Here’s a skill we’re going to need more of in the future: Climate SWOT.
What’s SWOT? It’s a tool for competitive analysis. It’s a business analysis where you consider:
Strengths / Weaknesses / Opportunities / Threats – Read more on Investopedia.
What’s Climate SWOT? Well, you determine the same issues in regards to your business’s exposure to climate strengths, weaknesses, opportunities, and threats, or those brought about by climate change. The Task Force on Climate-Related Financial Disclosures has developed a report on recommendations for companies to consider, mainly concerned with risks and opportunities of climate change to business. Why bother? According to the task force, benefits include:
‒ easier or better access to capital by increasing investors’ and lenders’ confidence that the company’s climate-related risks are appropriately assessed and managed
‒ more effectively meeting existing disclosure requirements to report material information in financial filings
‒ increased awareness and understanding of climate-related risks and opportunities within the company resulting in better risk management and more informed strategic planning
‒ proactively addressing investors’ demand for climate-related information in a framework that investors are increasingly asking for, which could ultimately reduce the number of climate-related information requests received
How does Climate SWOT benefit economy, environment, humanity? Here are some ways:
- Economy: (well, see above)
- Environment: reduced environmental impact from business activity, increasing investment in environmentally responsible businesses
- Humanity: better investment returns (including financial and environmental benefits), increased job security due to risk preparedness of businesses
In the future, some companies thought to have climate risk will not be able to proceed as going concerns without such analysis, and investors will require it. According to the CERES “In Sight of the Clean Trillion: Update on an expanding landscape of investor opportunities, May 2018:
• Institutional investors’ fiduciary obligations demand consideration of climate-related risks and climate solution opportunities across investment portfolios. Responsible investment, ESG and climate related governance are increasingly important areas of assessment for institutional investors. In order to meet this challenge and tap related opportunities, investors should reassess their strategic asset allocation, acquire the right skills snd capacity to evaluate low-carbon investment opportunities; and engage with relevant service providers, including investment consultants and credit ratings agencies.
• Institutional investors should require their consultants to improve and accelerate the integration of climate factors — both risks and opportunities — into their strategic asset allocation and investment strategy reviews
and recommendations.
If this is your thing, then get busy!
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