Two senior McKinsey employees have penned a commentary published on Fortune addressing CEOs from around the world and warning them about the risk of climate change to their business. Dickon Pinner and Kevin Sneader’s message to companies is loud and clear – businesses can no longer treat climate change as a far-off threat, and must take action and prioritise it as a risk factor if they are to survive.
The opinion-editorial is especially salient given the seniority of Dickson Pinner, currently the firm’s Sustainability Practice global leader based out of San Francisco and Kevin Sneader, a Hong Kong-based Global Managing Partner, and given McKinsey & Company’s global reputation as a leader of corporate strategy consulting services used by MNCs the world over.
Indeed, our climate crisis is happening right now, as the IPCC has repeatedly warned in their latest report. From Arctic wildfires to European heatwaves and increasingly destructive tropical cyclones like Hurricane Dorian, corporations have to brace themselves now. And with the onset of globalisation, the world economy is more intimately connected than ever – which means that economic growth will be affected even if the changing climate seems to be happening in another region of the world.
In order to cope with the threat of a climate emergency, Pinner and Sneader advise all companies – whether they are involved in directly affected sectors like the energy industry or not – to implement four main measures, which we are re-sharing below.
1. Plan For Physical Climate Change Risks Immediately
Firstly, they must assess and plan for potential risks due to physical climate change events such as rising temperatures, flooding, storm surges and drought. These events are bound to have an impact on global supply chains, whether it be the manufacturing of hard disks or agricultural yields.
2. Develop Adaptation Measures
Secondly, companies must develop adaptation measures in order to protect their own assets. This will require incorporating climate risk analysis into business strategy and budgeting for each project.
3. Decarbonise Company Operations
Thirdly, businesses must decarbonise their operations in order to remain relevant to consumers who are now looking for planet-friendly and purpose-driven businesses. For many executives, this will mean launching an “enterprise-wide transformation” that will have to tackle every emissions-generating sector, including plastics, oil, gas, power, agriculture, transport and product consumption.
4. Integrate Climate Risk Assessment Into All Business Processes
Finally, Pinner and Sneader called on companies to integrate climate risk assessment and management into every single process within their business, from strategic planning to supply chain and product development.
Pinner and Sneader’s advice is part of a new corporate trend towards long-termism, a strategy approach that considers environmental concerns and social impact, and one that measures whether growth is sustainable in the long-term.
Lead image courtesy of Pexels & Green Queen.