RESOURCES
Introduction to adaptation
CLIMATE RISKS AND OPPORTUNITIES FOR BUSINESSES
Small- and medium-sized enterprises (SMEs) are often the backbone of local economies – they create jobs, develop new ideas and help the economy grow. However, climate change is quickly emerging as one of the most difficult challenges of this century that threatens companies and their customers alike.
In most countries around the world, climate change will lead to higher temperatures, more irregular rainfalls and stronger storms or floods. These and other expected changes can affect businesses directly, for example by damaging buildings and weakening staff. They can also affect the firm’s suppliers, customers and surrounding communities.
Examples of climate change risks:
| Climate phenomenon | Impact on human or natural system | Negative business effect | |
| Heat wave | High in-/ outdoor temperatures | Exhaustion of workers | Reduced productivity |
| Heavy rain | Flooding or landslide | Blocking of transport route | Supply disruption |
| Irregular rainfall | Lack of cooling water | Overheating of machinery | Reduced output |
Even though these climate phenomena as well as their impacts on natural and human systems might still be subtle now – in the next years and decades, the climate will change more quickly and more dramatically. Therefore, climate change has moved from the sidelines to be recognized as a serious development challenge.
Besides risks, climate change can also create business opportunities! Above all, companies will be required to offer new products and services that help other people adapt to climate change. By anticipating these new needs, companies can emerge as forerunners in their sectors.
Examples of climate change opportunities:
| Climate phenomenon | Impact on human or natural system | Positive business effect | |
| Heat wave | heating up of private homes | increased demand for insulation material | New product opportunity |
| Changes in climate and weather | Risks for other businesses | increased demand for adaptation support | New service opportunity |
ADAPTATION = MANAGING RISKS AND SEIZING OPPORTUNITIES
Climate change adaptation essentially means management of risks and opportunities – it should thus be part of the routine management of companies. As a result, the business will be stronger and ready to deal with changing demand and supply.
However, SMEs often lack the necessary skills to conduct thorough climate risk assessments and to develop adaptation strategies. The Climate Expert Approach was developed to help SMEs overcome these barriers. In four steps, it guides companies through the identification of past and future climate change phenomena in their region; evaluation of risks and opportunities for their businesses; prioritization of adaptation measures; and development of an entire adaptation strategy.
