Businesses are being encouraged to plan for the opportunities as well as the risks presented by severe weather and climate change, many of which can be managed within existing budgets.
In a new report commissioned by the Environment Agency, surveys of leading UK firms have revealed that forward-thinking businesses are able to capture a competitive advantage by effectively managing climate-related risks such as extreme weather and flooding.
The recent heavy flooding across Cumbria, Lancashire and Yorkshire in December 2015 left many businesses facing an uncertain future and is projected to cost the economy at least £5 billion.
Previous heavy flooding across England in 2007 is estimated to have cost businesses £740 million in clean-up costs and lost business, with affected businesses taking an average of 26 weeks to return to full capacity.
Almost all businesses face some type of climate-related risk. These can include direct risks such as physical damage to operations, or indirect risks such as changes in the regulatory environment or changing consumer behaviour.
According to report, 86 per cent of the companies surveyed identified one or more climate-related risk. For SMEs only, the figure was 68 per cent.
Over a third of the risks identified are being effectively managed using a low cost ‘business-as-usual’ approach, with levels of awareness highest in sectors that operate large or fixed assets or buildings, are reliant on ‘climatically sensitive’ raw materials or have complex supply chains.
Identifying the potential opportunities of taking early action is also an emerging area for many businesses.
For example, putting plans and measures in place to ensure business continuity during extreme weather can help companies gain a competitive advantage, while cost and reputational benefits can also be gained through incorporating climate resilience into specifications for operational equipment and other assets.
According to the Environment Agency’s report, businesses surveyed identified approximately one opportunity for every three risks reported. A third of these opportunities are expected to arise within the next three years.
‘Good business sense’
Emma Howard Boyd, acting chair of the Environment Agency, said: “Planning now for the impacts of severe weather and a changing climate makes good business sense and can have immediate benefits. For instance, if businesses can keep trading during severe weather they will not only retain customers, they may have the chance to win new ones.
“We want UK businesses to be resilient to extreme weather, to be prepared for future risks, and to seek opportunities, where they can, from a changing climate.”
The full report, which includes UK case studies on risks and benefits, is available here.