Rising prices, supply chain chaos: Covid a taste of climate change disruption
We face a future of rising prices and empty shelves even after the Covid pandemic is over because of the worsening effects of climate change , a researcher says. Rising heat , and other extreme weather such as flooding , will increasingly disrupt the way businesses operate, said David Lont, professor of accounting and finance at the University of Otago. If you start to have extreme events occurring, eventually somebody has to pay for that. And that will be of course the consumer, because that's the last person standing in this conversation, he said. People could sometimes buy cheaper options or delay a purchase, but sometimes they could not, for example if they were building a house. READ MORE: * Cruise ships say they are getting greener, but critics want faster change * Mahuta outlines how $1.3b will be spent on climate action * Insurer IAG calls for an end to building homes in flood zones So the Covid crisis is going to go away eventually, hopefully. But the extreme weather one isn't going away, its going to get worse. And we don't seem to be planning for it in terms of giving us clear information on this. When it is too hot to shop, businesses also suffer, according to research by Lont, associate professor Martien Lubberink of Victoria University of Wellington, and Paul Griffin from the University of California. Who wants to go to the shopping mall in 40 degrees? Lont said. Not every shopping centre had air conditioning, and those that did saw their power bills jump. The researchers looked at records of "heat events" in the United Kingdom and the European Union between 2001 and 2019, and found that each degree increase in temperature above 25C resulted in an annualised loss of sales of about 0.63%. Profitability fell too, with a profit margin decrease of about 0.16%. Across all the EU and UK firms in the sample, businesses lost almost US$614 million (NZ$994 million) in annual sales for every extra degree of excessive temperature. Heat and other effects of climate change affected transport and other critical infrastructure. Even computing was hit in the Northern Hemisphere heatwave in July , with tech giants Google and Oracle suffering outages when their cooling systems could not cope at their London data centres. Lont wanted companies to provide better information on climate change risks so they, and consumers and investors and communities, could make some increasingly urgent decisions. By 2030, New Zealand aims to halve net greenhouse gas emissions to its gross 2005 level. Other countries have set their own targets in a bid to limit global warming to 1.5C . But Lont said climate change risk was not on the radar of businesses enough yet. What we're trying to signal is to say look, here's an opportunity to do this sensibly. And if you don't do it, sensibly, Mother Nature will do it for you. Kiwis might look to the recent extreme heat in Europe and the United States and think New Zealand was immune, but Lont pointed to the fire in 2020 that ripped through the South Island village at Lake Ohau . That came as a shock to New Zealanders, but it just shows you it's happening now. Five years down the track it will happen more, and 10 years down the track it will happen a lot more. New Zealand is going to mandate climate risk disclosures with reporting periods starting in 2023. Starting next year, about 200 big companies will have to reveal their emissions and the risks that climate change poses to their business. New Zealands Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act was passed in October 2021, and an independent agency called the External Reporting Board (XRB) has been writing the rules, in consultation with businesses. The issue was not just about disclosing information, it was about what to do next, he said. The aim was to try to create worldwide change without too much disruption, and it made sense to start with the easiest changes, which was why disclosure was so important. And then, you know, [asking] what is the company doing about it in an orderly manner, rather than this disorderly manner, which I fear is coming, he said. We shouldn't underestimate the market mechanism working. But the greenwashing and all the rest of it means that sometimes we need regulation, sometimes we need a push. Consumers needed to decide how they could change, which would also drive companies to make changes. Consumers are key to this, demanding choice. It's like with battery hens , we can see that [farmers] can change practice. The key was making the information available in a way that people could understand, for example a simple sign on packaging similar to food labels . You can give all these technical reports, and nobody can read the damn things. Or you can do it in traffic lights.