Climate Change: How Environmental Accounting Can Help Weather the Storm
October 10th, 2018
It’s time to start making a change to help deal with climate change.
The extreme weather around the world is already becoming a big problem, and it’s only going to get worse if people—and businesses—don’t do something about it, according to a recent report from the UN Intergovernmental Panel on Climate Change, which was prepared by 91 authors and editors from 40 countries.
In 2017, out of 17 tropical storms that formed near the United States, six became hurricanes of at least a Category 3 or higher, meaning they produced wind speeds of at least 111 mph with 9 to 12 feet of storm surge. That included hurricanes Maria—which the Insurance Information Institute predicted will be the second-costliest hurricane to ever hit the United States—Irma and Harvey that produced well-documented damage and destruction in Puerto Rico and Texas along with other states and islands. At this writing, Hurricane Michael was headed for the Florida Panhandle as a Category 4 storm with winds up to 150 mph at a time when the state’s neighbors to the north are still trying to recover from the devastation caused by Hurricane Florence that made landfall in September.
On top of that, from Jan. 1 to Oct. 5, 2018, there have been almost 48,000 wildfires in the United States that have burned 7.7 million acres of land, which is down slightly from the nearly 50,000 wildfires that burned 8.4 million acres of land during the same period last year. As the Center for Climate and Energy Solutions explains, the median burn area could increase “as much as 600 percent in some types of forests” with a 1°C temperature increase.
And these are just the climate-related events that have affected the United States and its neighbors.
The recent tsunami in Indonesia, for instance, has caused thousands of deaths along with a major financial impact to the area that will likely take months to determine. The average annual economic losses from natural disasters, including tsunamis and earthquakes, is $250 billion to $300 billion, according to the UN Office of Disaster Risk Reduction.
Not a Favorable Forecast
As the National Academy of Sciences researchers wrote in their 2016 report on extreme weather and climate change, “Humans have contributed to warming of the climate system globally (predominantly due to anthropogenic greenhouse gas [GHG] emissions). This finding is supported by multiple lines of evidence that originate from data from observing systems across the globe on land and sea and in the atmosphere and from structurally different analyses of multiple components of the climate system. A substantial body of evidence also shows that climate change has led to discernible and quantifiable changes in the intensity and/or frequency of some types of extremes.”
The news is even more sobering when you read the UN panel’s findings that “human-induced warming has already reached about 1°C above pre-industrial levels at the time of the writing of this Special Report. … If the current warming rate continues, the world would reach human-induced global warming of 1.5°C around 2040.”
It could even happen as early as 2030, according to the report, and the rise in temperature will likely affect the food and water supply as well.
Added Panmao Zhai, co-chair of the IPCC Working Group I, in a news release: “One of the key messages that comes out very strongly from this report is that we are already seeing the consequences of 1°C of global warming through more extreme weather, rising sea levels and diminishing Arctic sea ice, among other changes.”
There is hope though to stem the tide of climate change, but it will take an “unprecedented” commitment from countries to make changes, according to the UN report. In a ruling that could move the needle in that direction, The Guardian recently reported that a Dutch appellate judge ruled that greenhouse gas emissions must be reduced by 25 percent by 2020. The article also states that there are similar lawsuits in the court system in other countries such as New Zealand and Uganda.
In a news release, Chris Weber, the World Wildlife Fund’s lead global climate change scientist, said of the UN climate change report: “We must have laser-focus on delivering on 1.5 degrees, and this report provides a pathway to get there. We need to halve greenhouse gas emissions globally by 2030 and cut coal use by two-thirds by the same date.”
According to the report, emissions need to decline quickly from all the main industries in the world, including transportation, energy and agriculture among others. The report also recommends phasing out coal and focusing on renewable energies, concentrating on electric vehicles and reducing the carbon footprint from food.
Exxon Mobil recently donated $1 million to a group lobbying for a tax on carbon dioxide emissions. The goal of Americans for Carbon Dividends is for the U.S. government to implement a tax designed to help lower greenhouse gas emissions. As CNBC reports, “A single, national tax policy would provide regulatory certainty to the energy industry, and the Baker-Shultz plan in particular seeks to limit the Environmental Protection Agency’s rule-making authority,” referring to James Baker III and George Shultz, the founders of the lobbying group.
“The impacts of climate change are an increasingly urgent concern,” said Jeff Ladner, Sphera’s vice president of Environmental Performance. “The path to moderating human-induced impacts will likely require myriad approaches from regulation to market-based mechanisms such as cap-and-trade and carbon taxes. Regardless of the approaches applied, companies increasingly need to understand their operational risks and environmental impacts with more accurate, detailed and timely information.”
He continued, “The days of an annual report supported by nothing more than spreadsheets are behind us. Companies need to take a disciplined, accounting-based approach to understanding their Environmental Performance, and integrate that information into an Integrated Risk Management framework that identifies and assesses all of the risks that extreme weather and other climate change-related phenomena may entail.”
Additionally, if the temperature continues to rise as the report predicts, companies could be flooded with potential Operational Risk, Ladner said, including but not limited to flooding in their plants, which can lead to serious risks for employees; lack of water for their operations; and general supply chain disruptions and damage that severe weather can cause.
There’s a misperception out there, Ladner said, that a disciplined, well-supported environmental management strategy is too costly. “The truth is it’s actually the opposite,” he said.
In fact, an Environmental Leader article from a few years ago explained that General Electric Co. saved $300 million by reducing greenhouse gases and water usage.
Evidence shows that saving the planet and saving money aren’t mutually exclusive. The question is: Will the operational climate change in time to meet these greenhouse gas and emission objectives?