Whatever the cause, there is a growing reality that climate change is taking place. Studies indicate that the earth is getting warmer at a relatively fast rate with the conclusion that climate change will become progressively worse over the coming years. Mike Sopp looks at the implications for business.

Climate change will have global and national impacts but businesses at a local level are not immune and can face significant threats too. Government guidance and the UK Climate Change Risk Assessment (CCRA) highlights that the changing climate of the UK will pose increased risk in future due to higher temperatures and extreme weather events.

However, the CCRA found that, “the vast majority of organisations active in the sector have yet to recognise climate change as a material risk, or they view it as a long-term issue of little current relevance”.

Consequently, the Government, through the National Adaptation Programme, is encouraging businesses to assess the risk, prepare for and adapt to climate change so as to remain resilient to changing climactic conditions.

Climate change impacts

In June 2009, the Department for Environment Food and Rural Affairs (Defra) published Adapting to Climate Change: UK Climate Projections, which is said to represent “strong and credible climate science”.

The projections show that, for the UK, increases in average summer temperatures may reach 3.9°C by the 2080s. Even under a “low emissions” path southern England could see a rise of 3°C by the 2080s.

The projections conclude by stating that, “it is clear that most organisations will need to consider these issues at some level, since nearly all make spending decisions, have premises and use transport”.

To better understand the risks climate change poses to the UK, the Government carried out the CCRA, which gives detailed analysis of potential impact.

The CCRA 2012 Evidence Report identified key themes, these being agriculture and forestry; business, industries and services; health and well-being; natural environment and buildings and infrastructure.

For the business, industry and service sectors, the CCRA concludes that although climate change does not necessarily create new risks it can represent a change in existing risk profiles, with vulnerabilities being identified as follows.

  • Assets: fixed and workforce (eg infrastructure damage, workforce exposure to health and safety risks).

  • Operations: supply of services, customer demand and regulatory environment (eg financial performance, markets shift due to change in public attitudes and/or legislation).

  • Procurement: raw materials, supply chain and logistics (eg supply of water, energy and materials, reliance on vulnerable transport networks).

  • Environment: natural and built, plus local community (eg climate sensitive resources and conflict over their use).

Consequences of these impacts can include reduced financial performance, increased costs, operational disruption, additional regulatory requirements and potential litigation.

The CCRA concludes that the sector is “highly vulnerable to projected changes in climate including higher average temperatures, changing rainfall patterns, changes in sea levels and changes in frequency and intensity of extreme weather”.

Business impact assessment

The UK Climate Impacts Programme (UKCIP) forms part of the UK Government’s “Adapting to Climate Change” programme and has been established to help organisations assess how they might be affected by climate change, so that they can prepare for its impacts.

A headline statement of UKCIP is that, “climate impacts on people, as customers for goods and services and as members of a workforce, for whom working conditions, both inside and out, could change beyond acceptable thresholds”. However, UKCIP also states the following.

  • Although the impacts of climate change are uncertain, they can be managed like any other business risks.

  • Planning ahead is often more likely to lead to cost-effective adaptation than responding to changes as they happen.

In its publication, Business Planning for the Impacts of Climate Change: A Changing Climate for Business, UKCIP recommends a number of actions that an organisation could take to determine the potential impacts of climate change. These include:

  • assembling evidence of the impacts on the business from recent (historic) weather-related events

  • deciding how to manage the work on impacts and adaptation, for example through existing risk management systems

  • identifying points in time that represent an opportunity to adapt the business, such as building refurbishment or moving premises

  • undertaking an initial climate impacts assessment through an in-house workshop event.

To assist businesses, UKCIP has developed the Business Areas Climate Impacts Assessment Tool (BACLIAT) for exploring the implications of climate change. BACLIAT can be used at the level of a single organisation or an entire business sector.

BACLIAT comprises a simple checklist for assessing the potential impacts of climate change under a number of headings: logistics, finance, markets, process, people, premises and management implications.

It encourages the consideration of both threats and opportunities that climate change can represent. As an example, for people-related issues, it notes that the internal environment could become uncomfortable as a result of increased summer temperature, with the external workforce being exposed to increased sunlight and temperatures in summer.

Conversely, it notes that there could be an opportunity to “improve work or life balance by responding to climate change risks with flexible working hours and increased homeworking”.

UKCIP believes that the most effective responses to a changing climate can be achieved where climate risks are managed through making the organisation resilient as part of existing business functions, such as business continuity planning, risk assessment and health and safety management.

Resilience through adaptation

As a response to the CCRA, the National Adaptation Programme (NAP) is being developed to “set how government, businesses, communities and civil society should prepare for and adapt to climate change”. The Government envisages that by 2015, priority sectors will be “incorporating climate risk management into their business decision-making”.

Adaptation is defined as “adjustments in natural or human systems (including businesses) in response to actual or expected climatic stimuli or their effects, which moderate harm or exploit beneficial opportunities”.

There are many ways that businesses can adapt. As an example, adaptation to higher temperatures can include the use of shading, insulation materials, thermal storage techniques, etc, while flooding and/or ground erosion risks can be mitigated by the use of Sustainable Urban Drainage systems.

According to British Standard Institution document BIP 2178, the ability of an organisation to take appropriate adaptation actions depends on its “adaptive capacity”. This is seen as the organisation’s knowledge, resources, support systems, and legislative and policy frameworks.

However, many businesses do not perceive climate change to be a significant risk. Getting adaptation on the agenda can be challenging and may require a compelling business case to convince the business board to take action. This is despite the CCRA noting that organisations that are able to respond positively to the challenge “may be able to achieve significant commercial and competitive advantages”.

The Institute of Environmental Management and Assessment has produced guidance on building the business case for climate change adaptation. This document suggests a number of stages to secure support for adaptation and resilience.

  • Plan by understanding the business, key stakeholders, its approach to risk, decision-making processes and business dependency on climate and weather, etc.

  • Build the case for adaptation through engagement, communication and the use of workshops to identify and gain appreciation amongst stakeholders of dependencies on climate and weather.

  • Enable implementation by putting forward the business case(s) for adaptation by integrating and embedding into current business processes and systems.

Further information

Last reviewed 21 August 2013