Two-fifths of UK small and medium sized businesses (SMEs) have already been affected by climate change, with a third worried about the impact climate change will have on their business, according to a study of business leaders commissioned by AXA.
Firms focusing on small steps to reduce carbon footprint rather than addressing key risks
Despite widespread concern, just 16 per cent said they have conducted a risk assessment to pinpoint vulnerabilities and only 39 per cent of senior managers at SME businesses believe their organisation is well prepared to deal with climate change.
The greatest concern for SME leaders is the impact that climate change could have on the cost of raw materials and inputs (9 per cent), with the health and wellbeing of employees (8 per cent) and cost of insurance and risk protection (8 per cent) completing the top three concerns.
However, when it comes to the actions that SMEs are taking to protect their business, many seem to be focused on smaller steps rather than deep risk planning. More than half (57 per cent) of those polled said they are focusing on recycling and waste reduction, with 40 per cent saying they are focusing on improving energy efficiency and 12 per cent, saying they are following national government guidelines on climate risk.
David Williams, Managing Director Underwriting, AXA UK, stated:
“Many businesses are on the front-line of climate change with their operations, employees and costs directly impacted. Smaller businesses are particularly vulnerable.
“Part of the challenge is that much climate change discussion takes place at a high level and there isn’t enough detailed discussion about the practical steps that business and consumers need to take to protect themselves from climate risk and ensure they are doing their bit to mitigate the impact.
“Yet the reality is that for all the discussion in Paris, at COP21, a large proportion of the action that needs to be taken to deliver carbon reduction targets will fall on business. Governments, NGOs and the business community need to act to help businesses adapt. What business needs is clarity on what needs to be achieved and the targets they are required to deliver.”
The study also found that 70 per cent of SME business leaders believe that insurance companies have a role to play in reducing climate change risk with 64 per cent believing insurance companies can help business and consumers adapt to the consequences of climate change.
