Zurich Insurance Group’s fourth annual global SME survey provides a snapshot of how small and medium sized businesses view the climate change threats that they face. Almost four-fifths (78 percent) of SMEs / SMBs surveyed expect the risks associated with climate change to have a significant effect on their business.
Heavy rain (22 percent) and droughts (20 percent) are seen as the most significant climate change risks for small and medium-sized enterprises. Material damage (36 percent) and business interruptions (26 percent) are expected to have the most severe impacts on these businesses and are the most difficult risks to protect against.
The survey, which polled 2,600 C-suite executives and managers at SMEs in 13 countries in Europe, the Americas and Asia Pacific, revealed that downpours and heavy rain (22 percent) and droughts and severe heat (20 percent) were the natural events believed to have the most potential to hurt business.
More than one-third (36 percent) of SMEs considered material damage as likely to be the most critical risk to business due to climate change. The next-greatest risk related to climate change was thought to be the threat of business interruptions (26 percent).
Additional risks that could arise due to climate change included supply chain interruptions, potentially higher costs for energy and water, and the impact of climate extremes on employees’ health, according to 14 percent of survey respondents.
The global survey revealed significant regional differences in terms of how climate change risk was perceived, and the potential impact it might have:
European SMEs fear flood risk
SMEs in Europe were the least likely to view climate change as posing a risk to their business. A quarter of SMEs in Europe, the highest percentage among regions surveyed, anticipated no negative impact on their business due to climate change. Among the 75 percent of European SMEs that did see climate change as posing a risk, most believed the biggest impact on their business was likely to be caused by flooding (22 percent). Where floods were concerned, material damage was considered to be the greatest risk (35 percent).
US businesses concerned about impact of climate on workers’ health
SMEs’ managers in the US were most keenly aware of the potential impact climate change could have on the businesses they run. Only 6 percent expected no impact. Over three-quarters of respondents were concerned about the impacts of extremes in precipitation, including the effects of heavy rain and floods, as well as droughts. The survey found that US SMEs were most concerned about the potential impact of climate change on their workforce. More than one-quarter (26 percent) of US SMEs perceived the health status of their workforce as their second-biggest concern related to a changing climate after material damage that climate change might cause (47 percent ranked it as the top risk).
SMEs in Latin America concerned about damage from heavy rain
When it comes to climate change, Latin American SMEs, like their U.S. counterparts, were most concerned about extreme weather. Downpours and heavy rain were the leading cause of worry for over a third (36 percent) of SMEs in Latin America; 43 percent expected material damage would be the most significant result of such risks. Responses from SMEs surveyed in Latin America found that more than one out of five SMEs in that region believed natural catastrophes had the potential to affect their business operations, affecting supply and distribution chains, and causing business interruptions.
Asia Pacific SMEs most worried about business interruptions
Unlike SMEs in other regions, those in Asia Pacific were most worried about the impact climate change could have on business continuity; the fear of business interruptions, rather than material damage, was their greatest worry. Over a third (34 percent) of SMEs in Asia Pacific also reported droughts and heat as likely to have the biggest potential impact on their businesses. That was in contrast to the concerns among SMEs in other regions, where respondents were more worried about events related to increased precipitation.More details (PDF).