The 2024 Atlantic hurricane season officially came to an end on November 30 and featured above-average activity. Typically, an average season is one that would produce 14 named storms, 7 hurricanes, and 3 major hurricanes (National Oceanic & Atmospheric Administration, NOAA). In comparison, this season produced 18 named storms, 11 hurricanes, and 5 major hurricanes (NOAA). Hurricane Beryl alone, the earliest Category 5 Atlantic hurricane on record, (World Meteorological Organisation) left a trail of damage, loss, and disruption estimated at $32.2 billion or 1.1% of 2023 GDP for Jamaica alone (Planning Institute of Jamaica). The reality on the ground is that livelihoods, homes, and families are adversely impacted.

Meanwhile, across the waters at the Panama Canal, shipping activity experienced restrictions since June 2023, due to the Republic of Panama experiencing one of its driest years on record (World Weather Attribution). The impact? A disruption equating to 10% to 25% of maritime trade flows for Jamaica, Panama, Nicaragua, Ecuador, Peru & El Salvador (IMF 2023). The ripple impact for businesses in these countries amounts to supply chain disruptions, which negatively impact the business’s ability to deliver its ultimate product/service and associated revenue projections.

In August 2023, the Eastern Caribbean Central Bank issued its Prudential Standard on Climate-related and Environmental Risks for Institutions licensed under the Banking Act, 2015. The Standard places additional responsibilities on the Board of Directors, senior management & risk management teams of licensed financial institutions under the ECCB’s purview, to identify, monitor, and incorporate climate-related & environmental risks in the overall business strategy, inclusive of stress testing, disclosure & reporting requirements.

Moreover, the Bank of Jamaica has signaled its own intention of identifying & monitoring climate-related financial risks in Jamaica.

A pro-active response from a mature business sector would be to (1) pay attention to these trends (2) initiate awareness and training sessions amongst senior teams to better understand climate risk & sustainability and their implications for the organization (3) anticipate how both physical and transition risks associated with climate change could impact the financial statements (4) put strategies in place to minimize identified risks, take advantage of cost reduction opportunities, (5) pursue new product or service lines that may present due to the greening of the financial system or potential shifts in consumer demand. I discussed these strategies with a range of Jamaican businesses in a recent 2-day Seminar I facilitated for the Jamaica Stock Exchange and UNDP, Jamaica, under the Climate Promise project.

Startup and micro businesses would do well to ascertain how their planned business model could be disrupted by shifts in regulations or consumer demand. Incorporate this as part of your market research as you test and build your model. 

An immediate opportunity that faces larger businesses is how they adjust and/or reframe any existing corporate social responsibility (CSR) activities in this new reality. Your CSR is still valuable, and there are simple ways to evolve. 

1. Impact Meets Value: The key, firstly, is to shift the organisation’s mindset away from “nice to do” activities implemented through marketing or a Foundation, to finding strategic alignment between external social/environmental activities/impact and internal business model.
2. Engage Don’t Dictate: Your organisation exists in an environment pressured by social, environmental, and economic challenges. Your profitability is dependent on the buying decisions of diverse communities of people. Your CSR activities remain a critical vehicle to demonstrate that you care about the things that concern your clients. Incorporating stakeholder engagement or materiality assessment approaches from ESG methodology allows you to better identify and address your stakeholders’ top concerns.
3. Measure, Learn & Evolve: Adding an Environment, Social, Governance (ESG) lens can help you to track, measure, learn from, and report on your CSR activities more effectively.  
4. Transparency Over Hype: The structure of the ESG approach allows for the application of a management & analysis framework through which your company can clearly identify your “why” and express your CSR activities in transparent, comparable, and measurable goals & objectives. Moreover, it is a great preparatory step for a marketplace where ESG reporting may become a norm for some sectors. 
5. Whole-of-Business Approach: One common challenge CSR managers often face is figuring out how to engage senior teams in CSR activities or balancing business priorities with social project objectives. An ESG approach allows for the addition of a cross-sectional team pulled from across the business to support ideation & implementation of project activities. This offers a great strategy for moving from siloed execution to a whole-of-business engagement. 

Ignoring climate realities is not an option for Jamaica/Caribbean businesses. Climate change changes the game in operating environments and business decisions. What the business sector now has is a legacy opportunity to evolve for the long-term health of the bottom line, the resilience of families, and the sustainability of our islands. 

This article was first published in the Jamaica Life Magazine. Pinnacle Impact International Limited is a trusted strategic business partner that supports the private sector, multilateral agencies, government agencies, and corporate foundations to navigate climate and sustainability risks. Schedule your discovery call today – https://calendly.com/pinnacleimpactinternational/30min