Why every business needs to prepare for a changing climate

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The Climate Change Committee (CCC) is the UK’s independent advisor on tackling climate change. As part of our role, enshrined in law by the Climate Change Act, we assess how well the government is doing in ensuring the country is prepared for the changing climate today and in the future; the legislation calls this adaptation.

Even with ambitious global emission reduction targets and commitments to achieving net zero, the impact of climate change continues to accumulate. If we can achieve net zero greenhouse gas emissions globally between 2050 and 2060, that means temperature continues to rise for at least the next 30 years and we will continue to see increasing climate-driven hazards.

In the UK, 2022 was the warmest year on record, while the warmest 10 years have all occurred since 2003. Our vulnerability to climate change has been exposed by the recent extreme weather events, with temperatures over 400C, widespread drought, record numbers of wildfires and damaging storms. These impacts of climate change are felt locally, but all parts of the UK face challenges in responding to climate change. We need a much greater sense of urgency as we take on the lessons from the recent extreme weather impacts to prepare for the future.

Baroness Brown DBE FREng FRS, chair of the Adaptation Committee of the Climate Change Committee (CCC).

Action on adaptation must start with the government. But everyone across society and the economy, including business, has a role to play. It is in every company’s interest to prepare for a changing climate, to limit the extent of damages such as the scale of disruption to business sites during increasingly frequent weather extremes and the impacts of climate change on supply chains. Adapting your business can also ensure the productivity of the workforce is maintained despite the impacts of the climate. For the forward-thinkers, adaptation measures will shortly become required as part of a social licence to operate – much like net zero goals are now – it makes sense to get ahead of the curve.

In addition to the benefits of adapting, there are risks to not adapting. Climate change is likely to impact UK business activity in a range of ways: including: direct disruption from flooding and storms; infrastructure failure including power, communications and data; supply chain issues; and productivity losses from heat and transport interruptions.

The impacts are highly interdependent, so businesses of all sizes will need to adapt.

What does a well-adapted business look like?
A well-adapted business will be able to deliver, and must itself be able to rely on, a climate-resilient supply of goods and services. So, what do you – a business owner or leader – need to do?
We want to see these key outcomes for businesses:

  • Adaptation measures are implemented to minimise physical climate risks to business sites. This should include things like protecting business premises from flooding and overheating.
  • Businesses have access to appropriate insurance and capital. Ensuring there is access to funding from investors and through insurance for businesses to make the changes needed is a key outcome for climate resilience for all sectors.
  • Productivity losses are minimised. Climate change impacts, such as weather-related travel disruption,
    or very high indoor or outdoor temperatures can make it difficult for staff to work.
  • Supply chain risks are identified and managed. Businesses rely on domestic and international supply chains to deliver goods and services. Climate-related risks to supply chains could lead to cascading failures in service provision.
  • Businesses understand their interdependencies and can rely on climate-resilient critical infrastructure for their energy, data, communications and water supplies.
  • Risks and actions are disclosed and managed by businesses. Robust climate risk assessments are needed to identify key adaptation actions which can reduce exposure and vulnerability to climate change.

While a lot of the focus in adaptation is on managing and minimising risks, there are also economic benefits for some. There is the potential for new opportunities to meet a growing need for adaptation measures across the economy, and smart companies in the relevant sectors will look to lead this trend.

How well are businesses delivering on these outcomes?
Unfortunately, our latest assessment isn’t positive. While more businesses are now reporting their climate risks, disclosures on physical risk management and adaptation action are at an immature stage. It is not possible to evaluate several outcomes we mention above and at best we see limited progress with developing plans, in some cases we find there is insufficient progress being made.

While there have been steps forward in corporate risk disclosures, much of the information relating to business risk assessments, adaptation actions and effectiveness of actions is not publicly available. Data is particularly difficult to obtain for unlisted and small and medium businesses.

What needs to happen next?
There has been some progress by the government to support businesses to adapt to climate change, but gaps remain. Most critical is improving the National Adaptation Programme, which is the government’s plan for delivery of adaptation. The third National Adaptation Programme is due this summer and must set out the government’s vision of what a resilient UK looks like. It needs to support this vision by laying out specific and measurable resilience standards and targets, which are supported by a consistent regulatory landscape that enables business planning.

Wider policy priorities, including net zero and nature recovery, will fail if adaptation to climate change is not incorporated from the start. We have had a lost decade on adaptation in this country and this cannot continue. The government must support all areas of the economy to make plans and implement them if we are to protect people, businesses, and the economy from climate change. We need the business community to join our call for leadership from the government, and to demonstrate leadership themselves within their own sectors.

Baroness Brown DBE FREng FRS is chair of the Adaptation Committee of the Climate Change Committee (CCC).

For more information on the work of the CCC see:

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