Weather resilience, climate preparedness Introductory presentation for SMEs This is a generic set of slides aimed at an SME audience. They cover an explanation of adaptation and information on building the business case, including what we can expect from the future climate. How the future and current climate presents some significant threats and opportunities for business and the case for taking a planned response in some cases. The impacts set out under the BACLIAT headings are a generic set of examples. It may be desirable to tailor these for specific SME audiences as appropriate.

Twin responses to climate change Mitigation: To reduce your impact ON the climate emissions The Business Climate Change impacts A business’s relationship with weather and climate works in two directions: Emissions and energy use contribute to the causes of climate change And the effects of climate change will have business impacts Therefore there are two separate and very different responses: Mitigation to tackle the causes of climate change and Adaptation to prepare for the impacts of climate change Most business activity is currently focussed on contributing to mitigation e.g. through resource efficiency measures, renewables, green travel planning etc With little emphasis on adaptation, especially within the SME community, who may be disproportionately affected due to having less resource and access to information Adaptation: To prepare for the impacts OF the climate 2 2

Adaptation and Mitigation The diagram highlights the activities/infrastructure that help us mitigate climate change and those that help us adapt to climate change: Mitigation activities, such as investing in energy efficient technology, are designed to reduce emissions of greenhouse gases and so reduce the magnitude of future climate change Adaptation activities, such as building flood barriers, are designed to reduce the impacts of future climate change on people, processes and the environment You may want to use examples of mitigation/adaptation actions that your authority / region has experiences. Most activities fall into either mitigation or adaptation, however, there are a few that contribute to both objectives such as solar shading and insulation can both mitigate climate change (by reducing demand for air conditioning for example) and aid adaptation (by reducing the impact of increasing temperatures)

Building the business case There are three components to the business case for adaptation. Understanding that the climate is changing and that there will be consequences for business is not enough. (page numbers refer to UKCIP publication ‘A Changing Climate for Business) The scientific case for climate change is well documented (could reference IPCC 4th assessment report) However, this does not constitute a business case for action. Upon this you can build an understanding of the range of ways that climate change could impact on your business and that some of the consequences could be significant. To complete the business case it is necessary to make the case for a planned rather than a reactive response. These three components are covered in the next few slides. Even in the absence of climate change extreme weather events and current climatic variability presents a range of business risks and opportunities so the first component (the scientific case for climate change) and the reference to a long term phenomenon may not even be required.

Expected changes in the UK Changes in annual / seasonal averages warmer, drier summers (spring and autumn too) milder, wetter winters rising sea levels Changes in extremes more very hot days more intense downpours of rain uncertain changes in storms – possible increase in winter Web site: ukclimateprojections.defra.gov.uk These are the headlines taken from the UK Climate Projections published last year by Defra and based on modelling by the Met Office Hadley Centre. These are state of the art projections with a lot of information that can be accessed for free from ukclimateprojections.defra.gov.uk. There is a lot more information that can be accessed but in many cases these headlines are enough.

Changes: summer mean max temperature 2050s – High emissions 10% probability level: very unlikely to be less than 2050s – High emissions 50% probability level: central estimate 2050s – High emissions 90% probability level: very unlikely to be greater than Projections available for several different climate variables at a 25km resolution across the UK. For three different emissions scenarios (high, medium and low), which make different assumptions about future greenhouse gas emissions. An example of some of the information available for temperature change from the 1961-1990 baseline. In order to be upfront about the uncertainties involved in climate modelling, the projections are probabilistic so that you can identify the level of change associated with different probability levels. So these maps show that on the Isle of Wight the change is very unlikely to be less than an increase in 1 degree and very unlikely to be more than an increase of 8 degrees by the 2050s (other time periods are available). The central estimate is an increase of between 5 and 6 degrees. Note regional variation with SE being more affected than NW because of the relative influences of the continental land mass (which changes more quickly) and the oceans. It’s quite hard to imagine what these changes in average temperature mean- useful to understand past events (see next couple of slides) Change in summer mean maximum temperature (ºC) 6 6

The 2003 heatwave in Europe Europe: 30,000 deaths attributed to the heat wave Forest fires and crop damage seriously impacted economy Economic losses in excess of £7.5bn Hadley Centre England (3-14/8/03): Excess mortality All ages: 2091(17%) >75: 1781(23%) Emergency hospital admissions (>75) 1490 (6%) Thinking about past events is a good way of understanding what the consequences of future changes could be The European heatwave in 2003 represented a summer average maximum temperature of 2.5 degrees above the average Estimated to have caused about 30,000 excess deaths across Europe including more than 2000 in the UK. Also significant economic losses – mostly in agriculture and forest fires. So if the average is increasing by 4 or 5 degrees and then we still get the occasional extreme event the consequences for society start to look a bit more serious. 7

Summer 2003 likely to be normal by 2040s, cool by 2080s observations Medium-High emissions (modelled) European summer temperatures The red line indicates predicted temperatures from one of the models (on basis of MH emissions scenario) Back line show observed temperature record with the peak in 2003. But notice conditions similar to 2003 are likely to become the norm by the middle of the century and by the 2080s it will never get be that cool in summer again. Source: Peter Stott, Hadley Centre 8

The need for adaptation Current vulnerability Models of future climate modelled based on UKCP09 The weather already causes business disruption- Chartered Management Institute survey reported that 58% experienced some kind of disruption in 2009. (another stat: 29% reported significant impacts from weather over the past three years (excluding snow)- MORI, 2010) So in many cases there a need to adapt to the current climate For businesses who have longer planning horizons or are making some decisions that could have long-term consequences there is also a need to look to the future Looking at projected global temperature change for the 21st century for different emissions scenarios – they all result in similar changes to the mid-century when they start to diverge. Therefore, there is a degree of unavoidable climate change (even if we are successful at cutting our emission now, and in the future) because of CO2 already released into the atmosphere last century. 58% of UK businesses experienced some kind of disruption as a result of extreme weather in 2009 Unavoidable change to 2050 Depends on future emissions beyond 2050

BACLIAT - Business Areas CLimate Impacts Assessment Tool A generic framework for considering climate impacts on business areas markets logistics process finance people premises This next set of slides provides an overview of some of the business impacts of climate change using UKCIP’s BACLIAT tool. The tool is a very simple brainstorming aid that encourages the scoping of both threats and opportunities across six generic business areas. It can be used either by an individual company or for a whole sector and works best as a workshop involving a range of people. The idea is to generate as long a list of possible from which to select priorities. The heading help you to think of impacts that are perhaps not immediately obvious. climate change provides both ‘challenge’ and ‘opportunity’ 10

Markets Changing demand for goods and services tourism: Med. is too hot so visit UK instead food & drink: summer preferences, al fresco pavement cafes 24/7 leisure: demand for parks, gardens, heritage building design: passive cooling, sustainable construction technology: monitoring, flood protection, cooling equipment, health products etc global impacts on markets?? Some markets will shrink, some will grow and there will be new market opportunities As more businesses, public sector organisations and citizens make plans to adapt, there will be opportunities for entrepreneurial SMEs, who are able to innovate will be able to exploit market opportunities arising from climate change and its influence on consumer behaviour, lifestyles and customer requirements. There are of course many more important factors driving market trends so the key might be to identify where weather or climate change and other factors combine to present a significant opportunity. 11

Logistics disruption of supply chains arising from: transport disruption impacts on suppliers just in time systems increase vulnerability disruption to power or water supply for smaller companies, supply chains and power supply represent a large proportion of their exposure to the climate risk ‘Logistics’ impacts on supply chain, transport and utilities (electricity, gas and water) Disruption to supply chain- JIT and single source supply chains, although efficient may be more vulnerable to disruption Flooding: Coastal, Riverine, Urban Flash floods and drainage related events are less predictable. Subsidence and heave (esp. in clays) In the Bristol area for example Coastal erosion Serious impacts likely on beaches and cliffs as well as coastal defences Wind and storm damage See later on buildings and supply lines Water Intrusion From driving rain especially in exposed areas Transport Example from past weather: Summer 2005 BMW Any transport delay of over 1 hour has the potential to stop production as parts are delivered ‘just in sequence’. Represents loss of turnover in region of tens of thousands of pounds. Heatwaves also: High temperatures 34.8oC on 19th July create ‘sticky’ conditions on more than 37 roads over two day period. Some roads permanently damaged by heat. Some roads impassable so road closures across county. Extensive diversions in place. Gritters sent out to treat damaged roads. ‘Slippery road’ signs erected until surface texture can be restored. Heat damage initial estimates £3.6m, and expected to rise when full costs calculated. Summer 2005: BMW lost hours of production equating to 50 cars as a result of delays to deliveries following riverine flooding 12

Process Impacts on production processes and service delivery some business processes, equipment, assets and activities are climate or temp. sensitive food preparation and storage some industrial processes, such as waterless printing agriculture server room Some processes and activities are weather or climate sensitive. Examples additional to those on the slide (slide could be tailored depending on audience): amenity value of built heritage, gardens, beaches, parks construction; waste collection, storage and disposal tourism In the service industry there may also be activities weather events can cause damage or disruption climate change could reduce/ increase production efficiencies extreme events will set new performance standards 13

People Implications for employees and customers poor (better?) working environment: external: construction, agriculture internal: offices in summer more complaints generally reputation as employer attract and retain high quality staff The big issue under people is the health, safety and comfort of your workforce There is currently no legal upper temperature limit but excessively hot internal temperatures can cause discomfort, lower productivity and in extreme cases health problems, such as heat stress. There will be a different set of issues for outdoor workers- high temperatures or inclement weather can make working conditions dangerous and you may need to think about clothing or equipment that is provided. As well as employees, don’t forget other people that may come into contact with your business- customers, suppliers and local communities. Some people are more vulnerable than others and you should take extra care when dealing with the young, old, unwell or inexperienced. There may be some longer term issues related to how and where people choose to live, work and travel. For example, will there be a trend for out of urban areas or northwards migration as temperatures rise? 14

Premises impacts of wind, rain, storm, fire and subsidence on building fabric and structure or grounds internal environment: less winter heating/ more summer cooling design decisions based on historical climate data likely to be inadequate retrofitting existing buildings represents a major challenge sustainable construction needs to link climate change adaptation and mitigation agendas Building fabric can be damaged by extreme weather Building structure can also be compromised e.g. increased subsidence and heave in dry conditions especially on clay soils Access to premises can be cut off by flooding Internal environment will be affected by higher external temperatures Many adaptation measures will involve changes to your building e.g. passive cooling, flood protection measures Consider also your outdoor premises- car park, garden New buildings have very different opportunities compared with existing buildings, where you are already tied into features of the design. But with both it is important to combine consideration of energy performance with weather/ climate resilience. 15

Finance insurance issues: increased premiums; variable premiums; vulnerable locations; uncertainty investment issues: tests for future proofing of investment, global impacts on international investment costs: impact on raw material prices; retrofitting existing buildings and equipment could be expensive Businesses should increasingly expect availability of insurance and premiums to be linked to risks from weather and what actions have been taking to manage these Similarly investors may soon start to ask for evidence that you understand and are managing your weather and climate risks The ‘cost’ category is more a consequence of the impacts in all areas. For example, unexpected costs can arise in the form of repair, replacement and maintenance costs or lost business due to disruption. Changing production efficiencies or markets (in either direction) will also have direct impact on the bottom line. 16

Adapt to manage risks / exploit opps Climate Change market opportunity production opportunity Potential impacts on: Markets Logistics Process Finance People Premises Management response Potential impacts on: Markets Process Premises Logistics Finance People Environmental risk Reputational risk Operational risk Health & safety risk Impacts on the six business areas as outlined about lead result in the full range of business risk, not just environmental. For example: a disruption to logistics because of local roads melting in the heat represents an operational risk Insurance premium’s being dependent on flood protection measures being installed represents a financial risk Climate change as a long term phenomenon could in many cases be regarded as a strategic risk issue- for example if your product is less suited to future conditions than a competitors more robust version. Health and safety risks arise from potential impacts on people And your reputation is at risk if health and safety or quality, comfort, productivity or quality are compromised or if you are not able to deal effectively with a disruptive event. Most businesses will already have arrangements for managing these types of risk (e.g. H&S arrangements, business planning, management systems) so rather than presenting a new set of risks, weather and climate change in many cases represent new understanding to as an input into existing decision-making processes. And don’t forget the upsides- these are often more important to SMEs who can be more entrepreneurial and innovative. These arise mainly from market opportunities but there may also be opportunities on the supply side if a process or activity that was not previously economically viable becomes so, such as growing of new crops. Financial risk Strategic risk 17 17

Why take a planned approach? Much adaptation will be possible without long lead times but: the current climate may already present threats and opportunities difficulties in recognising the climate change signal lag times between making and implementing a decision retrofitting often more costly Max temp, Summer av. 1961-1990 Climate vs weather The final stage in making the business case for adaptation requires answering the question: why should we plan ahead rather than simply reacting to impacts and changes as they happen. Much adaptation will be possible in a reactive way without long lead times but in many cases it is better to take a more proactive approach. This is because: you may already be at risk from the current climate, even if you have not been affected in the past. There is often a lag time between recognising the change, deciding what to do about it and implementing a response so that waiting until you have noticed the impact will increase the amount of time you are vulnerable. If you miss key decision points like the planning stage of a new process, recruitment of new staff, purchase of new equipment or design of a new product/ service you could miss opportunities and embed vulnerable ways of doing things. Making changes retrospectively is often more expensive than doing so in line with these planning cycles. Weather What it is doing outside right now. It is mainly extreme weather events, and their impacts, that present risks to society. Climate The average weather in a locality over a thirty year period. “Climate is what you expect – weather is what you get!” Robert Heinlein, 1973 Therefore, a planned approach that deals with climate change like any other business risk is more likely to lead to efficient adaptation 18

How vulnerable is your business? Factors that increase vulnerability: business requires taking decisions with long-term consequences (decades or longer) for land-use, built assets or people specific environmental requirements for processes or equipment health and safety issues/ requirements that could be affected by rising temperatures heavy reliance on utility supply and transport infrastructure maintaining business continuity is of critical strategic importance premises in a high risk location, poorly designed, constructed or maintained Climate change will not impacts on all businesses to the same extent or in the same way. Vulnerability depends very much on where you are and what you are doing etc. Location- Only 11% of Thames Valley SMEs know whether they are in a flood risk area (Climate South East, 2008). It is interesting to note also that rain or flooding has impacted on more than a quarter (28%) of SMEs known not to be in a flood risk area. Asking whether each of these factors apply could help you decide whether it is worth taking action to build resilience and where to focus. You could ask the same questions before embarking on any new operation or project. If none of these factors apply, then a quick desk-based scoping exercise is likely to be enough to make sure you have not missed anything.

Mole mapping service developed by Medical Photographic Services aims to help medical professionals and patients to produce a visual record of skin changes to aid diagnosis climate change and behaviour change driving increasing market Key messages changes in climate intersect with changes in lifestyle and other factors, presenting opportunities for entrepreneurs to identify and develop new products and services for health and social needs these types of niche markets can often be a development from an established service rather than a totally new departure 20

Baby Warehouse UK Ltd an SME start up selling baby clothes and equipment flooded in 2007 installed some simple measures to improve resilience: online stock management system, raised storage of stock and equipment and BCM unfortunately could not recover and went out of business Key messages the effectiveness of their response to this flood event was highly dependent on several external organisations (insurers, contractors, local authority, neighbours) Note that another company has since bought the name ‘Baby Warehouse’ and has nothing to do with this case study. 21

Baby Warehouse UK Ltd experience Impacts Consequences Knock-on effects Nine months without retail premises Portacabin and container costs Loss of trading Loss of word of mouth recommendations Lost till system, customer records and paperwork Difficulties in meeting outstanding orders Significant staff time required to calculate cost of damage Damage to stock and equipment Repair/ replacement/ container costs Shows the business consequences of the 2007 flooding event, which caused them to go out of business. Illustrates the range of consequences both in the short and longer term. Measures to increase resilience could focus on reducing the likelihood of the impact, such as the raised storage of stock or the magnitude of the consequence, such as the online stock management system or business disruption insurance. Massive increase in buildings insurance, which landlord may pass down Health and safety risk E coli found in the water

Hampshire Cosmetics an sme that manufactures, packages and supplies toiletries and personal case products to supermarkets and high street stores ‘supplier days’ to build open conversations about issues, including resilience to climate impacts prioritising BCP – incl. staff section on the company website to highlight weather events and so minimise disruption to factory operations Key messages resilience to climate impacts involves building on relationships beyond the factory gates, to suppliers around the world and staff facing possible travel disruption external expertise can provide reassurance on actions to date and a source of advice on future developments. • supply chain is key to success- 23

Mole mapping service developed by Medical Photographic Services aims to help medical professionals and patients to produce a visual record of skin changes to aid diagnosis climate change and behaviour change driving increasing market Key messages changes in climate intersect with changes in lifestyle and other factors, presenting opportunities for entrepreneurs to identify and develop new products and services for health and social needs these types of niche markets can often be a development from an established service rather than a totally new departure • A range of new interventions, varieties and techniques will be required to maintain healthy productive orchards, and more thought should be given to siting of orchards to minimise risk from extreme weather events (e.g. Oct ’87 storm in the South East). • Utility costs are likely to rise as requirements for cooling of plant increase and become more widespread against a backdrop of rising electricity and water prices. • Risks to physical assets will increase, including flood risk and transport to/from risks and companies should seek to address these in good time via business continuity planning. • There are opportunities for different styles of cider as ‘café culture’ and warmer weather produce more ‘al fresco’ usage occasions. 24

Key messages we are already committed to some further climate change The business case for adaptation can be made in terms of avoiding unexpected costs, reducing risk and making the most of opportunities past weather events can provide insight into vulnerability to weather and climate climate change is a business risk like any other, with adaptation implemented through existing business processes and taking advantage of existing decision points 25 25

Thank you for listening www.ukcip.org.uk Kay Johnstone Project Officer (Business) UKCIP UK Climate Impacts Programme