Skip to content
Northern Powerhouse European Union

SMEs ignoring climate risk

The majority of UK SMEs are completely unprepared for climate change, according to new research, despite global greenhouse gas concentrations set to enter a new “permanent reality” in 2016.

The majority of UK SMEs are completely unprepared for climate change, according to new research, despite global greenhouse gas concentrations set to enter a new “permanent reality” in 2016.

The research, conducted by AXA Insurance, found that just 12 per cent of SMEs have carried out a climate change risk assessment to pinpoint their vulnerabilities, despite a third expressing concern about the potential impacts to their business.

According to the survey of 200 directors, the greatest concerns about climate change amongst SMEs are its potential to affect the cost of raw materials and inputs (9 per cent), the health and wellbeing of employees (8 per cent) and the cost of insurance and risk protection (8 per cent).

SMEs ‘vulnerable’

While many SMEs are focusing on small steps to reduce their environmental impact, such as taking measures to reduce waste and improve energy efficiency, David Williams, managing director of underwriting at AXA UK, said that most are failing to incorporate risk planning into their strategy.

“Smaller businesses are particularly vulnerable”, he said. “Part of the challenge is that much climate change discussion takes place at a high level and there isn’t enough detailed discussion about the practical steps that business and consumers need to take to protect themselves from climate risk.”

Uncharted territory

According to the World Meteorological Organisation (WMO), the concentration of CO2 in the atmosphere is now 143 per cent higher than pre-industrial society. 

Globally, CO2 concentrations stood at 397.7 parts per million (ppm) in 2014, up from around 278ppm in 1750. The WMO expects the 400ppm barrier to be broken in 2016, despite widespread agreement that concentrations needed to be kept below 350ppm to maintain a reasonable chance of keeping global warming below 2°C. 

Michel Jarraud, secretary general of the WMO, said: “We will soon be living with globally averaged CO2 levels above 400ppm as a permanent reality. It means hotter global temperatures, more extreme weather events like heatwaves and floods, melting ice, rising sea levels and increased acidity of the oceans. 

“This is happening now and we are moving into uncharted territory at a frightening speed”, he added.

‘Clarity needed’

The news comes on the eve of historic climate change negotiations in Paris, where UN member states are set to gather to agree on a global strategy beyond 2020.  

“The reality is…a large proportion of the action that needs to be taken to deliver carbon reduction targets will fall on business”, said Williams. “What business needs is clarity of what needs to be achieved and the targets they are required to deliver.”