Introductory presentation for SMEs

Weather resilience, climate preparedness

Climate Change

The Business

Adaptation:To prepare for the impacts OF the climate

Mitigation: To reduce your impact ON the climate

emissions

Twin responses to climate change

impacts

Adaptation and Mitigation

Building the business case

• There are three components to the business case for adaptation.

• Understanding that the climate is changing and that there will be consequences for business is not enough.

(page numbers refer to UKCIP publication ‘A Changing Climate for Business)

Changes in annual / seasonal averages

• warmer, drier summers (spring and autumn too)

• milder, wetter winters

• rising sea levels

Changes in extremes

• more very hot days

• more intense downpours of rain

• uncertain changes in storms – possible increase in winter

Web site: ukclimateprojections.defra.gov.uk

Expected changes in the UK

Changes: summer mean max

temperature2050s – High emissions

90% probability level:very unlikely to be greater

than

2050s – High emissions

50% probability level:central estimate

2050s – High emissions10% probability level:very unlikely to be less than

Change in summer mean maximum temperature (ºC)

The 2003 heatwave in Europe

Hadley Centre

Europe:

30,000 deaths attributed to the heat wave

Forest fires and crop damage seriously impacted economy

Economic losses in excess of £7.5bn

England (3-14/8/03):

Excess mortality

All ages: 2091(17%)

>75: 1781(23%)

Emergency hospital admissions (>75)

1490 (6%)

Summer 2003 likely to be normal by

2040s, cool by 2080s

observationsMedium-High emissions (modelled)European

summer temperatures

Source: Peter Stott, Hadley Centre

Current vulnerability m

odelled

Models of future climate

58% of UK businesses experienced some kind of disruption as a result of extreme weather in 2009

Unavoidable change to 2050

Depends on future emissions beyond 2050

The need for adaptation

based on UKCP09

1. markets

2. logistics

3. process

4. finance

5. people

6. premises

climate change provides both ‘challenge’ and ‘opportunity’

A generic framework for considering climate impacts on business areas

BACLIAT - Business Areas CLimate Impacts Assessment Tool

Markets

Changing demand for goods and services

• tourism: Med. is too hot so visit UK instead

• food & drink: summer preferences, al fresco

pavement cafes 24/7

• leisure: demand for parks, gardens, heritage

• building design: passive cooling, sustainable

construction

• technology: monitoring, flood protection,

cooling equipment, health products etc

• global impacts on markets??

Logistics• disruption of supply chains arising from:

– transport disruption

– impacts on suppliers

• just in time systems increase vulnerability

• disruption to power or water supply

• for smaller companies, supply chains and

power supply represent a large proportion

of their exposure to the climate risk

Summer 2005: BMW lost hours of production equating to 50 cars as a result of delays to deliveries following riverine flooding

ProcessImpacts on production processes and

service delivery

• some business processes, equipment, assets and activities are climate or temp. sensitive

- food preparation and storage

- some industrial processes, such as waterless printing

- agriculture

- server room• weather events can cause damage or disruption

• climate change could reduce/ increase production efficiencies

• extreme events will set new performance standards

People

Implications for employees and customers

• poor (better?) working

environment:

- external: construction,

agriculture

- internal: offices in summer

- more complaints generally

• reputation as employer

- attract and retain high quality

staff

Premises• impacts of wind, rain, storm, fire and

subsidence on building fabric and

structure or grounds

• internal environment: less winter

heating/ more summer cooling

• design decisions based on historical

climate data likely to be inadequate

• retrofitting existing buildings represents

a major challenge

• sustainable construction needs to link

climate change adaptation and

mitigation agendas

Finance• insurance issues: increased premiums;

variable premiums; vulnerable

locations; uncertainty

• investment issues: tests for future

proofing of investment, global impacts

on international investment

• costs: impact on raw material prices;

retrofitting existing buildings and

equipment could be expensive

Adapt to manage risks / exploit

oppsClimate Change

Potential impacts on:

Markets

Logistics

Process

Finance

People

Premises

Management response

Reputational risk

Health & safety risk

Strategic riskFinancial risk

Operational risk

Environmental risk

Potential impacts on:

Markets

Process

Premises

Logistics

Finance

People

production opportunitymarket opportunity

• the current climate may already

present threats and opportunities

• difficulties in recognising the climate

change signal

• lag times between making and

implementing a decision

• retrofitting often more costly

Therefore, a planned approach that deals with climate change like any other business risk is more likely to lead to efficient adaptation

Much adaptation will be possible without long lead times but:

Max temp, Summer av. 1961-

1990

Climate vs weather

Why take a planned approach?

How vulnerable is your business?

Factors that increase vulnerability:

• business requires taking decisions with long-term consequences (decades or longer) for land-use, built assets or people

• specific environmental requirements for processes or equipment

• health and safety issues/ requirements that could be affected by rising temperatures

• heavy reliance on utility supply and transport infrastructure

• maintaining business continuity is of critical strategic importance

• premises in a high risk location, poorly designed, constructed or maintained

Mole mapping • service developed by Medical Photographic

Services

• aims to help medical professionals and patients to produce a visual record of skin changes to aid diagnosis

• climate change and behaviour change driving increasing market

Key messages

• changes in climate intersect with changes in lifestyle and other factors, presenting opportunities for entrepreneurs to identify and develop new products and services for health and social needs

• these types of niche markets can often be a development from an established service rather than a totally new departure

Baby Warehouse UK Ltd • an SME start up selling baby clothes and equipment

• flooded in 2007

• installed some simple measures to improve resilience: online stock management system, raised storage of stock and equipment and BCM

• unfortunately could not recover and went out of business

Key messages

• the effectiveness of their response to this flood event was highly dependent on several external organisations (insurers, contractors, local authority, neighbours)

Baby Warehouse UK Ltd

experience

E coli found in the water

Health and safety risk

Lost till system, customer records and paperwork

Difficulties in meeting outstanding orders

Nine months without retail premises

Loss of trading

Loss of word of mouth recommendations

Portacabin and container costs

Damage to stock and equipment

Repair/ replacement/ container costs

Significant staff time required to calculate cost of damage

Massive increase in buildings insurance, which landlord may pass down

Impacts Consequences Knock-on effects

Hampshire Cosmetics • an sme that manufactures, packages and supplies

toiletries and personal case products to supermarkets and high street stores

• ‘supplier days’ to build open conversations about issues, including resilience to climate impacts

• prioritising BCP – incl. staff section on the company website to highlight weather events and so minimise disruption to factory operations

Key messages

• resilience to climate impacts involves building on relationships beyond the factory gates, to suppliers around the world and staff facing possible travel disruption

• external expertise can provide reassurance on actions to date and a source of advice on future developments.

Mole mapping • service developed by Medical Photographic

Services

• aims to help medical professionals and patients to produce a visual record of skin changes to aid diagnosis

• climate change and behaviour change driving increasing market

Key messages

• changes in climate intersect with changes in lifestyle and other factors, presenting opportunities for entrepreneurs to identify and develop new products and services for health and social needs

• these types of niche markets can often be a development from an established service rather than a totally new departure

• we are already committed to some further climate change

• The business case for adaptation can be made in terms of

avoiding unexpected costs, reducing risk and making the most

of opportunities

• past weather events can provide insight into vulnerability to

weather and climate

• climate change is a business risk like any other, with

adaptation implemented through existing business processes

and taking advantage of existing decision points

Key messages

Thank you for listening

www.ukcip.org.uk

Kay JohnstoneProject Officer (Business)UKCIPUK Climate Impacts Programme