The Three Epochs - Overcoming Business Reluctance towards Climate Action
Climate crisis is changing the way we live and the way we work. The effects of climate change are being felt by citizens and businesses all over the world. Bobby, a restaurant owner in Cape Coral, Florida gets an insurance renewal premium quote for $13,000/ year compared to $3,000/year for year before. Such an increase in cost for a small and medium enterprise jeopardizes the business continuity of the restaurant.
Bobby’s story is not in isolation. Climate change triggered disasters have ravaged large parts of Florida coast for years. The number of insurance providers in State of Florida has shrunk by 90% due to their inability to preemptively and accurately estimate premium based on granularized risk exposure data record. Eventually, high premium forces Bobby to discontinue his insurance for physical assets.
The risk from naturally triggered disasters is categorized into physical and liability risks. 2023 was the hottest year on record. One other hot record in 2023, damages from global natural disasters totaled USD 380 Billion in economic losses – with only one-third of these losses covered by insurance.
The increasing frequency and intensity of climate events is not just an Environmental disaster, but also a spiraling Economic disaster. Many businesses are exposed to liability risks from failure to measure risk at granular level. More so, the inability to prepare for climate events prior to the event is a chance lost towards survival. With an existential threat to physical assets worldwide, most businesses remain reactive and shy from investing in granular climate risk data record and data-based adaptation action. Why is this? How do we comprehend the inaction from businesses? How can we explore the challenges and opportunities for proactive Climate action. Nudge businesses globally to Prepare and NOT Postpone.
Tom Chi’s Three Epochs Framework – Scarcity, Abundance and Planetary Harmony provides a useful lens for understanding this reluctance
Epoch 1 – Scarcity – In this stage businesses only focus on solving for immediate operational concerns and near-term profits. For example, a seafood processing unit close to the coast focuses on maximizing production, while ignoring the need for flood-proofing the facility.
Epoch 2 – Abundance – When business is growing, creating a little surplus, the focus shifts to creating value and impact. Large MNC face equal pressure from investors and consumers to address its environmental impact while assessing climate risk of their operations.
Epoch 3 – Planetary Harmony – At this stage, businesses take a long–term and regenerative approach towards business operations. It views climate risk mitigation as integral to its strategy, collaborating with other companies to create sustainable solutions.
Most businesses today struggle to get past Epoch 1 – Scarcity. This is primarily driven by perceived upfront cost of action, with unclear Return on Investment (RoI) and rigid internal systems. Additionally, businesses lack a clear understanding of the specific climate risks they face across their asset portfolio, comprising of land and building, plant and equipment, supply chain infrastructure and point of sale hub and centers. This lack of awareness hinders their ability to step out of the near-term business performance towards long-term business sustenance.
At Resilience AI, we understand most of the challenges that businesses, large and small and medium enterprises, spanning across organized and unorganized sector, face in their #ClimateAction journey. Our flagship offering – Reslience360, is a Climate Enterprise suite that enables businesses agnostic of its size, strength and sector, assess their hyper-local risk across their operations, provide a comparison of readiness across different global standards and use automated climate action to accelerate the path to resilience.
We reduce the friction of Climate Risk adaptation using a lifecycle approach
- Demonstrate the business use case and the benefits of investing in climate risk mitigation efforts towards increase in revenue and short-term and long-term savings in expenditure
- Build insights climate risks relevant to the business and potential impacts on their operations
- Provide easy to access and affordable solution via our web based portal
- Replicate the benefit and impact across businesses, policymakers and academia
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