Our toolkit: Earth, Labour, and Enterprise.

Recognising the business opportunities

The SCG investment portal was founded as a sandbox project created by students in Hong Kong under guidance of venture capital, business and banking veterans and mentors. While the company was founded in 2004, one summer in 2018 a few outspoken smart kids redefined the meaning of sustainable opportunity for the team. The purpose of the project was to explore how digital transformation can assist and facilitate the transition of the planet to a net-zero emissions economy and lifestyle. Because our oceans are currently the largest carbon sink that keeps the apocalypse at bay, investigations in not just land but also the ocean and water environments were encouraged.

It is essential to realise that while the transition to net zero presents a wide range of risks to businesses and the global economic system, the risks of inaction will be far greater. Moreover, not every climate-related impact will be negative. While change may be difficult, many climate-related developments can also provide opportunities for growth and innovation (CalPERS & Wellington Management, 2019).

Transitioning to net zero will change the nature of competition as businesses compete to provide goods and services for the 21st century. One such example can be seen in the energy sector. As coal may become obsolete in the transition, the move away from coal creates a gap in the market that provides opportunities for growth, investment and innovation in cheaper and cleaner renewable energy and energy storage technologies (Evans, 2017).

Opportunities for businesses to grow or improve their resilience in the transition will vary depending on their sector, location and market, but they may include cost savings from efficiency measures, access to new markets or the development of new products or services aligned with net zero targets. Table 2 outlines some likely areas of opportunity as identified by the TCFD.

Table 2: Opportunities related to the transition. (Adapted from: TCFD, 2017)

Resource efficiency– more efficient buildings, modes of transport and production and distribution processes
– reduced water usage and consumption
– increased use of recycled materials.
Energy source– increased use of cheaper, renewable energy sources
– more decentralised energy generation
– encouraging policy incentives
– utilisation of new technologies
– involvement in carbon market.
Products & services– innovation and development of net zero products or services
– enhanced insurance risk solutions and climate adaption strategies
– diversification of business activities
– shifting consumer preferences.
Markets– access to new and emerging markets through cross-sector collaborations
– use of public-sector incentives
– diversification of financial assets such as ‘green’ bonds or infrastructure.
Resilience– participation in renewable energy programmes
– improvement of energy efficiency and production processes
– improved resilience planning and reliability of supply chains
– diversification or substitution of resources.

Leading organisations recognise this potential and embed climate-related risks and opportunities into their strategic thinking. By seizing such opportunities early, businesses can bring new products and services into the market, engage investors with confidence, prepare well for regulatory changes and improve resource efficiency.

In an analysis of the world’s 500 largest companies in 2018, the international non-profit organisation CDP found that climate-related business opportunities offered almost seven times more potential value than the cost of actualising these opportunities (CDP, 2019). Managing climate-related risks was also estimated to be significantly cheaper than the costs associated with responding to climate-related impacts at a later stage.

Explore further:

If this has piqued your interest, explore the CDP’s climate change report and learn more about the value of climate-related risks and opportunities. Please also explore our site to see how we put our money to good use for the future of humanity, but also for sustainable financial returns. Please also register your interest in the links below.