue, they may have to pass these costs on to customers.

Expenses such as switching bulbs for energy-efficient bulbs, installing a thermostat, and implementing a recycling waste management scheme, can lead to higher efficiency and reduced business costs in the long run. Still, in the short term, you will have to manage the initial setup costs.

Having to increase prices as a small business is challenging as customers and clients can usually shop around for better deals.

These are just some of the obstacles smaller businesses face as they come to terms with the effects of climate change.

Reduced productivity

Extreme weather can impact the ability of employees to attend their work with public transport and infrastructure sometimes being affected.

Dramatic changes in weather can also lead to an increase in some bugs or illnesses. Sickness in staff at smaller companies has a more significant impact on the day-to-day running of the business and can lead to reduced service.

Building upgrades

As unpredictable and extreme weather worsens, and the risk of flooding rises, ensuring work premises are secure and safe is essential for all businesses. If a small company owns its premises, it will have to ensure the building can withstand extreme weather conditions. Alternatively, if a business rents, they may find rental costs increasing as landlords try to cover expenses.

Higher insurance

Insurance premiums that protect against damage caused by the weather are likely to rise. Building and contents insurance for small businesses is a necessary expense and could have a detrimental impact on business costs if insurance companies raise prices too sharply.

Final Thoughts

It is evident that if businesses do not act quickly, climate-related risks could be devastating to companies of all sizes.

The Paris agreement implemented at the 2015 United Nations Climate Summit, ensures that government regulations will start to target businesses that continue to pollute, whilst rewarding companies that address climate change and make the necessary changes.

Reviewing your business energy supplier and using our handy comparison tool can be a great way to get a greener business electricity supplier for less. You will be able to compare the largest business gas and electricity suppliers in the UK, as well as smaller niche services, including green energy providers.

While there may be small-term sacrifices and expenses, the long term benefits include having a more energy-efficient business, playing your part in tackling climate change, and displaying corporate social responsibility that will give customers a more favourable impression of you.

Frequently Asked Questions

How does the Climate Change Levy (CCL) work?

The CCL (Climate Change Levy) is an environmental tax that businesses pay at either a Carbon Price Support Rate (CPS) or the main rate.

Main rate - The main rate would be charged on solid fuel, gas, and electricity by businesses in the commercial, industrial, agricultural or public service sectors. These rates would be listed on a business electricity or gas bill.

CPS rate - Power stations and generating stations would pay the CPS rate. The levy rate that you would pay will vary for each commodity.

Businesses with an energy consumption below the de minimis limit would be exempt from paying the CCL rate, as would non-commercial charities. Domestic users, schools, self-catering accommodation, and caravans are also exempt from having to pay the CCL rate.

Suppose you have a feed-in tariff and generate your energy through solar panels or turbines. In that case, it is unlikely you would generate enough power to be classified as anything other than a small generator, so you would not have to pay.

Businesses that do not sign up for or pay the CCL rate can be fined £250. You would be charged by your business energy supplier, who would then pass this on to HM Revenue & Customs.

Is climate change already affecting the UK?

The UK is already facing the effects of climate change, with 2020 being the first year on record that it was placed in the top 10 for being the warmest, wettest, and sunniest.

Heatwaves in the UK can cause roads to melt and railway line cabling to buckle, whereas the wetter weather has seen an increase in flooding despite improved flood defences.

These can impact a business with everything from flood damage, to stores and stock, to fewer people visiting during weather extremes. Supply chain issues will also hit companies and raise costs as these issues continue to worsen.

Are there any positives for businesses from climate change?

As with any change, there are opportunities to be taken advantage of. New markets will open up in response to a greater demand for renewable energy and environmentally friendly products.

This increased demand will also create more competition and innovations. In turn, this will make it more accessible for businesses to switch to renewable energy and reap the benefits as costs are predicted to drop as it grows in popularity.

Businesses will also be able to capitalise on the warmer, sunnier weather, as well as the damp, wet weather, by supplying customers with products that are in demand.

Even if governments reach their target of just a 1.5°C increase in global temperature, this will still have a considerable impact. This would, in fact, still see a rise of 10% in the water the air would hold.

As long as businesses adapt and explore the greener business energy companies that are available, they should be able to make the necessary changes.

Is renewable energy more expensive?

If you had asked if renewable energy was more expensive 10 years ago, then the simple answer would have been yes. However, as the infrastructure for harnessing renewable energy grows and technology improves, the costs reduce.

With a solid and ever-improving infrastructure in place, renewable energy providers only need the wind and sun, which are free and readily available. This means that the costs should continue to drop in comparison to traditional fossil fuel power plants.

Regulations and taxes are set to impact fossil fuel, and as customer trends are showing more people opting for socially conscious, environmentally friendly energy options, renewable energy providers are set to benefit even further.

As the government continues to promote renewable energy, bills can be reduced through subsidies. This is funded through charges on energy generated by fossil fuels.

A combination of switching to renewable energy, investing in renewable sources such as solar panels or wind turbines, and learning how to manage your energy consumption, will help lead to lower energy bills.

If you are considering moving to a green business energy provider, use our quick and easy comparison tool to see the best rates from the UK's biggest and best providers.

We look at a vast range of business energy suppliers to ensure you can check for the best deal to suit you. As well as working with the UK's biggest business energy providers, we also work with smaller independent companies that can tailor tariffs to their customers' needs.

We also have a great selection of green business energy providers for you to explore, making it easier for you to find a more environmentally friendly way to power your business.

The process is straightforward, and all you would need to do is enter a few details. In under a minute you will be able to see the best rates and tariffs available for you.

Can't we adapt to climate change?

While we are learning to adapt to the minimal climate change we are already experiencing, this should not be seen as an alternative to reducing carbon emissions.

Specific adaptions and risk management techniques have started to take place, such as the way buildings are built and protected, the improvement of flood defences, and changes to land use. However, this will not be enough to combat climate change if it is not stopped at the rate it is proceeding.

If climate change is not addressed, it could lead to rising temperatures, more erratic and extreme weather conditions, and rising sea levels that would threaten low lying land or islands.

Making changes to how a business operates can ensure it adheres to current regulations, improves efficiency, reduces energy bills, and reduces its carbon footprint. Making measures to reduce carbon emissions now is an investment for the future.