Bringing a climate-oriented lens to your most pressing decisions
Cheesan Chew, MBA, serves as Chief Strategy Officer of climate risk planning software company Manifest Climate. As one of the Black Wealth Club’s (BWC hereon) esteemed mentors, Cheesan outlines her experiences, the importance of converging business decisions with climate risk planning, and tangible steps decision-makers in organizations can take today to fulfill their commitments to sustainable business practices.
For more information on Cheesan, you can find her BWC biography
How I ended up as a climate-focused leader
The urgency of climate change is all around us. Currently, we’re seeing the effects of climate change impact communities through extreme environmental events. In Canada, heat waves, floods, forest fires, droughts, and storms have become regular stories in our news cycle. Globally, these events are even more devastating and amplify systemic and social inequities in countries where the most vulnerable are bearing the brunt. Extreme weather events have widespread reverberations on global supply chains and significantly affect people and communities by causing forced migrations and political instability, among other things..
While experts have seen this trend amplifying over decades, this understanding has thankfully moved into mainstream consciousness in recent years. Business leaders, policymakers, and regulators have come to understand that these issues have real financial and economic consequences.
As a leader with over 20 years of working with organizations through discontinuities and transformations — digital, innovation, and customer — I was drawn to focus my energy and experience on helping organizations through the next meaningful transformation — climate.
I met Laura Zizzo, Manifest Climate’s co-founder and CEO, several years ago when she was building an earlier iteration of the company. I became an informal advisor at first and then joined as an official advisor when Laura and Jeremy Greven, Manifest Climate’s co-founder and president, pivoted to the company’s current iteration in 2019. Manifest Climate’s vision is to scale corporate climate resilience and competence globally through technology that’s grounded in deep climate expertise. We’re looking to bring transparency to capital markets through our cutting-edge solutions that help companies with climate risk planning actions and disclosure reporting.
Climate change is an existential risk for businesses. After spending a decade building my previous company, Idea Couture, into a global innovation consultancy that helps organizations adapt to consumer, technology, and industry shifts, I’ve seen how critical it is to identify and incorporate strong externalities and weak signals into decision-making. More recently at RBC Ventures, where I was a chief operating officer, the focus was building businesses outside of traditional banking in response to the signal of commoditization in the industry. I believe the most innovative business leaders are those who recognize signals that are critical to their survival and act on them quickly. Climate is one of the loudest signals that businesses need to listen to.
Why climate risk planning matters
In today’s macroeconomic environment, there is no doubt that business leaders are facing headwinds. We’re seeing the highest inflation in decades, public and private market volatility, the scarcity of raw materials, supply chain disruptions and shortages, wars and civil unrest, rapidly changing consumer behavior, and disruptive technology advancements. In the face of these headwinds, companies must actively manage enterprise business risks, including ones that are financial, operational, human, cyber, reputational, and climate-related.
In my years of experience, business leaders who combine innovation-driven business growth with risk-driven management are the ones that lead their organizations through periods of volatility and come out stronger and more resilient. They are the leaders that have the foresight to include climate risk planning in their strategic cycles. Climate risk planning is a relatively new practice and has become more mainstream in the last one to two years.
The evolution of the corporate climate risk landscape is comparable to cyber risk. While cyber risk emerged on the corporate fringes in the 1970s and 1980s, it moved into the mainstream business consciousness in the early 2000s when sophisticated and professional cyberattacks became a widespread systemic risk. Today, cybersecurity is no longer only the concern of CTOs and technology leaders but also of CEOs and strategy leaders and their teams where employees are required to take cybersecurity courses as part of annual training.
Climate risk has a similar systemic nature to cyber risk. Like our digitally connected world, our physical world has no barriers. Unlike shutting down cyberattacks, we cannot shut a door to extreme weather conditions. Businesses that understand climate change need to plan for and mitigate its impacts, many of which are far more devastating and fundamental than cyber risk.
Many external forces are driving business decision-making on climate. Government and industry alliances publicly commit to decarbonization targets in record numbers, significantly marrying climate and reputational risks. At the same time, regulators and capital markets are requiring companies to disclose their climate risks, creating additional pressure.
What can business leaders do?
Innovative business leaders can incorporate climate risks into their decision-making practices in several key ways in their quarterly and annual business planning cycles. Here are five key steps that businesses can take to make sure they’re ahead of climate risks:
- Recognize that climate is an indirect and direct business risk. This level of recognition can be difficult to surface without deliberate and strategic thinking. It’s easy to dismiss events that aren’t in your backyard, but as we’ve seen with post-pandemic economic challenges — — like supply chain issues and labor shortages — events that take place halfway around the world can significantly influence businesses directly and indirectly.
- Ask the right questions at every level. Companies’ boards and management teams need to ask questions about governance. Leaders need to ask how climate risks impact strategy, and other risks, and how they can create opportunities. Operators need to ask how they can adapt to the climate transition and how they can operate to meet climate goals. Department leaders need to ask how they can contribute to their organizations’ climate ambitions.
- Look beyond the numbers. Metrics and targets matter, but what’s more important is a management team’s strategy, path, and plan to become more climate resilient and build climate competency within an organization’s teams.
- Identify double-value opportunities. There is significant value in focusing on climate risk in business. Measures to improve climate practices — such as recycling, reusing materials, reducing water usage and consumption, and improving energy efficiency — can lead to significant cost reductions for companies. With heightened consumer and industry awareness, new developments in climate-smart products and services can lead to new markets and revenue.
- Track progress and actions. Climate resiliency is a long game that can impact every part of a business. Regulatory and investor pressure for greater climate disclosures means companies can’t just say they are planning for climate risk. They need to show how.
Ultimately, incorporating climate risk planning into established business planning cycles will allow companies to develop a new decision-making muscle required for climate resilience. I’m excited to be a part of Manifest Climate because our platform is uniquely designed to guide clients through this journey. With our decades of in-house climate risk management, innovation, and strategic leadership expertise coupled with the power of AI-driven technology, machine learning, and data models, we help business leaders uncover new value in their businesses through a climate lens — efficiently and effectively.
As an optimistic realist, I don’t believe climate change is a zero-sum game. With the increased attention, the right tools, and guidance, I hope that strong business leaders will make informed climate decisions that drive value creation for their investors, shareholders, employees, and consumers.
