What are climate-related risks?
Deforestation & biodiversity threats: With deforestation of the Amazon hitting its highest level since 2008 between August 2019 - July 2020, deforestation remains an incredibly prevalent problem. Organisations need to be aware of the involvement that they, and those within their supply chains, have in deforesting activities, including their connection to palm. Palm oil continues to be one of the major drivers of deforestation, with hundreds of acres of natural, biologically diverse forests destroyed for palm plantations every year.
Rising carbon emissions & climate impact: To reach the 2050 net-zero target, human-caused CO2 emissions need to fall by 45% from 2010 levels. As a result, companies worldwide need to be monitoring both their direct and indirect emission levels, including those produced by their partners, suppliers, distributors, investments, transportation, and other aspects of their supply chain to have a clear idea of the impact of their whole operation and business.
Water scarcity & productivity: Water is one of the key areas of focus for the UN’s SDGs. Water supply, sanitation, and hygiene are critical when it comes to assessing a business’ climate risk, which extends from working conditions, right through to water that is wasted in the production of commodities. Agricultural production is the most water intensive activity, consuming 70% of the world’s fresh water, so without climate risk consideration of this nature, the world’s water supply faces the risk of overexploitation very soon.
Social equality & exploitation: It is not just an impact on the environment that climate risk can cause, social inequality can also result from it. In 2016, 24.9 million people were victims of labour exploitation, with 1 in 4 of those being children. Businesses throughout the commodities and trade supply chains, from banks and insurers, to ship operators and farmers, should all be aware of the social conditions of those that they do business with. A bank financing a soya shipment, is just as liable and responsible for the welfare of those harvesting the soya, as the farmer himself. This also extends to forced labour, modern slavery, income inequality, and employee health and safety.