Senior research fellow at the Grantham Research Institute on Climate Change
The landmark Paris climate treaty is an encouraging step in the global fight against climate change, but governments and industry leaders now need to show real action, as the risks for businesses are rising.
Dr Swenja Surminski, senior research fellow at the Grantham Research Institute on Climate Change and the Environment at the London School of Economics and Political Science (LSE), and a member of the Centre for Climate Change Economics and Policy (CCCEP), thinks that too many UK businesses are not prepared for risks that climate change may pose to their operations in future.
“There is quite an urgent need for most UK businesses to carry out a risk analysis of their potential exposure to climate change, in terms of their production at home, and also further down their supply chains in developing countries, many of which are much more likely to suffer the effects of climate change,” says Dr Surminski.
Why consider indirect risks?
“What is often overlooked are indirect risks – where your customers, suppliers or employees are hit by extreme weather events. This can affect any business and companies need to take a strategic view of where the risks may lie, not just close to home.”
“For example, in recent years the food and beverage industry was hit by shortages of raw ingredients because some of the countries producing them, such as India, were badly affected by flooding or hurricanes, which led some companies to start planning ahead. However, particularly for smaller businesses this presents a key challenge.”
A recent report, the UK Climate Change Risk Assessment report (1), to which Dr Surminksi was a contributor, identified a number of areas where businesses and government should be focusing their attention. One of the major areas of concern is the location of existing and future business sites and infrastructure and their potential risk for flooding.
The report warns: “Through their international supply chains, distribution networks and global markets, UK businesses are exposed to the risks of extreme weather around the world. Climate change is expected to increase the risk of weather-related disruptions, particularly for supply chains and distribution networks that involve more vulnerable countries, such as in south and south-east Asia, and in sub-Saharan Africa.” Infrastructure failure, such as blocked transport routes or power outages are already having a negative impact on some sectors – a risk that is likely to increase unless more is done to protect our infrastructure and insure that new sites are developed with resilience in mind:
“For companies making investment decisions, such as building a new factory or site, it might be very important for them to be near ports, rivers or major motorways, but some of these areas are the very ones that are already liable to flooding. Preparing for current and future climate risks needs to be a key part of the early planning stages.
Small and medium sized businesses
“Fortunately, the UK has a very good research base and there is a great deal of expertise available in these fields and for some sectors this actually presents a business opportunity – developing new technology or product designs.” she says. Government support is important, particularly for smaller businesses.
The Federation of Small Businesses also carried out a survey recently and found that most small and medium sized businesses had either not carried out a risk assessment on climate change or had not done enough to safeguard their business. The Environment Agency offers advice and information to business on taking protective measures against climate change, but implementing them is a decision for the organisation itself.
In some areas, local authorities are offering a level of support to businesses. In London, the London Climate Change Partnership, set up by former mayor Ken Livingstone, brings together statutory bodies and business to identify areas which they can tackle together. In future, partnerships such as these will be vital in planning for extreme weather events.
(1) UK Climate Change Risk Assessment report: https://www.theccc.org.uk/uk-climate-change-risk-assessment-2017/ccra-chapters/business-and-industry/