The truth about the environment and your business.

As we collectively focus on everything except climate change we should expect changes to climate and weather patterns, which can impact economic activity and business.

To really understand what is happening with the environment, ignore the politicians and look to the insurance industry. Insurers have real money on the line and can’t afford to bury their heads in political agendas.

In Swiss Re’s annual report on natural and man-made disasters they showed the highest incidence of total disasters ever, and while man-made disasters have come down from their peak, natural disasters are on the rise:

There are many reasons for this from climate change to concentrated living in cities and growing populations. As we add people to the planet all the environmental systems are coming under pressure.

According to the Environmental Justice Foundation In the last six years, 2% of the world's population have been displaced by climate- and weather- related disasters, totaling a staggering 119.4 million people – a number slightly larger than the entire population of Mexico.

2013 was a record year for people displaced by storms, with 14.2 million people forced from their homes.

Certainly, climate change is an issue but so are pollution, availability of fresh, clean water, availability of arable land (and its productivity) and depletion of natural resources.

The World Bank forecasts that water stress could cause extreme societal disputes in regions such as the Middle East and the Sahel, where the economic impact of water scarcity could put at risk 6% of GDP by 2050. The Bank also forecasts that water availability in cities could decline by as much as two thirds by 2050, because of climate change, competition from energy generation and agriculture

Non-renewable resources are also coming under pressure, this infographic from iibstudio shows the estimated remaining world supplies of non-renewable resources, and it does not paint an encouraging picture.

The changing environmental situation is a daunting threat but also an unprecedented opportunity.

The only resource that is replenished continuously is energy. Humans use about 17 terrawatts of energy daily (from all sources), the sun delivers 120,000 terrawatts daily - 7000 times what we need. There is an opportunity to use renewable resource to solve many of these environmental challenges. It would allow us to we can clean water, recycle materials and create new forms of agriculture.

And by changing the way we source energy – moving to renewable sources and away from fossil fuels, we can change the drivers that are leading to these environmental challenges in the first place.

For those of us more engaged in strategic planning than environmental planning, we need to consider how these changes and trends can impact our markets:

  • How can we build resiliency, the preparation of built and natural environments, to mitigate impacts of severe weather events?

  • How will mass migrations impact the political environment and shift demographics?

  • How will increasing prevalence of natural disasters do to cost structures and opportunities?

  • What does this imply for locating production facilitates and risk mitigation?

From a business perspective, the environmental changes and managing these changes can be a significant positive. While environmental stresses have the potential to negatively impact society, politics and business they will also demand solutions. This will provide a wide range of opportunities for technology development, innovation and new business models.

Just ask the insurance industry, as they are busy developing new products and new structures to deal with the challenges we will all soon be facing.

How will environmental change impact you and your market? What opportunities do you see?

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