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Climate change and its effects on small businesses in the UK
The threat of climate change has taken on a new urgency during the last 12 months following the discovery last December of a 30% reduction in the thermohaline ocean circulation (which drives the Gulf Stream) and increased melting in the Greenland ice cap. New research reports are increasingly discussing “dangerous” climate change and so called “tipping points”. A tipping point is a point of no return where feedback effects start to accelerate change resulting in an escalation of global warming, or sea level rise. This summer there were predictions from mainstream scientists in a new OECD report2 that global sea levels could rise by as much as a metre in the next 100 years. The graphic below outlines potential global mean sea level rise from the IPCC (Intergovernmental Panel on Climate Change).This is the first research to look specifically at the impact of climate change and insurance on small and medium size enterprises (SMEs) in the UK. It concentrates on flood risks, although climate change will produce many other threats for small businesses. It is based on insurance data from AXA Insurance, a major insurer of SMEs, combined with a survey of small businesses in recently flooded areas and comments from focus groups of the managers and owners of small companies which have survived recent major floods.
The potential effect on SMEs of increasing flood damage and reducing insurance availability could be serious for the economy as a whole, but our survey shows that while 85% of businesses are aware that climate change is a problem for the world:
- 46% of small businesses think that climate change is blown out of proportion and;
- only 26% think it is a real threat to them.
The Small Business Council’s Annual Report for 2005 barely mentions climate change as an issue3, despite government concern on the subject, but suggests it is something to look at in the future.
For more information contact David Crichton david@crichton.sol.co.uk
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