More than 80 percent of U.K. businesses say climate change is a substantial risk to them, citing a range of risk factors including change in precipitation extremes and droughts, change in temperature extremes or induced changes in natural resources. However, only 46 percent of surveyed FTSE 100 companies say they have climate adaptation plans in their business strategies, according to research commissioned by the U.K.’s Department for Environment, Food and Rural Affairs (Defra).
The report Insights into Climate Change Adaptation by UK Companies, carried out by the Carbon Disclosure Project, found that among those that have a strategy, the main focus is on assets, followed by logistics and finance.
The report found that companies were not distinguishing adaptation practices from their overall climate change responses. The CDP defines adaptation as creating a response that will reduce vulnerability to the unavoidable impacts of climate change.
For example, the report cites data from the Association of British Insurers, showing that an inevitable 2-degree C temperature change will increase the average annual insured loss in Great Britain from inland flooding by £47 million ($75 million) to £600 million.
According to CDP, most companies in the survey had difficulty quantifying the financial implications of physical climate impacts on their businesses; only 15 companies out of the 71 identifying risks were able to do this. The report found high levels of uncertainty with large ranges of figures given. The companies primarily looked to previous incidents to make projections for future values and costs.
For example, Serco Group reported that flooding had closed its operations at one location for two weeks at cost of at least £250,000, while Land Securities gave a worst-case, and likely “improbable” example, of an entire building rendered useless at a cost of £50 million.
A large number of companies, 74 percent, reported that they see opportunities driven by changes in the physical climate parameters for their businesses, including an increased demand for existing products or services, reduced operational costs, opportunity for new products or business services, increased production capacity and increased investment opportunities, CDP said.
Defra also released a report from 91 companies with functions of a public nature, including transport, energy and water, about how they are assessing and acting on the risks and opportunities from a changing climate.