Climate change - the reason for change

The evidence is now clear that climate change is going to impact us all from both an individual and corporate standpoint. Climate change will give us challenges, choices and more competitors and depending on how we approach these; opportunities and risks. At Cavell we truly believe that climate change offers the industry opportunities for new technology and innovation, new markets in which to operate and new avenues for investment.

The new buzz words for the industry will be Resource Efficiency and Resource Sustainability. Thinking carbon and beyond raises some interesting questions around business strategy, business models, corporate valuation, innovation and investment and supply chain management.

Business Strategy & Models

With the opportunities and risks that climate change bring to industry it is vital that we reassess all the assumptions made to support current business models. Is outsourcing still the cheapest option, with increasing shipping costs and the risks associated with manufacturing in developing countries? Although climate change offers many new opportunities for innovation and the creation of new markets, it is the potential risks to current business that must initially be addressed to ensure ongoing business and survival. Some of the simplest questions need to be answered: can your current energy supplier guarantee power to your data centre for the next 2, 5, 10 years? What is the impact to your business is you lose 50% of your power supply? Is your data centre at risk from flooding? Are your back-up generators at risk from flooding? By addressing all the risks and understanding their business impact Cavell can work with you to ensure that you will not only survive the market changes caused by climate change but position your business to thrive on the opportunities it offers.

Innovation & Investment

Innovation is the key to ensuring on-going business success in any market, this remains true for climate change. In fact new technologies will be key, not only to the survival of business. However gaining investment to finance new technologies will be tricky in a market where there is no track record or guaranteed revenue. Whilst subsidies cannot be used to finance an industry long term, in the short term they will be vital in bridging the gap between venture capital for start up technologies and the major government and industry investment required to sustain changes to major infrastructure, such as energy and data distribution & management. The GreenTech market will have to ensure long term growth and competitiveness to gain investment, Cavell can work with you to help you underpin your innovations with robust long term business planning and strategy.

Corporate Valuation

Traditional methods for determining corporate valuation do not include carbon footprint, energy efficiency and climate change sustainability. But with regulation changes and an increase in consumer awareness and behaviour how will your company valuation be affected? Changes external to industry have historically had profound effect on valuations - one only has to look at the change in traditional telephony markets following the introduction of mobile and wireless technologies in the last 15 years. However climate change and its potential effect on business valuation is something that is widely being ignored at a board level. Cavell can help you understand the impact climate change may have on your valuation by helping you understand possible changes in business models, cash flow impact and management and change in consumer demand. It is also important to understand the opportunities that climate change could bring.

Supply Chain Management

Over the last decade there has been a major move towards outsourcing both manufacturing and customer service, but what effects will climate change have on your supply chain costs, customer service and product quality? Will it still be sustainable to manufacturer your goods in China or India and ship to your main markets in the USA or Europe? What is the impact on product margin? Could your business still be competitive if you saw a 5%, 10 or even 15% drop in margin? Cavell can help you understand how you can understand the risks you face as well as recommend ways to protect margin.

Conact Cavell on environmental@cavellgroup.com to discuss how we can help you deal with the risks and opportunities of climate change.