What are the threats of climate change and how could these affect businesses?
UK business as a whole will be affected by climate change in the future, but certain sectors could experience problems sooner than others. Extreme weather events, such as flooding and prolonged heat waves, are likely to disrupt supply chains and hamper imports and exports on a wide scale.
Flooding has already become a particular issue for businesses in parts of the UK, causing considerable disruption in day-to-day operations. As a result, some business premises may have become uninsurable against flooding. Flood insurance premiums could also become prohibitive on cost grounds for struggling businesses.
It’s important for business owners to be aware of the possible effects of climate change on various aspects of trading, and be able to adapt and mitigate some of the risks. The fact remains, however, that although some effects of global warning are well known, we don’t yet know all the risks involved with climate change.
For this reason, businesses could become exposed to a new regulatory environment where red tape becomes oppressive and compliance costly.
A defined target to ease the effects of climate change
In 2019, Theresa May’s government set a target in the UK to achieve a minimum reduction in greenhouse gas emissions of 100% (compared with emissions in 1990) by 2050 – an ambitious goal also known as a net zero target.
So what are some of the main threats and challenges businesses are facing as a result of climate change?
Climate change threats
Flooding poses a serious risk for businesses in many parts of the UK. Although some local authorities are planning or have installed flood defences, business owners should also plan for flood-related disruption. This might include making contingency plans for alternative working arrangements/locations, for example, and taking out business interruption insurance.
Extreme summer and winter temperatures, along with heavy rainfall, have a damaging effect on our transport infrastructure, causing congestion and disrupting the movement of goods. The damage can also impact staffing levels as employees struggle to attend work due to heavy snow, or flooding in their area.
The Climate Change Committee’s 2017 risk assessment contained alarming information on the possibility of water scarcity in the future, stating that, “By the 2050s, the demand for water will exceed the available supply by more than 50% in many places around the UK.”¹ This could mean severe water restrictions for businesses and individual households.
So which UK businesses and sectors might be impacted sooner than others by climate change?