Climate change risk assessment
The impact of climate change continues to threaten the UK economy and the forecast is not improving.
The first ever comprehensive assessment of the potential risks and opportunities for the United Kingdom arising from climate change has recently been published. The Climate Change Risk Assessment (“the Assessment”) outlines predictions as to how the climate is likely to change and what impact that will have on everyday life. The risk assessment provides a mixed review for businesses.
The Assessment concludes that an increased risk of flooding is likely to drive insurance policies up which could, in turn, result in businesses being forced to relocate and / or change how they operate. Flooding currently costs the UK economy around £1.3 billion each year. Based on predicted population growth and, in the absence of adaptive action, the Assessment suggests that those costs could rise to between £2.1 billion and £12 billion over the next 70 years.
Despite this, the report did forecast some sunny spells. The increase in general temperatures is likely to lead to changes in the types and varieties of crops that can be grown around the world and easier, more direct shipping routes would be created because of the consequent melting of the polar ice cap.
It seems clear that some elements of climate change will affect most businesses but there are some aspects that will be more beneficial to some than others. Whatever the ultimate consequences, it is clear that as the world approaches 2080 the way business is conducted will need to change considerably if the conclusions of the Assessment are correct.
The Government, through the Climate Change Act 2008 has set a target for the UK of an 80% reduction in carbon emissions by 2050. This ambitious aim has already brought about significant changes in working practices for many large businesses and public bodies. Although the early days of businesses striving to achieve carbon neutrality so as to be able to advertise themselves as such seem to have passed, businesses are still nonetheless willing to invest in short term capital products to reap long term rewards. With the likelihood of a carbon tax ever greater, businesses are starting to plan for the future.
It is true that there are scientific sceptics who have cast doubt over parts of the CCRA, it is difficult for many to attribute the recent increase in natural disasters to coincidence rather than climate change. On that basis, businesses face a real threat to their continued operations, and governments are unlikely to do nothing. It is almost inevitable that the UK, probably the world, can expect far reaching regulation to preserve the status quo and ensure that trade, and the global economy survives.
Most businesses have already adopted sustainability statements and policies, encouraging employees, suppliers and, even customers, to adapt to their ‘greener’ way of thinking.