AWP: The double cost of global warming for Swiss industry
(by Christine WERLE, AWP Zurich)
translated from the French original
After a summer marked by periods of intense heat, more and more business leaders are expressing concern about the impact of global warming on their business models. Swiss industry faces a twofold dilemma: it must invest in achieving carbon neutrality while also anticipating the material risks associated with rising temperatures.
According to a report by audit and consulting firm Deloitte, 82% of senior executives in Switzerland - compared to 70% on average worldwide - believe that climate change will have a significant or very significant impact on their company's strategy and operations over the next three years. This is a significant increase compared to 2023, when only 61% believed this to be the case.
More than half of the executives surveyed in the study (53%) also indicate that they are transforming their business models to address climate change. Again, this figure is higher than the global average (45%).
The reason? The consequences of rising temperatures for Swiss industry will include increased costs and lower productivity. A study by the World Economic Forum (WEF), published last January, estimated that between 5% and 25% of corporate profits will be threatened by the physical risks of climate change by 2050.
"Heat waves increase demand for electricity for air conditioning and cooling, which drives up energy prices. They can also cause droughts, which will cause raw material costs to skyrocket. In addition, infrastructure is vulnerable to heat waves, droughts, and floods, which can affect productivity," Elise Buckle, founder of Climate Bridges and climate advisor to the UN and the World Bank, told the AWP news agency. According to her, companies are still doing too little to anticipate the changes ahead.
Christian Zeyer, co-director of the Swisscleantech climate-friendly economic association, points out that the sectors most affected are those that use large amounts of energy in their manufacturing processes, particularly the cement, steel, and food industries.
As the Climate and Innovation Act (CIA) stipulates that all companies must reduce their CO2 emissions to net zero by 2050, these sectors will have to change their energy source and switch, for example, from natural gas to electricity. “But since electricity is more expensive than fossil fuels, factories will have to invest in new energy-efficient processes,” says Zeyer.
Reducing the carbon footprint
Swiss Steel is only at the beginning of this process. The steelmaker plans to accelerate the conversion of its furnaces, which are currently powered by natural gas, to electric or renewable gas solutions in order to achieve its goal of carbon neutrality by 2038. It is currently testing a project at its German site in Krefeld, called Hydreams, which aims to replace natural gas with hydrogen in the heat treatment of steel.
The Lucerne-based group is also assessing the impact of climate change on its production through scenario analyses. Its sustainability report mentions that the Emmenbrücke site in the canton of Lucerne is at high risk of extreme precipitation, recalling that the company's headquarters was severely affected by flooding in 2005.
The Zug-based cement manufacturer Holcim has also begun replacing fossil fuels with alternatives for operating its cement kilns. "This approach alone enables us to save around 160,000 tons of CO2 per year. At our plant in Eclépens, Vaud, we have already achieved a 95% substitution of fossil fuels," explains a spokesperson. The construction materials giant has also set itself the goal of producing exclusively climate-neutral and fully recyclable construction materials by 2050.
Impact on the product itself
Global warming is also changing the game for the food industry, due to its impact on raw materials and production costs, for example in the dairy sector.
“Longer, hotter summers lead to a drop in milk production, as animals reduce their feed intake. They can also impact the quantity and quality of available forage and have a negative influence on the fat and protein content of milk, which can affect the manufacturing processes of certain products,” explains Alex Segovia, Communications Director at Cremo.
"More frequent heat waves will mean increased demand for cooling and higher energy bills. Operating costs may also skyrocket: for example, in 2024, flooding at our factory in Sierre impacted the supply chain, procurement, and industrial facilities," notes Mr. Segovia, adding that the Fribourg-based dairy group is not yet considering changing its business model.
cw/al
