Sectoral examples

The tables below show the outcomes of the BACLIAT business functions applied to businesses in four sectors. These are edited highlights from a workshop and are not definitive nor comprehensive assessments of the climate risks for this sector.

Logistics: vulnerability of supply chain, utilities & transport infrastructure
Threats Opportunities
  • More refrigerated distribution and storage required and problems with livestock transportation in summer heat conditions.
  • Floods, landslips etc. disrupting transport infrastructure in short and long term, creating problems with raw materials in and goods out.
  • Limited availability of water (Section 57 of Water Resources Act restricts agricultural use of water) and potential interruption of supply (and/or cost increase) to irrigation systems in glasshouses and poly-tunnels.
  • Supplying local markets either in UK generally or very locally, provides for local sourcing and regional distinctiveness offering a new marketing approach with reduced food miles.
  • On-site processing to supply local markets and add value.
  • Build relationships with water companies for farmers to provide water storage facility on their land and provide on-site water storage generally.
Finance: implications for investment, insurance & stakeholder reputation
Threats Opportunities
  • Investment in equipment ties farmer into the relevant crop until capital is paid off, so difficult to change crops.
  • Agriculture perceived as a poor industry in which to invest as it is vulnerable to climate change.
  • Investment may not be available to respond to impacts of changing climate e.g. hardstanding around buildings to deal with winter mud.
  • Consider risks and opportunities of climate change within (say) a 5-year business plan.
  • Evidence of climate proofing business improves reputation with investors, insurers and other stakeholders and may liberate investment funding.
Markets: changing demand for goods & services
Threats Opportunities
  • Loss of traditional markets, loss of local competitive advantage, and new competition in existing markets, e.g. as a result of global climate change.
  • Quality issues relating to climate, e.g. overheating of grain, and supermarkets demanding washed produce – which is very water intensive.
  • Maintaining a supply to markets.
  • UK can compete with other countries by growing new products that need a warmer climate.
  • Changing customer demand in response to climate (more salads and fresh fruits).
  • Diversification into new areas, e.g. tourism, biomass, renewables, manufacturing (hemp).
Process: impacts on production processes & service delivery
Threats Opportunities
  • Existing crops may no longer be viable in new climate conditions.
  • Problems of access to land especially in flood or torrential rain conditions.
  • Less frequent frosts will affect quality of certain crops, reduce soil conditioning and reduce kill-off of pests and diseases.
  • Water quality reduced in summer.
  • New species and varieties of plants can be grown: e.g. English vineyards for English wines and new types of livestock, e.g. buffalo for English mozzarella.
  • Crops for renewable energy and transport fuel.
  • Better growing conditions [higher temperatures and increased carbon dioxide (CO2)] for existing crops will increase productivity.
People: implications for workforce, customers & changing lifestyles
Threats Opportunities
  • Difficult to respond to increased demand for staff leading to staff shortages or unskilled staff.
  • Staff need training in new skills associated with new crops, new technologies and new approaches to land management.
  • Exposure of workforce to increased sun and skin cancer risk.
  • Possible increased local employment opportunities arising from new crops, livestock, etc.
  • Provide staff training to respond to diversification of employment patterns, new crops, technologies, land management, etc.
Premises: impacts on building design, construction, maintenance & facilities management
Threats Opportunities
  • Farm buildings vulnerable to extremes of wind, summer heat, driving rain. A particular concern for animal welfare (e.g. summer shade for pigs).
  • Curtilages to buildings vulnerable to extreme downpours of rain, flash flooding and increased run-off and erosion.
  • Existing buildings not adapted to new climate, especially in hot summer conditions.
  • Generally milder winters requiring less winter housing for livestock.
  • Farmers diversifying can convert existing buildings to other uses,(e.g. residential accommodation and tourist information/education centres), designed to take account of future climates.
  • Threat to existing buildings provides an opportunity to create climate-proofed new buildings.
Management implications
Threats Opportunities
  • Diversification generally including cultivation of new crops could mean that farmers are moving into areas in which they have no experience and are therefore more vulnerable.
  • Risk of reactive adaptation rather than adaptation responses based on long-term planning.
  • More outsourcing and use of contractors could mean that farmers are less flexible and more reliant on contractors.
  • Consider risks and opportunities of climate change within (say) a 5-year business plan
  • Staff development – training and education could include overseas trips to other farms that are growing crops that UK will be able to grow in new climatic conditions.
Logistics: vulnerability of supply chain, utilities & transport infrastructure
Threats Opportunities
  • Flooding, especially flash flooding, will disrupt transport for site deliveries.
  • Site work more difficult therefore more prefabrication – therefore longer delivery lines for materials/components which will be vulnerable to extreme events, and generate more CO2 emissions.
  • Utilities generally (energy distribution, drainage infrastructure) vulnerable to extreme weather events.
  • Specify building solutions where production is close to point of use, including pre-fabricated buildings and components.
  • Use local sourcing to reduce ‘travel miles’ and vulnerability to transport disruption.
  • Opportunities for timber production (more CO2 helps growth) for use where lightweight construction is appropriate.
Finance: implications for investment, insurance & stakeholder reputation
Threats Opportunities
  • Construction industry needs clarification of design standards in the face of changing climate and performance indicators of well-adapted buildings.
  • Implications for insurance (of buildings, professional indemnity, employers liability) for existing buildings, new buildings and during the construction process.
  • Clients attracted to designers and contractors with evidence of climate future-proofing in building projects.
  • Good risk management will appeal to financiers and insurers and provides opportunity to market risk management expertise.
  • Good reputation attracts good staff, customers, and investors.
Markets: changing demand for goods & services
Threats Opportunities
  • Building fabric generally vulnerable to increased temperatures, driving rain and other extreme events.
  • Could NHBC 10-year guarantee period need extending?
  • Existing buildings not well-adapted to new climate, especially in hot summer conditions, leading to reduced value of existing buildings if they are not future climate-proofed.
  • Opportunities for concrete in situations where high thermal mass is appropriate, especially by recycling waste materials from other industries, thereby reducing use of virgin materials.
  • Specify flood-resistant solutions in vulnerable locations.
Process: impacts on production process & service delivery
Threats Opportunities
  • Excessive heat in summer will affect on-site construction processes.
  • Need to damp down on-site dust in dry summer conditions.
  • Extreme rainfall events make muddy site conditions and restrict on-site days.
  • Partly-completed structures more vulnerable to wind and storm damage.
  • Fewer frosts reducing interruptions to on-site processes.
  • Developing expertise and technology in water management and drainage.
  • Developing expertise in the design of well-adapted buildings.
  • Developing expertise in managing construction processes in response to climate change.
People: implications for workforce, customers & changing lifestyles
Threats Opportunities
  • Extreme discomfort in summertime in all building types, especially in the south.
  • On-site workforce exposed to increased UV and temperatures.
  • Dissatisfied occupants of buildings that are not fit for purpose, e.g. building occupiers experiencing flooding, inadequate drainage, lack of solar control and cooling, problems with air tightness, driving rain and winds.
  • Greater comfort and lower fuel bills in winter.
  • Training staff on climate change issues – including design, on-site activities etc. (applies at lots of levels, degree, HND, individual trades).
  • Some locations, currently not popular because of poor weather, will become more attractive as the climate changes.
Premises: impacts on building design, construction & facilities management
Threats Opportunities
  • Risk of flooding to properties and building sites.
  • Provision of cooling through installation of air-conditioning will increase capital cost, running costs and emissions of greenhouse gases.
  • Poor working conditions on site including in site huts particularly in higher summer temperatures.
  • Clients will require increased maintenance of existing buildings.
  • Opportunities for high thermal mass building solutions which can reduce air-conditioning requirements.
  • Opportunity to develop expertise and reputation in climate-related building issues.
Management implications
Threats Opportunities
  • Danger of ignoring climate change issues altogether.
  • Danger of over-reacting to climate change issues.
  • Unforeseen or unplanned-for regulations.
  • Ultimately business failure.
  • Putting climate change into management and planning systems thus climate future-proofing business and buildings.
  • Make full use of climate scenarios and other weather prediction services.
  • Influence regulations, especially Building Regulations, through trade and professional bodies and other stakeholders.
Logistics: vulnerability of supply chain, utilities & transport infrastructure
Threats Opportunities
  • Prolonged periods of poor weather make it harder for insurers to deal with high volumes of claims.
  • Insurers’ and lenders’ operations (inc. IT systems) could be vulnerable to impacts of stormy conditions, unpredictable electricity supply etc.
  • More weather-related claims improves efficiencies per claim.
  • Specialised claims handlers for climate-sensitive claims.
Finance: implications for investment, insurance & stakeholder reputation
Threats Opportunities
  • Ignoring climate change may appear to give a better return on investment.
  • Over reaction or no action to possible risks.
  • Reach limits of capacity of global financial markets to absorb risk. Currently global reinsurance capacity is $100bn, and Munich Re suggests that cost of weather-related disasters will exceed $150bn by 2010 due to climate change.
  • Greater need for risk-transfer mechanisms.
  • Policies based on rigorous risk assessment.
  • Alternative Risk Transfer mechanisms could be developed through other parts of financial sector, e.g. catastrophe bonds and weather derivatives.
Markets: changing demand for goods & services
Threats Opportunities
  • Negative impact on reputation if property insurance cannot be provided in areas of increasing risk, e.g. high flood risk, high subsidence risk.
  • Reduced market for insurers and lenders in climate-sensitive locations/sectors.
  • Insurance market could provide products to deal with increasing proportion of higher-risk locations/sectors.
  • Evidence of future-proofing could be included within any replacement for the Sellers’ Pack for the sale of domestic property.
  • Pro-active stance on dealing with climate change could enhance reputation of financial sector.
Process: impacts on production processes & service delivery
Threats Opportunities
  • High volume of claims becomes unmanageable.
  • Underwriting more difficult as traditionally it is based on historic information of previous patterns of claims.
  • Sophisticated underwriting that takes account of climate change.
  • Greater capacity within workforce of climate-related issues for underwriting.
People: implications for workforce, customers & changing lifestyles
Threats Opportunities
  • Workforce experiencing difficulty getting to work in extreme weather conditions.
  • Individual householders may not understand or respond to potential impacts of climate change.
  • Dissatisfied customers/occupants with buildings that are not fit for purpose, e.g. experiencing flooding, inadequate drainage, lack of solar control and cooling, problems with air tightness, driving rain and winds.
  • Be a good employer by preparing well for climate change.
  • Lower fuel bills and reduced CO2 emissions as buildings don’t need as much heating in milder winters.
  • Householders anticipate changing climate in making purchasing decisions based on property location and preparedness for changing climate.
Premises: impacts on building design, construction, maintenance and facilities management
Threats Opportunities
  • Climate damage to building fabric and structure including mould, subsidence, wind and flood damage.
  • Pest damage to buildings, e.g. termites over-wintering in mild winters.
  • Opportunity to establish a reputation by setting good examples of climate change adaptation.
  • Exploit external spaces.
Management implications
Threats Opportunities
  • Business failure as cannot price risk correctly OR cannot handle all the claims OR cannot maintain sufficient financial capacity.
  • Unforeseen or unplanned for regulation.
  • Reactive rather than pro-active approach gives sector a bad reputation on weather risk issues.
  • To become a source of expertise on weather damage issues.
  • Putting climate risks into management systems.
  • Financial services to take a central role in society by communicating risks of one of biggest environmental challenges we face.
Logistics: vulnerability of supply chain, utilities & transport infrastructure
Threats
  • Significant supply chain interruptions to intensive production schedules, and resultant cost implications.
  • Vulnerable transport systems, on which global supply chain depends, carrying high value products around the world (e.g. one ship carries £30 million worth of product).
Finance: implications for investment, insurance & stakeholder reputation
Threats Opportunities
  • Failure to climate-proof company, product range, premises etc. will increase potential for legal action, increase insurance premiums and reduce confidence amongst investors.
  • Demonstrating that climate risks are integrated into business planning improves reputation with investors, insurers, and other stakeholders.
Markets: changing demand for goods & services
Threats Opportunities
  • Increasing globalisation of markets may require products to operate in even wider range of climates, but many cars already designed to operate in harsher climates.
  • Vehicles to tolerate new extremes of climate, including greater intensity of rainfall (affecting seals, tolerances, wipers, tyres) and increased need for cooling.
  • Globalisation of markets may permit a ‘one size fits all’ specification for a wide range of climates.
  • Design and produce low-energy technologies for cooling interior of vehicles.
  • Include new technology in vehicles to warn drivers of weather-related hazards.
  • Increased demand for (summer) recreational vehicles.
Process: impacts on production processes & service delivery
Threats
  • Process environment will become hotter with increased need for cooling of some sort.
  • Increased drying time for painted products as a result of increased humidity.
People: implications for workforce customers & changing lifestyles
Threats Opportunities
  • Possible introduction of regulation on maximum working temperature in process environment.
  • Health hazards arising from excessive heat and respiratory problems and possible increased absenteeism.
  • Changing holiday patterns of workforce with more even distribution throughout the year will aid continuous production.
  • Staff training including learning from operation of plant in other climates similar to those which are expected for UK.
Premises: impacts on building design, construction, maintenance & facilities management
Threats Opportunities
  • Buildings generally vulnerable to extremes of wind, summer heat, driving rain etc. particularly addressing comfort conditions for workforce and performance conditions for production processes.
  • Existing buildings difficult to adapt to new climatic conditions.
  • Lower heating costs in winter.
  • Design new buildings in anticipation of changed climate.
Management implications
Threats Opportunities
  • Perceived lack of suitable data on future climate as a basis for quantified decision making.
  • Review vulnerability of supply chain and logistics, particularly extreme events, as these seem to be priority areas.
  • Some product components and testing regimes may need adaptation to cope with climate change.
  • Processes may be influenced by climate change but global experience will help the industry to adapt.
  • Demonstrating that climate risks are integrated into business planning improves reputation with investors, insurers, and other stakeholders.