Climate Change: The Business Risk You Can’t Afford to Ignore
Climate change is no longer a distant threat it’s a present-day business risk. Across industries, companies are facing growing exposure to physical, financial, regulatory, and reputational risks linked to a changing climate.
Some risks you may wish to incorporate into your risk register, and embed the impact into your risk appetite:
1. Physical Risks: Extreme weather, droughts, floods, and wildfires disrupt supply chains, damage assets, and increase insurance costs. From manufacturing to logistics, resilience is now a core operational priority. This impacts all businesses in one way or another – what action have you taken to mitigate it?
2. Transition Risks: As economies move toward low-carbon models, companies dependent on fossil fuels or high-emission processes face stranded assets, higher compliance costs, and investor pressure. That impacts your bottom line – is the level of risk acceptable?
3. Regulatory Risks: Governments worldwide are tightening environmental standards, introducing carbon pricing, and mandating climate disclosures, including those governments which do not practice what they demand. Failure to adapt means penalties and lost competitiveness. Regulatory non-compliance is very expensive both financially and reputationally. Ignore this at your peril.
4. Reputational Risks: Stakeholders expect accountability. Consumers, employees, and investors increasingly favour organisations that show real progress on sustainability. Falling behind can damage brand trust and market share. That ultimately means less business, less revenue, less profit.
Forward-thinking businesses are already responding by integrating climate risk into strategy, governance, and reporting; investing in decarbonisation; and pursuing climate resilience across operations and supply chains.
This isn’t just about ticking a box headed ‘compliance’ - it’s about futureproofing your business in a world that’s rapidly changing.
Why it matters
Sustainability isn’t just about doing good. It’s about futureproofing your business. SMEs that act now are better positioned to attract investors, win contracts, and weather economic and environmental shocks.
How is your organization preparing for climate-related risks?
For more hints and tips, visit www.peakgovernance.co.uk
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