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Climate Change Changing Business
By Michael Schweibinz

Companies with operations in every corner of the world are beginning to embrace and account for climate change. Having endured the devastating effects of changing weather patterns for several years, Coca-Cola and Nike are two multinational corporations that have come to appreciate the impact of climate change on operations. By working to adapt their business practices now, global companies can be better prepared for a future where climate related disruptions may become ordinary.

It may be especially important that Coca-Cola take on these precautions, given its track record over the past decade. The beverage company has been feeling a bit less bubbly about climate change since 2004 when an operating contract in India was lost due to water scarcity. Since then, climate change has delivered continuing blows to Coke’s balance sheet “in the form of shortages of water, sugar cane, sugar beet and citrus needed to produce its soda,” according to a New York Times report. Coke has now “fully embraced the idea of climate change as an economically disruptive force.”

Nike has also faced climate related issues that have caused supply chain interruptions and shortages. Last year, four factories in Thailand experienced serious flooding. Nike is also “concerned about the threat posed to cotton harvests and, as a result, cotton prices.” Shutting down and opening up new factories as a result of changing weather patterns is a trend that Nike clearly wants to avoid, if at all possible.

Whether from droughts or floods, climate change is resulting in financial setbacks for companies like Coke and Nike all around the world. In an attempt to minimize the negative yet inevitable effects of climate change, Coke has employed “water conservation technologies, and Nike is using more synthetic material that is less dependent on weather conditions.”

While these efforts are encouraging, both companies realize that widespread action is needed; hence, they are also encouraging governments to pass environmentally friendly policies.

Forward-looking companies are anticipating stricter state and/or federal regulations in the near future; some are preparing for that day by placing a dollar amount on each metric ton of CO2 emissions. Small businesses may be the most vulnerable and least able to weather the storms of a quickly changing climate.

 

At First Affirmative, we understand that the ways we save, spend, and invest can dramatically influence both the fabric and consciousness of society. We believe that in addition to the benefits of ownership, investors bear responsibility for the impact our money has in the world. Are you making conscious decisions about the impact of your consumer purchase and investment decisions?

 

Mention of specific companies or securities should not be considered an endorsement or a recommendation to buy or sell that security. Past performance is no guarantee of future results.

Posted: February 26, 2014