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15 October 2013

UK Business - ready for any weather?

Emma Cox, partner, PwC was recently appointed to lead the firm's UK Sustainablity & Climate Change practice. In an address to Business Leaders on Climate Change, she examines the business case for action.

Time and again, the conversations we have with the leaders of UK businesses of all sizes, are driven by an outlook on the economy and shaped by recurring themes: New markets, skills, innovation, investment, regulation, competitiveness, risk and resilience.

In a world craving economic growth and stability, we cannot ignore the findings of the Intergovernmental Panel on Climate Change (IPCC). This year’s IPCC report gave us the most authoritative review of the scale of the threat and the risk to us all of climate change, and reinforces the case for action. 

Not matter what insights and reports you read on the implications of AR5, for business, there are let three points that need to frame your thinking, and the case for action.

The first is that climate doesn’t respect borders. It will not just be impacts locally in the UK that will matter to UK business. Global supply chains link us directly to hazard prone and potentially less prepared countries in developing and emerging economies, and 80% of the FTSE350 assets are now overseas.

Secondly, weather pays no attention to scale and stature. Dealing with climate change risk is not just about the action large companies take. Smaller businesses also have international supply chains, and smaller businesses may not have the luxury of a full time climate risk manager to keep an eye out for these issues.

Thirdly, climate change is not just an environmental issue. The UK is facing fundamental challenges that underpin economic stability. This includes energy capacity, pricing and security; infrastructure resilience and access; international risks and competitiveness; security of food supply; development of skills and R&D capability. All these are interlinked to the climate and weather.

This is no longer just a debate about climate change. It's one of securing recovery and sustaining growth for UK plc.

In our role as report writer to the CDP's Global 500 report in 2013 we found four out of five (83%) companies in the Global 500 Index have reported physical impacts of climate change as a risk.

Let’s not lose sight too of the opportunity, not just in terms of risk prevention, but in terms of innovation, skills and business opportunities. A resilient economy is an attractive one, for investments and talent. Many sectors that the UK is strong in, from insurance to water management, will have an important role to play in a changing climate. But we need to be ready in a competitive global economy.

CDP's report, alongside that of BusinessGreen's survey of business leaders climate action, provide not just a useful insight into the day to day thinking in UK business about the reality of action and inaction on, managing climate risks, but also reflects the scale of the economic opportunity we will miss if we don’t act.

We hope they will help move climate change up the risk radar for UK businesses, because it is time to act.

Emma Cox leads PwC's UK Sustainability & Climate Change practice. Follow PwC's climate change updates @pwcclimateready.