Without a climate plan, small businesses will not survive

TThe impact of the COVID-19 pandemic has been a challenge for Legacy Vacation Resorts.

When a hotel goes without guests for a week, times can get tough. Just as Legacy Vacation Resorts was getting back on its feet, wildfires caused the closure of their resort locations in Colorado and Reno. Not being able to go outside and explore, not to mention the health effects of smoke inhalation, also caused cancellations and further lost business. The recent hurricane in Florida resulted in additional business loss and guest cancellations due to closures, evacuations and localized damage. Florida’s red tide has also resulted in cancellations, lost revenue and repeat guests being turned away after dead fish on the beach and a foul smell from the water were witnessed. Now inflation is forcing Florida-based entrepreneur and Legacy Vacation Resorts chairman Jared Myers to take another look at how he can adapt the business to deal with the latest in a catalog of obstacles. He explains how he looks for cost-effective solutions that will save his business money while making it resilient to the impacts of a rapidly changing climate.

“The way I see it, the cost increases are related to the global energy crisis, and the energy crisis is related to climate change,” he said. “Our company cannot survive if extreme weather events worsen and become more frequent. The climate crisis affects us all significantly if we do not act. We’re switching to renewables and increasing energy efficiency because these solutions save us money and help future-proof our business. By addressing the climate crisis, we are also cutting costs.” Unless we take collective action to reduce emissions, the impacts of climate change will continue to harm the safety and security of our businesses, communities and economies.

While this is only one company, looking at one of the American ones 30 million small businesses like Legacy Vacation Resorts can tell us a lot about how our society and economy is doing in the present. Small and medium-sized enterprises (SMEs) employ the majority of the US population after they have established 2 out of 3 of jobs in the country over the past 25 years. of jobs in the country over the past 25 years.

It’s been an uncertain few years for most small business owners and their employees. The COVID-19 pandemic has led to an economic recession, and the worst one at that decline in employment following the financial crash of 2007. Amid growing economic uncertainty, the impact of rising global temperatures compounds the risks for American businesses of all sizes. In the past five years, climate-related disasters have cost more than $788 billion and claimed 4,500 lives in the United States. Only the recent Hurricane Ian is expected to be costliest storm in US history, causing an estimated $67 billion in economic damage, including the destruction of property and infrastructure along Florida’s coast and the destruction of orange farms in the state’s largest producer. And only 30% of these damages are covered by commercial insurance.

Disruption to US supply chains, critical infrastructure and local communities has had a major impact on small businesses in the affected regions, from staff being unable to go to work to power outages and difficulty finding key materials and products. Take, for example, Clif Family Winery & Farm, a vineyard based in Napa Valley, California, that experienced catastrophic wildfires caused by climate change that displaced employees and severely damaged the land and produce. “We’ve seen firsthand that we need to take action now to protect our community and our people for the future,” says Clif Family Winery & Farm President Linzi Gay.

As a result, the small-scale wine and specialty food business, owned by Clif Bar & Company co-founders Gary Erickson and Keith Crawford, has joined the SME Climate Hub to make strides towards its emissions reduction goals. Their climate action strategy includes installing solar panels in their office and tasting room along with new innovations such as using sheep in the vineyards for weed control and fertilization, a practice that reduces both costs and emissions.

The sheep made a huge difference, Gay said, “because a lot of the company’s emissions come from the fuel used for the vineyard’s vehicles and tractors.”

The winery has also signed on to the 100% Deep Green Power initiative of non-profit electricity provider MCE. The program supplies all of the company’s energy from wind and solar, and the winery also works with their packagers to allow them to do the same. The company is also working to reduce the use of foil caps on their bottles by 2023, and they aim to source all of their specialty food packaging from the US to reduce the impact on the supply chain.

Building a climate action strategy also inspired Clif Family Winery & Farm to develop solar-grown honey products sourced from pollinator-friendly solar farms, which both reduces emissions and promotes important pollinator habitat. The next critical step is to reduce emissions along the company’s value chain. Gay explains: “Our plans in 2022 include working with our co-packers and supply chain partners to get a baseline of our emissions and determine what we can do with those partners to reduce our emissions.”

Companies don’t have to start out as sustainable brands, and in fact many grow to develop climate action plans. Vice President of Strategy at retailer Adore Me, Ranjan Roy explains that after the company realized the economy was headed irreversibly to zero, Adore Me knew it had to transform its business sustainably. “It became clear that if you don’t build your business sustainably, you will be left behind. If you remember that digital transformation was all the rage in the early 2010s, we think sustainability will follow suit, where it will be ingrained in every part of your business.”

Adore Me, which was around $100 million in revenue when they began their transformation in 2019, is now over $200 million. “As we scale as a growing brand, our experience shows that you really can change the way you work and that being more sustainable is really good for business.”

For SMEs, costs are a major factor. Roy says looking at the whole picture is important when considering where you can cut costs, not just on a single product in isolation. “An example is air shipping versus ocean shipping,” he says. “Air shipping can have 20 to 50 times more impact on the planet than sea shipping. And sea transport is 5 to 10 times cheaper. Of course, sea transport takes longer, so you have to adapt by being better at inventory management and building your supply chain in a predictable way.”

Beyond cost savings and innovation, from a regulatory perspective, there has never been a better time for US SMEs to get involved in climate action. They can touch Inflation Reduction Act$369 billion in investments and tax credits to make clean energy more affordable and accessible to everyone, including small businesses.

The SME Climate Hub offers resources and suggestions for companies to prioritize in their climate action plans. This includes eliminating waste to reduce costs and emissions and limiting energy use to ultimately save money and reduce emissions. Companies should look for every opportunity to reduce material waste and use more recyclable materials. These can be simple actions such as turning off heating and cooling systems when not needed and turning off lights when offices are empty.

SMEs can also play a role in reducing dependence on fossil fuels by reaching out to large corporate customers with science-based emission reduction targets to support them in the transition to renewable energy sources. In Europe, companies such as IKEA and Siemens are supporting their SME suppliers to adopt renewable energy solutions. IKEA, for example, offers its SME suppliers support for the transition to clean energy by enabling the purchase of renewable electricity. Even small interventions such as plastic-free packaging, cycling to work schemes or subsidizing public transport can have an impact on fossil fuel demand. Companies that invest in decarbonisation – like renewable energy and efficiency – are doing what’s good for the bottom line, the health and safety of communities and the economy.

Businesses of all sizes should prioritize reducing emissions in their value chain before seeking offsets to offset emissions they cannot yet reduce. Many low-cost offset projects are still of poor quality and transparency, so it is essential to maintain reliable programs with high integrity outside their value chain. Initiatives such as TIME’s new climate initiative CO2.com seek to build robust, diversified high-quality climate action portfolios for business. It focuses on the highest quality credits that move the needle on carbon and deliver real impacts for nature and communities.

Small businesses are the cornerstone of the American economy, making them central to our collective efforts to stabilize the climate. As more and more of our 30 million community leaders, entrepreneurs, warehouse keepers, startups, hard workers and big dreamers begin to see that it makes good business sense to take climate action, it gives us hope that the turbulence and uncertainty in our economy may soon be a thing of the past and a more secure future may be in sight.

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