How climate change in Zim is transforming business sectors

IN the past, many from amongst us perceived climate change as an illusion, propagated by those with the most imaginative minds.

Unfortunately, climate change is no longer a distant threat.

It is now an ongoing crisis that is already reshaping the way businesses operate across various sectors. From agriculture to finance, the implications of climate change are profound, prompting companies to rethink their strategies, adapt their operations, and innovate to survive. 

This instalment delves into how climate change is altering business models in numerous industries, highlighting both the challenges and opportunities that arise in this transformative landscape.

Agriculture and food production The agricultural sector is one of the most directly affected by climate change. Altered weather patterns, increased frequency of extreme weather events, and shifting growing seasons have led to significant challenges for farmers.

Crop yields are becoming increasingly unpredictable, particularly in regions that depend on specific climate conditions. Farmers are adapting by diversifying their crops and investing in climate-resilient varieties. For instance, companies are developing genetically modified organisms (GMOs) that can withstand drought or flooding.

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Furthermore, precision agriculture technologies, such as drones and satellite imagery, are being employed to optimise water usage and monitor crop health in real-time.

Additionally, the rise of sustainable practices, including organic farming and regenerative agriculture, reflects a shift in consumer preferences towards environmentally friendly products.

As a result, businesses are re-evaluating their supply chains and investing in sustainable sourcing to meet growing demand for responsibly produced food.

Energy sector transformation

The energy sector is undergoing a significant transformation due to climate change. The global push for decarbonisation has led to a dramatic increase in the adoption of renewable energy sources.

Solar, wind, and hydroelectric power are not only becoming more cost-effective but are also essential for meeting international climate commitments, such as the Paris Agreement. Traditional fossil fuel companies are compelled to diversify their energy portfolios to remain competitive. Many are investing in renewable energy projects and technologies, recognising that the future of energy lies in sustainability.

For example, major oil companies are now allocating resources to develop wind farms or solar energy projects, signalling a shift in their business models.

Moreover, energy efficiency has become a critical focus for businesses across all sectors. Companies are increasingly adopting energy-efficient technologies and practices to reduce their carbon footprints and operational costs.

This shift not only meets regulatory requirements but also appeals to environmentally conscious consumers, creating a competitive advantage. 

Transportation and mobility

The transportation sector is another area experiencing significant disruption due to climate change. As cities become more congested and air quality deteriorates, there is a growing demand for sustainable transportation solutions.

Electric vehicles (EVs) are gaining traction, with governments worldwide setting ambitious targets for phasing out internal combustion engines.

Automakers are adapting their business models by investing heavily in EV technology and infrastructure. Companies like Tesla have pioneered the electric vehicle market, while traditional automakers are racing to transition their fleets to electric options. The development of charging infrastructure is also critical, as it supports the widespread adoption of EVs.

Public transportation systems are also evolving.

Cities are increasingly investing in green transit solutions, such as electric buses and bike-sharing programmes, to reduce emissions and improve air quality. This transition not only addresses climate change but also enhances urban mobility and accessibility.

Finance and investment

The finance sector is becoming increasingly aware of the risks associated with climate change. Investors are now considering environmental, social, and governance (ESG) factors in their decision-making processes.

The financial community recognises that companies failing to address climate risks may face significant losses, making sustainable business practices a key consideration for investment.

Green finance is on the rise, with financial instruments such as green bonds becoming popular for funding environmentally friendly projects. Banks and investment firms are also developing climate risk assessment frameworks to evaluate the potential impacts of climate change on their portfolios. Moreover, corporate sustainability reporting is gaining traction, as stakeholders demand transparency regarding companies' environmental impacts.

Organisations that prioritise sustainability not only mitigate risks but also enhance their reputations, attracting socially conscious investors and customers.

Insurance and risk management

The insurance industry is facing unprecedented challenges due to climate change.

Increasingly frequent and severe weather events, such as hurricanes, floods, and wildfires, have led to rising claims and losses.

Insurers are re-evaluating risk assessment models to account for the changing climate, leading to adjustments in coverage and premiums. Insurance companies are also innovating by offering products that promote resilience.

For instance, some insurers provide discounts for homeowners, who invest in flood-resistant infrastructure or adopt energy-efficient technologies.

Additionally, parametric insurance products are emerging, which pay out based on specific triggers, such as rainfall levels, rather than traditional assessments of loss.

As the industry adapts, insurers are also investing in climate research and data analytics to  better understand and predict risks.

This proactive approach not only protects their bottom line but also contributes to broader efforts to enhance community resilience against climate impacts.

Consumer goods and retail

The consumer goods sector is experiencing a significant transformation as climate change influences purchasing behaviours and brand loyalty.

Today's consumers are increasingly aware of environmental issues, leading to a demand for sustainable products. Brands that prioritise eco-friendly practices — such as reducing waste, using sustainable materials, and ensuring ethical sourcing — are gaining a competitive edge in the market.

Retailers are adapting their business models in several ways.

Many are committing to reducing their carbon footprints by optimising supply chains, minimising packaging, and implementing circular economy principles.

For instance, brands are embracing recycling programmes and offering products made from recycled materials, appealing to environmentally conscious consumers.

Moreover, the rise of e-commerce has prompted companies to rethink their logistics and distribution strategies.

As online shopping continues to grow, businesses are implementing more efficient delivery systems to reduce emissions associated with transportation.

Last-mile delivery innovations, such as electric delivery vehicles and bike couriers, are becoming common as retailers strive to meet consumer expectations while minimising their environmental impact.

Tourism and hospitality

The tourism and hospitality sector is also grappling with the realities of climate change. As extreme weather events become more frequent and ecosystems are disrupted, destinations are facing challenges that threaten their viability and appeal. For instance, rising sea levels and increased storm intensity pose risks to coastal resorts, while natural attractions are affected by changing climatic conditions.

In response, the industry is shifting towards sustainable tourism practices. Hotels and travel companies are adopting eco-friendly operations, such as energy-efficient facilities, water conservation measures, and waste reduction programmes. Many are also promoting local and sustainable experiences to attract environmentally conscious travellers.

Additionally, there is a growing trend towards carbon offsetting, where companies invest in environmental projects to compensate for their carbon emissions. This not only helps mitigate their impact but also appeals to travellers who wish to contribute positively to the environments they visit.

Construction and real estate The construction and real estate sectors are undergoing a significant transformation as climate considerations become central to design and development. Increasingly, building codes and regulations are mandating energy efficiency and sustainability measures.

This trend is pushing developers to incorporate green building practices, such as using sustainable materials, improving insulation, and installing renewable energy systems. Real estate companies are also recognising the value of sustainable properties. Buildings with energy-efficient designs and features are not only more attractive to buyers and renters but often command higher prices and occupancy rates.

As such, developers are increasingly seeking certifications like LEED (Leadership in Energy and Environmental Design) to demonstrate their commitment to sustainability. Moreover, the rise of smart building technologies is enhancing energy management and reducing operational costs. Automation systems can optimise lighting, heating, and cooling based on occupancy and weather conditions, further minimising environmental impacts while improving tenant comfort.

Technology and innovation

The technology sector is playing a crucial role in addressing climate change and is experiencing shifts as a result. Companies are leveraging innovation to develop solutions that mitigate climate impacts.

This includes advancements in renewable energy technologies, energy storage systems, and carbon capture and storage (CCS) solutions. 

Tech firms are also focusing on developing software and platforms that help businesses measure and reduce their carbon footprints. For example, companies are creating tools for supply chain tracking, enabling businesses to identify and minimise emissions throughout their operations.

Furthermore, the rise of the circular economy is prompting tech companies to explore new business models based on resource efficiency. This includes product-as-a-service models, where companies retain ownership of products and customers pay for usage. Such models encourage sustainability by promoting repair, reuse, and recycling.

Conclusion

Climate change is already having a profound impact on business models across various sectors, forcing companies to adapt to new realities and expectations.

The challenges posed by climate change are significant, but they also present opportunities for innovation, sustainability, and resilience.

As businesses embrace sustainable practices, invest in new technologies, and prioritise climate risk management, they are not only contributing to the global fight against climate change but also positioning themselves for long-term success in a rapidly evolving marketplace.

The companies that recognise and respond to these changes will be better equipped to thrive in a world where environmental considerations are paramount. As we move forward, the intersection of climate action and business strategy will be critical in shaping a sustainable and prosperous future.

• Ndoro-Mukombachoto is a former academic and banker. She has consulted widely in strategy, entrepreneurship, and private sector development for organisations in Zimbabwe, the sub-region and overseas. As a writer and entrepreneur with interests in property, hospitality and manufacturing, she continues in strategy consulting, also sharing through her podcast @HeartfeltwithGloria. — +263 772 236 341.