With a median of just 38% of businesses overall feeling ‘very prepared’ to combat climate risk, our research reveals it is one of the risks to which businesses feel most vulnerable.
UK businesses in particular are lacking in confidence – a median of just under one third (32%) feel ‘very prepared’ – maybe because broadly speaking they are subject to less frequent and severe catastrophic climate impacts than their US counterparts. Only in recent years has Europe seen an increase in extreme climate related catastrophes, with stark examples including the recent floods impacting Germany, Belgium and the Netherlands and the wildfires in Greece. Given the spate of such events since this research was undertaken, attitudes will have changed with perception of climate change as a risk likely to have risen with resilience to it moving in the other direction.
Energy firms ahead of the curve on climate change
Energy and utility businesses show interesting responses on climate change. They are both notably less concerned than other sectors – with only 23% overall ranking this their top risk. However almost half (48%) are resilient – or very prepared to anticipate and respond. Climate is an existential risk for every business, but energy and utility companies have had some of the most forceful legal and regulatory interventions. This, combined with their position at the forefront of the energy transition has put them ahead of the curve in terms of their strategic response.
Marine and warehousing least prepared
The sector least prepared to manage climate risk is marine and warehousing. Supply chain risk was a growing concern for businesses everywhere even prior to the impact of pandemic lockdowns, as climate change places stress on infrastructure that was never designed to deal with the extreme high temperatures, flooding, ice and wind damage that are now becoming routine.
The predictability of these events is less certain, but they will in all likelihood become more frequent: perhaps moving a ‘1 in 100’ event to more like an annual occurrence, by the end of this century.9