Businesses need resilience in the face of environmental uncertainty

Mint

06-05-2025

The India Meteorological Department, while defending its failure to forecast the severity of last week's storm in Delhi, explained the difficulty of predicting sudden and extreme changes resulting from the interaction of multiple weather systems from different directions. It emphasized the need for much denser weather monitoring systems and greater sophistication in analytical capabilities to make forecasts at relevant geographical scales and within appropriate time spans for action to be taken in advance. Understandably, assessing the local impact of climate change is a critical challenge for industry, agriculture and everyone else.
However,
climatic changes
are not waiting for India's capacities to develop. The World Meteorological Organization's
State of the Global Climate Report
released in March highlights record increases in temperatures and carbon dioxide concentrations in the atmosphere, apart from unprecedented sea levels, that translate to a multitude of extreme weather events which afflict us with increased frequency and intensity.
The World Economic Forum (WEF), in its 2025
Global Risks Report
, places extreme weather events as the second-greatest risk in a two-year time frame; in its 10-year time frame, this moves to the first position, with the top four risks all related to the environment, reflecting perceptions of rapidly depleting environmental and natural resources.
Interestingly, both the
Global Risks Report
and the much broader
Edelman
Trust
Barometer
focus on a generational divide. While in the former, the younger generation was found to be significantly more concerned about environmental risks, a hard-hitting finding in the latter report suggests that more than four-fifths of the survey's respondents in the developed world believe that the next generation will be worse off. This number drops to less than 40% on a
global average
(the figure for India is 66%), but the survey still presents quite a pessimistic view on the whole.
The
Trust Barometer
also highlights the fact that the majority of its survey respondents hold high to moderate grievances against governments, businesses and the rich, signalling a growing sense of societal polarization—a risk identified among the top 10 risks by the WEF for the short- as well as long-term.
Respondents with the most grievances also believe that businesses are not going far enough to address societal challenges, in particular affordability and climate change. About 70% of the respondents said they believe that CEOs should address a problem if their business has contributed to the problem and/or if the issue harms customers, employees and/or the community.
Against this environmentally and socially volatile backdrop, businesses are faced with a triple whammy.
One
, they too are functioning in a highly unstable and uncertain climate-impacted world, with disrupted supply chains and resources that are either depleting or becoming inaccessible;
two
, they are operating without a clear, firm and globally consistent policy framework; and
three
, the societal licence they have for their operations is increasingly difficult to come by.
The risks and uncertainty they face are compounded by what their stakeholders are grappling with. Their response so far has been inadequate, as evident from the sharp decline in trust that people place in businesses. Also challenging is an erosion of employee trust within organizations that their employers would 'do the right thing.'
So, how should businesses respond? Under uncertainty, one would typically call for the development of alternate scenarios that would offer various solutions to choose from. However, with uncertainty across the inter-connected spectrum of geopolitics, climate change, social challenges and technology disruptions, such scenario exercises at a business level lose their relevance. Businesses may find it more useful to reflect on the resilience they need to build:
First is the question of whether their focus is on the short- or long-term. The actions needed for these time scales would be very different.
They must also assess which of the destabilizing factors and the responses needed are of a limited duration. This is obviously not an easy question. In the current situation, many would believe that a new world order is likely to emerge, the shape of which is difficult to predict and the rules for whose functioning would take some time to evolve. It is a question that may require businesses to hedge their bets.
More certain and increasingly urgent are the environmental risks identified by the WEF. Juxtapose this with what the
Trust Barometer
reveals of perceived CEO responsibilities, whether primary or secondary, and it's clear that businesses should urgently start evaluating strategic opportunities to minimize risks. Tackling environmental risks requires a robust and conducive policy framework to be put in place. This places the onus on industry associations to extend their cooperative lobbying with governments to include environmental and social challenges.
Last is the opportunity arising from preparedness. Businesses have been notoriously poor in stakeholder engagement—both external and internal—although this aspect is critical for them to deliver the benefits of preparedness. Internally, agility requires that employees—whose trust must be won—are fully informed of the leadership's thinking on likely action pathways and are prepared to play their role under dynamic conditions. Externally, businesses must generate confidence in their ability to emerge as leaders under challenging circumstances through integrity, transparency and effective communication.
In general, businesses have no choice but to expect the unexpected in a world of known and unknown unknowns. They must step out of their cocoons and engage much more intensively with their environment to tackle risks and prepare for an unfamiliar future.
The author is an independent expert on climate change and clean energy.