Global supply chains are susceptible to the impacts of climate change, such as extreme weather events, sea-level rise, and water scarcity. These impacts can result in severe disruptions, increasing costs, as well as reputational damage to business operations.

As such, those with local and global operations should seek solutions to mitigate the risks associated with climate change and help to secure a more sustainable future for all.

The sharpening focus on climate means that accurate reporting – without bias or greenwashing – is playing a pivotal role across economies. One way businesses can build a more objective and accurate picture of their risk is with technology. The market understands this, with nearly all companies expecting to invest in reporting technology over the next year, according to a recent report by consultancy Deloitte.

Technology can give leaders a better understanding of impact such as direct and indirect emissions and energy usage, enabling action to be taken to reduce impact. This not only supports businesses in meeting their sustainability goals but also can improve their bottom line by reducing operating costs and enhancing risk mitigation.

Global trade was worth a record $32 trillion in 2022. Amid deteriorating economic conditions and rising uncertainties, growth dipped negative towards the end of the year. Despite this, strong performance was recorded in the trade of “green goods”, finds the United Nations. Green goods, also known as “environmentally friendly goods”, refer to products that are designed to use fewer resources or emit less pollution than their traditional counterparts.

Only last month, the World Trade Organization, the World Bank Group and the World Economic Forum launched “Action on Climate and Trade”, a new initiative that aims to help participating developing economies, including least-developed countries, use trade to meet their climate change mitigation and adaptation goals. The new initiative, which starts with a pilot phase, will focus on working with participating developing economies to develop climate-related analysis specific to their trade circumstances.

“All economies are at a critical juncture for tackling climate change and growing sustainably. Trade as an engine of economic growth must be aligned to these objectives,” reads a statement.

Managing risk

Not only is encouraging more sustainable business and trade the right way forward, leaders that seek insight into the sustainability of their business – often across environmental, social and governance, or “ESG” – can gain a competitive advantage by differentiating themselves from their peers. Consumers are increasingly concerned about the impact of the products they purchase, and businesses that are perceived to be environmentally friendly are more likely to attract and retain customers.

Investing in ESG-focused solutions also supports businesses in complying with increasing regulations aimed at reducing greenhouse gas emissions, protecting the environment, and increasing socio-economic prosperity. The EU Taxonomy and the Corporate Sustainability Reporting Directive, as examples.

Furthermore, adopting technology can help businesses future-proof their operations and better manage risk. Climate change is expected to continue having significant impacts on the global economy, and businesses that fail to adapt will face challenges in the coming years. By investing in technology, businesses can ensure that they are well-prepared for the future.

Automated ESG scoring, for example, can support better management of ESG and climate risks for banks and businesses. Intelligent tools, such as the CoriolisESG scoring solution, facilitate transparency by measuring ESG impact throughout all supply chain tiers, mapping entities and their activities against recognized frameworks. Improvements in sustainability can only be productive when measured in an independent, standardized, and scalable manner. Technology will be key to ensuring adequate measuring of ESG risk and, therefore, advancing sustainability for business and beyond.

Climate change will only become more important in years to come. Businesses must invest in and adopt technology to mitigate the risks associated with climate change to help secure a more sustainable future for all. Investing in technology can help businesses reduce their carbon footprint, comply with regulations, differentiate themselves from competitors, manage risk, and future-proof their operations.