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Why More Leaders of Small Businesses and Nonprofits Should Be Worried About Climate Change

April 20, 2015


What constitutes a small business ranges from 15 employees in Australia to 50 employees in the European Union to fewer than 500 employees and less than $7 million in revenues in the United States. As such, many small to medium-sized nonprofit organizations bear some of the same characteristics and challenges as small businesses.

Some of those challenges are undercapitalization, rising costs for necessities like insurance and technology, fluctuating regulations and attracting talented workers. Increasingly, global issues like climate change and environmental degradation are having an impact on small businesses and nonprofits in the form of severe weather, power outages and higher energy costs. But, the ability of the average small business or nonprofit organization to exert influence over these trends is limited by economic, logistical and political challenges.

In a Washington Post-ABC News poll last year, 70 percent of Americans felt that the federal government should place more limits on greenhouse gases from existing power plants, and 63 percent supported cutting emissions even if it raised their energy bills by $20 month.

One might think that small businesses would be opposed to such proposals since they might increase their costs and possibly limit their growth. However, it turns out that this isn't the case.

In a recent poll of small businesses conducted by the American Sustainable Business Council, 64 percent of small business owners said that government regulation is needed to reduce carbon emissions from power plants, compared to 29 percent who think that power plants should be allowed to regulate themselves.

According to greenbiz.com, it turns out that small business align more closely to consumers on issues such as climate change and the economy. This is because small businesses have a lot to lose if climate change isn't brought under control.

87 percent of small business owners named at least one consequence of climate change affecting their businesses already - higher energy costs, power outages, and severe storms. In fact, one in five small businesses has said that extreme weather associated with climate change has already affected their business operations.

And, while there are no comparable surveys of nonprofit organizations, I suspect that many nonprofit leaders have the same attitudes as small business owners.

This is because most nonprofit organizations are more like small businesses than they are like large corporations - especially when it comes to planning for and coping with severe weather and natural disasters. In fact, on average about 25 percent of small businesses never open their doors again after a natural disaster according to triplepundit.com. Regrettably, 30 percent of the small businesses crippled by Hurricane Sandy never re-opened, which accounts for about 20,000 to 30,000 companies closed in one disaster.

Nonprofit organizations in New York, New Jersey and other places were also severely affected by Hurricane Sandy and many lacked the capacity and capitalization to adequately deal with the consequences of the storm despite millions of dollars in aid from organizations like the American Red Cross, the Mayor's Fund to Advance New York City, Robin Hood Foundation and the Hurricane Sandy New Jersey Relief Fund. Organizations like the South Street Seaport Museum, 3-Legged Dog Art & Technology Center, Snug Harbor Cultural Center, Manhattan Youth Downtown Community Center and Ellis Island Immigration Museum experienced severe damage from the storm and some have not fully recovered.

But, climate change isn't an important issue because it can wipe out businesses and nonprofit organizations. It's important because this trend could make it progressively harder for these companies and organizations to operate normally and effectively. And, that's a good reason for all leaders - be they for-profit or not-for-profit -- to pay more attention to the impact of climate change on their organizations.

If you have a question or comment, please follow me on Twitter at @timmcclimon and let's start a conversation there.
 

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