UK companies suffer most from climate change

As yet another period of extreme weather hits the UK and Ireland, 37% of businesses report problems at the hands of unpredictable climatic conditions, according to a new report.

The study, by credit insurer Atradius, showed that a quarter of companies across six European countries experienced severe climate-related circumstances during the last year. Natural disasters affecting British companies included strong rainfall (experienced by 63%), storms (60%) and floods (41%).

Although positive within some sectors such as international tourism, the overall consequences of severe climate-related incidents were, in most cases, reported as bad for business. 30 % of British companies said the incidents have had a negative impact on business compared to just 9% of companies citing positive impact.

Of the companies that reported a negative impact on their business, problems faced included an increase in total costs, decreased turnover, damage to buildings and dropping productivity levels.

Despite the negative effects of climate change on business, just two out of five companies who have suffered as a result of extreme weather during 2007 have taken steps to protect their business from this type of risk. Measures include making adjustments to business property and insurance – taken by 27% of companies; while 23% developed a business continuity management plan.

“Despite the negative effects of climate change on business, just two out of five companies who have suffered as a result of extreme weather during 2007 have taken steps to protect their business from this type of risk.

When asked about the future threat of natural disasters on their business, 41% of companies said that they expected to be affected. British companies (51%) were the most likely to view extreme climatic factors as a threat to their businesses, with the most significant listed as storms 72%, strong rainfall, 67% and floods at 56%.

Shaun Purrington, regional director of Atradius UK and Ireland said: ‘Changes in our weather conditions continue to affect a huge range of business sectors, from the wheat shortage set to increase food prices by 10% over the next 12-24 months, to the migration of our most commercial fish species to colder, more Northern waters, as average sea temperatures increase.

‘There are other knock-on effects to be found in leisure, transportation and logistics and construction industries, amongst others. European business needs to wake up to the risks posed by global warming and climate change – though it is clear that some are taking the risks more seriously than others.

‘Given increased concerns about the effects of climate change, businesses need to make sure they have the right protective measures in place should the worst happen – it’s time for everyone to review their credit management processes to cover them not just for payment delays, but also for worst case scenarios in the case of insolvencies.’