Businesses struggle when they can’t plan ahead. Profits rise and fall depending on executives’ ability to prepare for the future—to see where market trends are going, to identify the next big innovation, or to judge when and how to expand their business. Now though, climate change is causing a new era of ecological and infrastructural instability, and businesses all over the world are calling for action. Climate change is fundamentally shifting the challenges that businesses face, both in tangible and unseen ways.
In Canada and around the world, CEOs and managers are scrambling to adjust to the new and changing weather patterns. These changes affect all industries, from agriculture and natural resources to tourism and defense. For instance, the impacts are already keenly felt in Canada’s Arctic regions, where unreliable ice roads and buildings shifting on melting permafrost are intensifying the need for reliable year-round infrastructure. Inaction in the face of climate change is costing our economies millions of dollars. But with the landmark Paris Climate Agreement, there is finally international consensus on the need for strong climate action, creating a global push to slash national emissions and keep temperature increases below two degrees. This sends a strong signal to markets that the clean energy transition is well underway and is here to stay.
Nearly every business has something to lose if climate change worsens, which is why it’s necessary for businesses in all industries to contribute in reducing these impacts. One of the most effective and efficient ways a business can alter long-term plans, is by working with their chambers of commerce and governments to implement new policies and regulations. But businesses aren’t just pushing for action because of climate risk. We’ve entered a new age of innovation in which North American businesses are well-positioned to lead. The clean energy economy is not just a growth industry; it’s positioned to be one of the boom industries of the 21st century. In 2015, renewable energy made up almost 20% of Canada’s total production and represented 68 of all new capacity added in the U.S. In addition, clean energy investments rose to a record $329 billion in 2015, six times higher than it was in 2004, and likely to continue increasing.
Given these numbers, I am highly encouraged by President Obama and Prime Minister Trudeau’s shared values on climate change and clean tech initiatives, outlined in the North American Strategy announced during their visit last week. Together, Canada and the U.S. can take the cooperation seen between American states and Canadian provinces and develop it on a national level. By investing now in adapting and mitigating climate change, we can prevent much higher costs to our businesses in the future. These factors can be as immediate as the damage done by extreme storms to the rising costs of food commodities. For example, the increasing frequency of extreme weather events will cost Canadians $21 to $43 billion every year by 2050, according to one study—a trend that will be reflected in the profit margins of Canadian businesses. By investing in cost-competitive clean energy and diversifying how we power our businesses, we can provide companies with certainty that we can survive in a fossil-reduced future.
Climate threats know no borders, but neither do climate solutions. By making the partnership between the U.S. and Canada even stronger, Prime Minister Trudeau and President Obama can inspire countries around the world to take similar actions, proving their international leadership. They can also help businesses feel secure in their trade relations with these two countries—providing a home for more jobs, more economic growth, and more certainty for CEOs and managers of small businesses and multinational corporations alike. This strategy also recognizes that fossil fuels will continue to play a crucial role in North America’s energy mix. Any North American approach must work with the continent’s oil and gas sector and support their ongoing efforts towards greenhouse gas emission reductions. Policies that focus on energy efficiency and the implementation of new technology are particularly well-suited to this strategy, and will help protect North American companies – including the jobs they provide, the research they conduct and the innovations they create – during the transition to a reduced-carbon future.
President Obama and Prime Minister Trudeau are providing important international leadership on an issue that is both complex and urgent. The sheer size and economic power of the North American continent means that stronger policies will raise the standards for international businesses. The countries’ commitment to reduce oil and gas methane emissions from 40% to 45% below 2012 levels by 2025 sets a target that may inspire other energy producing countries to formulate similar goals. The U.S. – Canada partnership is a first step toward a cleaner and more successful future for all businesses.
Perrin Beatty is the president and CEO of the Canadian Chamber of Commerce.