Climate Change: The Big Problem
It’s no secret that climate change is potentially the biggest problem that we face in the world today. Aside from the obvious and damning ecological impacts, climate change brings with it social, civil, and especially economic problems. Each and every business is part of an open system, where firms affect the environment that they operate in, while the environment also affects firms. It is clear then, that the rapidly changing environment poses a significant challenge for firms in any industry. They must adapt to changing resources, geo-political circumstances, and public sentiment. The only way that firms can survive is to assess the individual threats they face, and contemplate the best way to move forward in light of these circumstances. The following, are just a few problems that firms could deal with because of climate change, and a few companies doing their best to shape the world of tomorrow under these current circumstances.
1. Global Water Shortages
While the climate changes, the global population continues to grow. So much so, that the United Nations report that the global population is projected to reach 9.8 billion in 2050. As more water is used for agriculture, desertification continues, and huge amounts of migrants move across the globe, an incredible strain is put on an increasingly small fresh water supply. On their website, the World Wildlife Fund (WWF) explains that “only 3% of the world’s water is freshwater, and two-thirds of that is tucked away in frozen glaciers or otherwise unavailable for our use.”, continuing on to say that ”At the current consumption rate, this situation will only get worse. By 2025, two-thirds of the world’s population may face water shortages.” We have in fact already seen the effects of water shortages in United States, such is the case with California, and abroad, like in South Africa.This is a big problem for companies like Coca-Cola, who need fresh water to produce nearly all of its products. Evidently, they have recognized the situation that they are in, and have taken steps to protect future business by conserving water. In researching Coca-Cola’s response to water shortage, Nikhil Dewan writes, “over the years, Coke has been making improvements in their manufacturing processes and also significant investments in equipment technology to reduce the volume of water required for producing their beverages. While in 2004, each litre of Coke required ~2.7L of water, this has dropped to ~2L in 2015.” They have also invested heavily in projects to clean wastewater created in their production process, and return it back to communities.
2. The Strain of Agriculture
As previously mentioned, the agriculture needed to feed the growing population requires a lot of water. The United States Department of Agriculture (USDA) reports that “Agriculture is a major user of ground and surface water in the United States, accounting for approximately 80 percent of the Nation's consumptive water use and over 90 percent in many Western States.” But the problem doesn’t stop there. Increasingly, wildlands are cleared to make way for farms and climate related issue continue to mount as a result. Stamford News reported in 2010 that “A new study led by a Stanford researcher shows that more than 80 percent of the new farmland created in the tropics between 1980 and 2000 came from felling forests, which sends carbon into the atmosphere and drives [climate change].” A big part of land cleared is to raise livestock for products like beef and poultry, which the U.S. consumes at breakneck speeds. As a result, many exciting and promising startups like Impossible Foods and Memphis Meats have taken advantage of this opportunity and have promised to deliver cleaner, healthier, and more responsible products by creating lab-grown meat or plant-based substitutes. On their website, Memphis Meats explains that it is their mission to “ [make] meat that is better for animals and that at scale uses significantly less land, water, energy and food inputs. Our process will produce less waste and dramatically fewer greenhouse gas emissions. We believe that the planet will be the ultimate beneficiary of our product.”. Companies in this space are a wonderful testament to the fact that firms must create new and unique solutions to climate related issues, and that business can be a force for good.
3. Rising Sea Levels
The polar ice caps continue to warm, and as a result are dumping massive amounts of water into the world's oceans, causing sea levels to rise. Scientific American claims that as a result, “ Seas are now rising an average of 3.2 millimeters per year globally, and are predicted to climb a total of 0.2 to 2.0 meters by 2100.” This poses an existential threat to island nations, and sea-level cities like New York and Miami. This threat is often actualized by storms like Hurricane Katrina and Hurricane Sandy here in the United States. As a result, an industry has been born to help cities deal with rising sea levels. In an article for The Tropic, Mario Ariza writes, “... AECOM, an engineering behemoth with $17.4 billion in revenue and 87,000 employees [has] won [a] $91 million dollar contract to fix Miami-Dade County’s rotting sewage systems. AECOM is also working with the City of Miami Beach on its stormwater drainage projects and has also helped the City of Key Biscayne on its resiliency planning.”
Global climate change is here, and it is affecting us now. Firms all over the world must reevaluate their goals and strategies to adapt to the changing environment. We can expect many firms to close their doors as they deal with the problems mentioned above, though there is certainly opportunity to create business models that will succeed in these changing times and as a result help create a healthier and more efficient world.
Dewan, Nikhil. “Is Coca Cola Staying Ahead of Climate Change?” Technology and Operations Management, 16 Nov. 2016, rctom.hbs.org/submission/is-coca-cola-staying-ahead-of-climate-change/.
“Water Scarcity.” WWF, World Wildlife Fund, www.worldwildlife.org/threats/water-scarcity.
“World Population Projected to Reach 9.8 Billion in 2050, and 11.2 Billion in 2100 | UN DESA Department of Economic and Social Affairs.” United Nations, United Nations, www.un.org/development/desa/en/news/population/world-population-prospects-2017.html.
“Irrigation & Water Use.” USDA ERS - Sharing the Economic Burden: Who Pays for WIC's Infant Formula, www.ers.usda.gov/topics/farm-practices-management/irrigation-water-use/.
Bergeron, Louis. “Most New Farmland Comes from Cutting Tropical Forest, Says Stanford Researcher.” Stanford University, 2 Sept. 2010, news.stanford.edu/news/2010/september/farmland-cutting-forests-090210.html
“Home.” Memphis Meats, www.memphismeats.com/.
Ariza, Mario. “These Are the Companies Who Will Get Rich Helping Miami Adapt to Rising Seas.” The New Tropic, 9 July 2017, thenewtropic.com/these-companies-will-profit-from-helping-miami-adapt-to-rising-seas/.