Despite the belief that the changing climate is impacting London businesses’ operations, few are quantifying the financial costs and, as a result, are failing to invest in suitable risk mitigation strategies.
This is the finding of a joint report by Marsh and Base London, which benchmarks opinion among infrastructure and real estate firms and Base London members.
It found that nearly two thirds (62 percent) of respondents believe that extreme weather events are already having an impact on their businesses. 86 percent believe that the impact of the changing climate is already, or will be, materially felt by their organisations in the next decade.
Despite acceptance that the climate is changing, the report found that 84 percent of respondents said that their firms do not record the impact or measure the costs associate with climate change.
Nearly 40 percent believe that a tangible return on investment would be required before their firms would further invest in resilience strategies relating to climate change.
The research also found that firms are under-utilising insurance products which can be used to enhance resiliency. Only 5.9 percent of respondents stated that they have a resilient repairs clause on their property insurance policy, which allows for more robust reinstatement of a property after a loss; and nearly three quarters did not know if such a clause is in place.
Cliff Warman, environmental practice leader, Europe, Middle East and Africa (EMEA), Marsh, said: “Extreme weather is no longer a ‘black swan’ event, or a once in a generation phenomenon; last winter’s storms in the UK, which resulted in more than £400 million in flood claims, serve as a stark reminder of the direct impact changing weather patterns are having on our society and businesses.
“While more London businesses accept that the climate is changing, it is worrying that so few are investing in appropriate measures such as resilient building or robust supply chain strategies to protect themselves from the risks associated with extreme weather. Those organisations that are perceived to have a low resistance to severe weather events will become increasingly uninsurable in the future.”
Andrew Dowding, managing director, Base London, added: “It’s clear that commercial property owners, landlords and tenants need to get a better handle on the changing urban risk landscape. For instance, failure to make contingencies or to prepare for extreme climate events could have very severe, disruptive and costly consequences for everyone. We all have to recognise that this agenda is as relevant to business owners who want to save their businesses as it is about campaigners who want to save the world.”
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Europe, Marsh, Base London, Climate Change