With environmental activists calling for more action against climate change, some banks and businesses have heeded the call and are taking the necessary steps.
Impact of climate change on businesses
While the impact of climate change has long been highlighted, with many calls from activist groups to affect change, the fight continues to this day. Now, however, even businesses and banks are being challenged to do their part. In a 2019 survey of CFOs in the European region, nearly 1,200 CFOs answered on the matter and what their respective businesses were doing to fight climate change at the time.
While the survey resulted in mixed responses focused on short-term efforts and cost savings, since then, the fight against climate change has been amplified. The year 2019 is regarded as a significant one because it was arguably the year when climate change activism went mainstream. During that year, an estimated six million people in more than 180 countries took to the streets to voice their concerns. Regarded as the biggest climate change protest in history, according to reports, the masses banded together and called for more action against greenhouse emissions.
Heeding the call, it seems that more businesses are looking to adopt more environmentally-friendly operations and do more to impact positive change. The European Central Bank (ECB) previously committed to adjusting its framework guiding the allocation of corporate bond purchases to incorporate climate change criteria. The framework and policies are expected to have a long-term impact on trade and business activity with other parts of the world, including those trading USD and European top currencies on the forex market, which is an integral part of trade relations amongst nations.
EU and the bottom line
The EU has also set its own target, promising to cut its net emissions by 55 per cent by 2030. This is in an effort to limit global warning according to standards set out in the landmark 2015 Paris Agreement. Although lauded by many, this decision and target has not be welcomed or embraced by all. Businesses have voiced their concerns on this and the impact it will have on their bottom line and profit-making abilities. The 2030 target means raising the cost of emitting carbon for heating, transport and manufacturing; taxing high-carbon aviation fuel and shipping fuel that have not been taxed before; as well as charging importers at the border for carbon emitted in making some key manufacturing products.
Forward-looking industry commentators have admitted that although this will impact many businesses that now have to reassess how they do business, it is a necessary evil. According to them, failure to support the fight against climate change would prove that we, as the current generation, have disregarded our obligation to the planet and ultimately, future generations as well.
While the EU is making strides in the right direction, some claim that it is not quite enough. Some environmental activists believe that the bar has been set too low and that the efforts are not enough to stop the rapid destruction of the planet. That being said, businesses that are looking to follow in the footsteps of the ECB and activists are encouraged to do so to prove their commitment to fighting climate change, however, this will undoubtedly have an impact on their bottom line, be it positively through attracting more environmentally-conscious customers, or negatively through the loss of funds while reassessing current operations.
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