A Changing Climate for Business

1. A Changing Climate for Business Challenging Climate Change Event for businesses Gloucester, 28th June 2007 Gerry Metcalf Knowledge Transfer Manager UKCIP UK Climate Impacts Programme

2. Who we are The UK Climate Impacts Programme (UKCIP) “helps organisations to assess how they might be affected by climate change, so that they can prepare for its impacts”. • Set up by UK Government in 1997. • Funded by DEFRA. • Based at University of Oxford. Works through: • Stakeholder-led research. • Partnerships. • Projects. • Capacity building. Provides common tools and datasets. All freely available on the web site: www.ukcip.org.uk

3. 1. UKCIP as a ‘boundary organisation’ facilitates relationships between three groups of key actors

4. 2. UKCIP methods and principles • helps build adaptive capacity in stakeholder organisations • uses a two-way process of knowledge transfer with stakeholders • uses a common set of tools • provides intelligent access to datasets eg climate scenarios • does not undertake research but sits on steering groups • gives guidance and support for partnerships and studies • assists dissemination of research and project outcomes • develops and refines new tools with stakeholders all services are provided free of charge to users

5. 3a. Science of climate futuresClimate change is unavoidable

6. 3b. Science of climate futuresUnavoidable climate change is long lasting

7. Twin responses to global climate change “There are two methods of curing the mischiefs of faction: the one by removing its causes, the other by controlling its effects.” James Madison et al, The Federalist Papers • Mitigation of climate change slow down global warming by reducing greenhouse gas emissions 2. Adaptation to climate change respond to the predicted impacts of unavoidable climate change The terms ‘weather related risks’ and ‘climate risks’ may be more useful when considering impacts and adaptation

8. Climate Change: A Step Change in Attitude • IPCC 4th Assessment Report: “…very high confidence that the globally averaged net effect of human activities since 1750 has been one of warming..” • The fact of climate change is now accepted by most UK decision-makers, beyond the ‘green’ community. • Nicholas Stern - Stern Review prepared for Treasury by former World Bank Officer, Head of the Government Economics Service and Adviser to the Government on the economics of climate change and development. • Climate Change Bill. The challenge now is to answer the question … “What shall we do about it?”

9. Business is Responding • Stuart Rose – CEO Marks and Spencers ‘Green’ Plan A, £200m eco-plan.B&Q promoting energy saving products, such as loft insulation and energy efficient light bulbs. • Lee Scott, the CEO of Wal-Mart unveiled an environmental plan, which includes targets, such as spending $500 million a year on fuel efficiency and emissions reductions. • CBI have set up a Climate Change Task Force. • Last year business leaders from Shell Texaco and Vodafone lobbied Government for stricter emission controls.

10. Expected climate changes in the UK • Trends • The UK will continue to get warmer. • Summers will continue to get hotter and drier. • Winters will continue to get milder and wetter. • Sea levels will continue to rise. • Extremes • Some extremes will become more common other less common. • More very hot days. • Fewer very cold days. • More frequent heavy winter precipitation. • More frequent winter storms. • The future can no longer be modelled on the past.

11. Changes in average temperature in UK

12. Changes in seasonal average precipitation in UK Winter Summer

13. Summer 2003 ‘Heat wave’ could be normal by 2040s, cool by 2080s observations Medium-High emissions (modelled) European summer temperatures Source: Peter Stott, Hadley Centre

14. BACLIAT Business Areas CLimate Impacts Assessment Toola generic typology for considering climate impacts on business areas • markets • logistics • process • finance • people • premises management responses climate change provides both ‘challenge’ and ‘opportunity’

15. 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 building design: passive cooling, sustainable construction environmental technology: monitoring, and technical fixes cars etc: cooling as standard health: new diseases, new technologies leisure: demand for parks, gardens, heritage other global impacts on markets???

16. Logistics: vulnerability of supply chain, utilities, transport, infrastructure arising from: flooding: coastal, riverine, urban drought, subsidence and heave, wind and storm damage, landslip, excess temperatures. disruption of utilities • power • water • drainage disruption of transport • road, • rail, • sea • air vulnerability of raw materials production ‘just in time’ systems increase vulnerability for manufacturing & retail ‘extreme events’ will set most new performance standards

17. Process:impacts on production processes and service delivery agriculture: crops manufacture: temperature nature conservation: habitats heritage: buildings and gardens food and drink: temp. control waste: health hazards construction: site conditions office: summer environment leisure: impacts on beaches, amenities ‘extreme events’ will set most new performance standards

18. Finance: implications for investment, insurance, reputation ABI policies increased premiums; variable premiums; vulnerable locations; uncertainty investment issues tests for future proofingof investment? global impacts on international investment liabilities in extg. developments new liabilities may occur; remedial action unlikely to be cost effective actions in future developments higher specification normally cost effective

19. People: implications for workforce, customers and changing lifestyles new residential locations preferred • trend to north • retreat from urban locations changed travel to work patterns • more pedestrian/cycle journeys poor working environment • external: construction, agriculture • internal: offices in summer • more complaint generally • siestas?? reputation as employer • attract and retain high quality staff

20. Premises: impacts on building design, construction, maintenance & facilities management all projects • use future not historic climate data building fabric and structure • vulnerable to wind, rain, storm, subsidence internal environment • less winter heating required • more summer cooling required but avoid air conditioning existing buildings • retrofit represents a major challenge • especially low-energy cooling in housing sustainable construction • link CC adaptation and mitigation agendas very dependent on location too

21. Management Implications include climate risk in appropriate policies marketing; insurance; investment; premises; risk register; identify roles and responsibilities appoint climate change adaptation champion ensure senior management buy-in and support pursue impacts on all business areas treat as a ‘change management’ task consider management systems such as EMS / ISO14001 undertake risk analysis; mainstreaming or separate strategies?

22. The Business Case for Adaptation • Unexpected costs: • Business interruption. Small businesses take on average 50 days to recover from a flood and 69% have no business continuity plan. • Loss of productivity, such as due to thermal discomfort. • Cost of repairing or replacing following damage from weather. • Potential new revenues: • Changing customer preferences and markets. • Future regulations. • Reputation: • With customers – judged on ability to cope in challenging situations. • With employees – attract and retain happy productive staff.

23. Planning for Climate Change • Why is planning is better than responding? • More likely to obtain first-mover advantage. • There is often a lag time between detecting the impact and making a decision and implementing it • Most impacts are due to extreme events so don’t register until it is too late. • Planning for climate change involves going through a process of understanding the risks, how resilient or vulnerable your business is and evaluating different adaptation measures in the context of other business priorities.

24. A Risk Based Approach • The combination of the probability and consequence of a hazard is generally termed ‘risk’ and can be analysed using risk assessment techniques (the same approaches can also be applied to opportunities). • Draw up a rank order listing of the significant threats and opportunities to your business. The order will depend on the priorities and drivers specific to your business.

25. 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. • If you are already adversely affected by the weather.

26. Non-Climate Issues and Other Priorities • the climate is not the only thing that is changing and is unlikely to be your most important driver. • important to consider non-climate risks in order to identify any interactions between climate and non-climate risks and ensure that adaptation measures taken are reasonable and proportional. • consider adaptation to climate change in the context of other business priorities, such as any existing plans you might have to grow, diversify or break into new markets.

27. Adaptation Examples • Adapting to water shortages e.g. grey-water recycling, rainwater harvesting, reservoir. • Casella Cel Ltd moved their server room to the second floor because of the flood risk and insurance requirements. • Northern Ireland Electricity have strengthened their infrastructure to be better able to deal with floods and storms. • National Trust has provided its gardeners with improved outdoor clothing and training in gardening in the new climate. • A farm in Devon used frozen lollies stuffed with carrots to help their pigs cope with the heat in 2006.

28. Key Messages • Future weather can no longer be modelled on the past. • Many business are not adapted to current weather variability let alone prepared for the impacts of climate change. • Climate change will have direct physical impacts as well as changing the business environment. • There are opportunities as well as threats, both in the form of positive impacts and the potential advantage of being the first to adapt to a negative impact. • Planning for climate change is better than responding. • Climate change should be seen as a business risk, integrated with other business priorities and fully incorporated into forward planning.

29. www.ukcip.org.uk kay.johnstone@ukcip.org.uk