Managing climate change risks

The changing climate poses a wide variety of risks for small business including physical impacts to buildings and staff from extreme weather events, supply chain and market disruptions, or changing affordability of insurance and finance.

The way in which these impacts will affect your business will vary depending on your industry, location and vulnerabilities (such as what your business facilities are made from, and the services it depends on).

There are also opportunities. Demand for low emissions goods and services is growing significantly in response to local and global efforts to reduce greenhouse gas emissions.

A recent survey found that 9 out of 10 consumers are more likely to purchase sustainable and ethical products with 41% even willing to pay more for these types of purchases.

Businesses that capitalise on this shift in demand and consumer preferences may be able to enhance brand loyalty and increase market share. There may also be opportunities for development of new products and services.

As each business is unique in its location, operation, and supply chains, it is important to identify the specific climate risks and opportunities to your business sector and location, and plan accordingly to help improve the ability of your business to survive and prosper over the longer term.

Policy changes could include emissions reduction laws, trade laws and tariffs, prudential regulation and heightened planning and building codes. Technological changes and developments in areas such as renewable energy and electric vehicles may need to be considered together with changes to stakeholder preferences including investors, insurers, customers and the community.

In addition to these transitional risks, there are four broad risk categories for small businesses that can arise because of climate change and extreme weather events.