How Climate Change Impacts Businesses and What Can Be Done
Climate change is a risk factor for all industries, each facing their own risks ranging from physical to liability risks. For instance, businesses could face structural damage resulting from climate change and could be held liable for employees’ medical expenses as a result of the physical risks.
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In this blog post by Pacific Prime Dubai, we will be discussing the effects of climate change on businesses and what can be done to address these issues.
The Impact of Climate Change on Businesses
Climate change can impact businesses both directly and indirectly. Notable examples of impacted business sectors include the transportation and logistics, construction, agriculture, fishing, and forestry sectors.
For companies thinking about the impact of climate change on their business, they should consider three primary risks–physical risks, transitional risks, and liability risks. Below are the three key areas companies should carefully consider when faced with the impact of climate change on their businesses.
Physical Risks
The most obvious risks businesses face as a result of climate change are the physical risks, which are immediate changes that come from the environment. These include flooding, storms, drought, wildfires, and other natural hazards that can harm people and cause structural damage.
Aside from thunderstorms causing the Singapore Airlines turbulence and injuring dozens of passengers, natural disasters such as extreme heat and cold or flooding and drought could severely impact crops and livestock.
Natural disasters can also impact the construction sector by destroying half-finished projects and damaging equipment in construction sites as well as possibly injuring or killing workers. Excess water from flooding, for example, can destabilize the ground and cause the excavation to collapse.
Transitional Risks
Transitional risks come from potentially high business costs from new policies and regulations designed to address climate change. They can also arise from technological and consumer trend changes, which may lead to reputational risks as society changes its views on ethical business practices.
As businesses forgo practices that contribute to climate change, they risk being left with stranded, value-deteriorated assets such as a piece of land, property, or equipment.
For example, the automotive industry’s shift from fossil-based fuels used for internal combustion engines in favor of net-zero carbon emission through renewable energy sources could leave the older fossil-based fuels devalued due to their inability to adapt to these changes.
Liability Risks
Liability risks refer to a company being held liable for losses suffered as a result of physical or transitional risks stemming from climate change.
For instance, in the Singapore Airlines tragedy, the head of Singapore Airlines, Mr. Goh Choon Phong, stated that the airline would fully cooperate with “relevant authorities on the investigations” and “render all possible assistance” to affected passengers and crew members.
For further reading on the Singapore Airlines tragedy as well as air turbulence safety and the importance of travel insurance, check out this article below from Pacific Prime Singapore.
Singapore Airlines Tragedy: The Danger of Air Turbulence
How Businesses Can Respond to Climate Change Risks
While some companies may be more worried about the loss of assets through structural damage or potential liability concerns, companies should thoroughly consider all three primary climate change risks discussed above.
Risks from climate change should be treated by businesses as a priority and part of the business strategy as the effects of climate change can fluctuate. Thus, risk analysis should be carried out regularly to avoid financial losses that could result from the materialization of climate change risks.
By thoroughly considering the varying degrees of climate change risks, businesses could potentially invest in new technologies, move into new areas of the particular industry they derive from, or adapt their business models.
Ensure Your Employees Feel Valued: The Importance of Group Health Insurance
Now that you know the different risks climate change can pose on your business and how businesses can respond, let’s move onto one factor that should never be overlooked when it comes to liability in the event employees sustain injuries from such risks, group health insurance.
Group health insurance is a health insurance plan covering a group of employees in a company and is more cost-effective in comparison to individual health insurance as risks assumed by the insurer are spread across the entire group.
Group health insurance also covers pre-existing conditions, which most individual health insurance policies tend to shy away from.
For further reading on what makes group health insurance stand out from its individual health insurance counterpart, as well as benefits and factors that could determine the cost, please check out this article below.
All You Need to Know about Group Health Insurance
Secure Group Health Insurance with Pacific Prime Dubai
As mentioned earlier, Singapore Airlines’ crew members were also affected by the sudden air turbulence like the passengers, to which the airlines stated they would provide necessary assistance to the best of their ability. In case of employees sustaining injuries, businesses will be held liable.
From this, we can all conclude that employees are seeking benefits beyond the paycheck. They want to be valued by their employers. Fortunately, both areas are where Pacific Prime Dubai can help.
As a leading international health insurance broker and employee benefits specialist, Pacific Prime Dubai has not only matched both expats and local citizens to their health insurance plan of choice, but also helped employers with excellent employee benefits solutions.
Whether you’re an expat or local citizen seeking health insurance in Dubai or a company looking for employee benefits solutions to ensure your employees feel valued, our team of specialists will be more than happy to help you out.
And if you have any questions, please get in touch with us.
He graduated with a Bachelor’s Degree in Communication Arts, Media & Communication major (concentration: Creative Content) from Mahidol University International College (MUIC). During the compulsory major elective period in the summer of 2021 and voluntarily during the summer of 2022, he also interned as a video and photo editor at Mbrella Films.
He has experience working as an English Content Writer at a real estate buying/renting/selling platform in Thonglor. There, he crafted company blog posts on a multitude of topics. Topics include market trends, legal issues and disputes in property businesses, financial guides, expat guides, home insurance, home decoration and maintenance, and weekly real estate news quick-recaps. Occasionally, as part of the blog-writing process, he would also translate existing Thai blogs to English.
In his free time, Guy enjoys doing scriptwriting and storytelling for comic strips, watching movies, and listening to music (particularly film scores).
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