Credit to the Bank of England for their prompt response to the latest assessment of the impact of climate change. This provides a much-needed intervention from the Bank of England to clearly signal to our nation’s financial institutions to take leadership on the climate change risk facing UK businesses. Along with 18 other central banks across the world, they are informing the business community that financial risks of climate change are systemic and potentially irreversible.
What does this mean for businesses? This is not just a big business issue, it will impact small businesses in the supply chain. From conversations, banks will reduce lending/investment to carbon-intensive industries and products; business not adapting to the physical risks of climate change (sourcing of raw materials, movement of people and goods, flooding of facilities) and; businesses not implementing low carbon practices.
For example, an SME produces a component for a diesel car. How will the transition to a low carbon economy impact the future value of the business? A hospitality business with a high energy use will need to make significant changes to reduce demand and avoid higher premiums from insurers and lenders. Long-term planning is key as these shifts will impact SME owners who wish to sell their business in 5-10 years time.
What can you do?
- Review your energy consumption – reducing energy use will make your business more efficient and profitable hence attractive to lenders and future buyers. Beyond Green has conducted over 500 energy reviews for SMEs saving them over £4.4m per year. Businesses based in Scotland can benefit from free technical support and funding from Resource Efficient Scotland, just as West Highland Hotel did. Beyond Green and Anderson Strathern will be sharing how businesses can stop losing money by understanding their energy use, and taking practical steps during this breakfast briefing.
- Review your business model – what part of your business will need to change to survive in a low carbon economy? This can be fun exercise by getting your team involved in creating solutions. Zero Waste Scotland provides funded support to help businesses develop new products, processes, business models, and/or source new materials.