By Elisa Jiménez Alonso and Will Bugler
Climate change presents UK businesses with opportunities as well as risks, according to a new report commissioned by the Environment Agency and produced by Acclimatise.
The report combines evidence from Carbon Disclosure Project (CDP) surveys of UK firms with new insights from a series of interviews with leading UK businesses.
When it comes to climate risks the vast majority (86%) of the companies have already identified one or more climate-related risks to their businesses. This apparently high-level of awareness is, however, not matched when it comes to taking action to adapt.
Many of the identified risks (34%) are being managed through low-cost, “business-as-usual” approaches. The report also shows that 44% of companies do not know the financial costs of climate impacts. This suggests that far more needs to be done for UK businesses to understand the most cost-effective adaptation options.
The report also highlights the types of climate risks that UK businesses are currently aware of. Companies were more likely to identify direct climate risks (climate impacts directly affecting business operations) than indirect risks, such as reputational impact, and risks to employee retention.
With companies reporting that over a third of identified climate risks (36%) have a ‘high cost’ to their operations it is imperative that more action is taken to increase the resilience of business operations along the entire value chain.
The study also shows that UK businesses see market opportunities from climate change adaptation. Respondents identified 1 opportunity for every 3 risks from climate change and its impacts. Emphasising the importance of taking early action to adapt to climate change, 33% of identified opportunities are expected to arise within 3 years.
The landscape of climate opportunities identified by UK businesses is also markedly different from that of climate risks. Where climate risks were identified in a wide variety of sectors and right along companies’ value chain, around 2 thirds (62%) of the market opportunities relate in increased demand for existing and new products and services.
As the report shows, UK businesses are already exploring opportunities that might arise from planning for climate change. The range of potential benefits goes from effectively protecting vital assets, to maintaining business continuity and gaining competitive advantages.
Finally, the world-class expertise of the UK in this field is evident in sectors such as manufacturing, finance and insurance, environmental and engineering consultancy, and construction. These sectors are already exporting globally products and services to help clients manage climate change impacts. Demand for these products and services will continue to grow, the report concludes.
The full report is available for download by clicking here.