How might climate change expose companies to regulatory risks?

The potential for climate change to expose companies to regulatory risks is significant, particularly due to the expected creation of new environmental regulations. As governments and international organizations respond to the growing threats posed by climate change, they are increasingly formulating policies aimed at reducing greenhouse gas emissions, promoting sustainable practices, and mandating accountability for environmental impact.

This means that businesses may find themselves facing new legal obligations and compliance requirements that did not previously exist, which can lead to increased operational costs, the need for new reporting systems, and the need to reconsider their supply chains or product offerings. As regulations evolve to address the pressing issue of climate change, companies must stay informed and adapt to these changes to avoid penalties, reputational damage, and potential disruptions to their operations.

The other options do not accurately represent the relationship between climate change and regulatory risk. For instance, simplifying compliance processes, eliminating existing regulations, or promoting deregulation would not align with the global movement towards enhancing environmental protections and mitigating climate change. Therefore, the creation of new environmental regulations serves as the primary mechanism through which climate change elevates regulatory risks for companies.