The multinational corporation Coca-Cola has always emphasized corporate economic efficiency. However, in 2004, when the company lost its lucrative business license in the Indian market due to severe water shortages, the situation began to change.
Global droughts depleted the water resources needed for Coca-Cola’s soft drink production, causing the company’s financial losses to expand continuously over the past decade. To this day, Coca-Cola has been forced to acknowledge that climate change is a serious force of economic disruption.
“More and more droughts, increasingly unpredictable changes, and once-in-a-century floods occurring every two years,listed Jeffrey Seabright, Coca-Cola’s Vice President for Environment and Water Resources, describing the recent climate challenges.
These problems have also disrupted the supply of sugarcane and sugar beets, as well as citrus fruits needed for juice production.
“When we consider the key ingredients required for our formulas, we view such events as threats to the company’s normal operations,” he said.
Coca-Cola’s experience reflects a new trend in awareness among American business leaders and mainstream economists.
Global warming is now recognized as a disruptive force that can reduce GDP, increase the costs of food and commodities, disrupt supply chains, and intensify financial risks.
As extreme weather disrupted supply chains, Nike—a multinational corporation with more than 700 factories in 49 countries—also took a public stance on global warming.
In 2008, floods forced Nike to temporarily shut down four factories in Thailand.
Because cotton is essential for producing sports apparel, the company has grown increasingly concerned about the worsening droughts in cotton-producing regions.
Hannah Jones, Nike’s Vice President for Sustainable Business and Innovation, noted that “droughts reduce the supply of cotton in the market, driving up costs.”
In its financial risk report submitted to the U.S. Securities and Exchange Commission (SEC), Nike disclosed the impacts of climate change on water availability.
As climate change drove up costs, both multinational companies responded internally: Coca-Cola adopted water-saving technologies, while Nike increased its use of synthetic materials that are less dependent on weather conditions.
Globally, these companies have also actively lobbied governments to implement environmental policies.
As multinational corporations increasingly require themselves and their supply chains to conduct risk assessments and implement mitigation measures for climate change, small and medium-sized enterprises (SMEs) in Taiwan must also develop the ability to manage their own risks.
Only by doing so can they minimize climate-related risks, transform potential future crises into business opportunities, and establish a solid foundation for long-term stability within their industries.
Sources: The New York Times (January 29, 2014) (Translated by PIDC)
