A warming planet and the global response to reduce emissions creates a wide range of risks and opportunities for businesses.
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.
What are the benefits for me and my business if I plan for climate change risks?
As a business owner it is important to understand how climate change could affect your business. Planning ahead rather than responding reactively will assist with:
- Cost savings - Make more informed investment decisions by understanding how current and future climate risks and opportunities will impact your business’s operational performance. This will allow you to manage or lower costs in the long-term
- Business continuity - Address your business’s exposure to climate risks and you will give your business a better chance to continue to operate and meet customer demands, while minimising the degree and duration of any extreme weather-related disruption
- Competitive advantage - Identify possible business opportunities such as developing new products or services, meeting shifts in consumer preferences and expectations, finding ways to reduce costs, or more effectively managing climate risks.
- Reputational benefits - Demonstrate to your customers and shareholders that the impacts of climate change are being managed. This will increase investor confidence and boost your business’s reputation.
What are the climate change related risks?
As Australia (and the world) transition to a zero emissions economy, changes in policy, technology and markets may begin to affect the profitability, characteristics and reputation of your business.
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.
Lives of staff and customers can be disrupted during extreme weather events. It could mean employees are unable to travel to work or tourists are unable to visit attractions or attend events.
Physical structures and business assets may be at direct risk from weather extremes, requiring design and/or location changes, affecting asset values, or causing physical damage. Whether owning or renting, it is important to examine any risks to your business premises and respond accordingly.
Supply chains are likely to be affected as a result of climate-induced disruption to production lines, changing energy supplies, damage to infrastructure, and increased vulnerability of the workforce. Climate change could also affect the availability of natural and raw materials that are vital to the production of goods and services, for example products relying on agricultural and forestry commodities as well as water.
Business continuity may be affected by climate change as increased extreme events can damage assets and property and disrupt essential services such as electricity and water supply. These can lead to increased insurance cost, disruptions in operations and lost sales, which can threaten your financial situation and risk your business continuity.
Get started with managing the climate change risks
CoastAdapt provides three risk assessment templates, from simple to more detailed, that will allow businesses to systematically follow the guidelines for assessing climate change risks, and record relevant information gathered at each step of a risk assessment.
Have you created your Emergency Management Plan?
As you put in place measures to manage climate change risks, it might be a good idea to create an Emergency Management Plan. Your plan should consist of a:
- continuity plan – helps you prepare your business for an emergency by identifying risks to critical areas and how to best protect them,
- emergency action plan – helps you and your staff know what to do during an emergency situation, and
- recovery plan – guides your business’s recovery after an emergency.
Helpful links and resources
- South Australian Government's Regional Climate Change Projections - a summary of the changes in climate that are projected to occur in SA over the coming 80 years.
- Coastal flood mapping viewer - identifies areas that may be vulnerable to coastal flooding.
- Flood awareness map - assists in learning about flood risks at your property or other places of interest.