Climate change and its impact on small businesses


Climate change is inevitable. While politicians, business leaders, and consumers still have the potential to slow global warming, the genie cannot be put back in the bottle entirely. This week, as the United Nations COP 26 Climate Change Conference continues, we decided to explain some of the ways climate change will impact (or is impacting) small businesses. If you run such a business, now is the perfect time to start preparing for the inevitable, ensuring you remain competitive while the world warms.

Rising costs
Governments are likely to intervene in an effort to mitigate the effects of climate change as they worsen. However, this is almost certain to result in higher operational costs for businesses – a real challenge for those which do not have a well thought out financial plan. The government might, for instance, announce that all companies are now required to use green energy. Although using this energy could eventually translate into long-term savings, and although the government may incentivise a transition (through, for example, rates cuts) the fact remains that start-up and implementation costs for such systems will be considerable. Disaster insurance may also become a “must have” for some businesses as extreme weather events like floods become more common.

Declines in productivity
One of the most worrying impacts of climate change is the ways in which it makes the human body more fragile. Workers are likely to get sick and injured more often as increases in pollution result in more allergens in the air, leading to more incidents of respiratory disease. Water and food supplies may become scarcer or contaminated, leading to more incidents of malnutrition and disease. We are living through one global pandemic at the moment. Climate change is expected to see infectious disease rates skyrocket, and become a major risk factor in future pandemics. What does all this imply for business? Fewer hours worked and increasing healthcare costs.

Extreme weather events
The world will see more and more extreme weather events as a result of global warming. These include droughts, floods, hurricanes, tropical storms, and more. There is now no way to prevent this increase. But there are ways your business can prepare for them, such as training employees in what to do when they occur. You may, for example, want to update guidelines on whether to evacuate the building or stay put in the event of an extreme weather event, and ensure that everyone in your building knows how to contact emergency assistance from outside.

Building upgrades
Upgrading your building can help to ameliorate the impacts of climate change. You can add safe rooms to withstand certain weather events (such as tornados), replace environmentally unfriendly materials (such as concrete) with more environmentally friendly ones (such as wood), or make your building watertight by adding a sealant to the walls and shields to openings, thereby minimising the impact of flooding.

Fewer customers
It is highly likely that climate change will make most people poorer. Natural disasters may affect the labour market, displacing jobs. Healthcare costs are likely to sky-rocket. Scarcity of food, water, and other commodities could cause dramatic price rises for a wide variety of goods. It is, therefore, likely that your customer base in the future will be relatively poorer, and potentially smaller, than it is today. This is likely to hit travel and hospitality hardest, as people may lack the resources to travel internationally and – if we witness further pandemics – they may simply become risk averse.

What you can do about it
There are a number of ways in which you can prepare for the effects of climate change on your business, such as eliminating waste as much as possible, updating emergency procedures, invest in equipment like smart thermostats to save on energy costs, and continuing to use long-distance communication tools (like Zoom and Teams) rather than resuming unnecessary business travel. Measures like these don’t just cut costs and futureproof your business – they may actually attract more customers. A 2018 Nielsen study suggested that an incredible 81% of respondents around the globe felt strongly that companies should help improve the environment.

If you want to explore the ways in which you can protect your business from the impact of climate change, get in touch with JW Hinks on 0121 456 0190. Our expert team of business consultants can help you explore all the relevant strategies and ensure that you are looking out for the future of the planet, as well as your business.

Get in touch

JW Hinks LLP
19 Highfield Road, Edgbaston,
Birmingham B15 3BH

Phone: +44 (0) 121 456 0190
Fax: +44 (0) 121 456 0191