Weathering climate change

Businesses are continuing to remain unprotected against climate-related losses, says John Blackwell

John Blackwell: Too many companies still do not consider climate change to pose a serious threat

A study carried out by trade credit insurer Atradius among a selection of businesses in six European countries found that two thirds believed their governments pay little or no attention to threats of climate change. Those in Italy were the least enthusiastic about the attention given to climate change from their government (83 per cent), with companies in the UK a close second (77 per cent).

The survey also showed that two thirds of companies were unfamiliar with the Kyoto Protocol ­ a key treaty in fighting climate change, while half feel that its influence on their organisation is very limited. The findings highlight that as an industry, our challenge is to make business aware of the threat they are exposed to.

This comes as Japanese and European leaders at their annual summit in Tokyo have called for heavy investment from the private sector and from market-based investments to curb climate change. Europe is pushing for a global deal to come into force when the current Kyoto Protocol targets expire in 2012.

When asked what steps European companies are taking to fight climate change, a third said they will be cutting down on power consumption, while 16 per cent said they will not be taking any action.

Changes in our weather conditions continue to affect a range of business sectors, and natural disasters and periods of extreme weather are also becoming increasingly common. Yet the survey shows that only 10 per cent of European businesses believe they are well prepared for extreme weather.

It seems that too many companies still do not consider climate change to pose a serious threat to their business. Yet the facts show otherwise. Some have put the costs to the UK economy of last summer’s floods at about £5bn with 7,000 business and 48,000 homes affected.

All firms should be taking steps to protect themselves from the risks of climate change and putting measures in place to maintain their cash flow should the worst happen. It is time for businesses to review their credit management processes to cover them not just for payment delays, but also for worst-case scenarios related to climate change.

John Blackwell is senior manager corporate communications at Atradius