Helping small businesses become more resilient

Extreme weather and other results of climate change are an increasing risk to businesses everywhere, but to small businesses, they can be devastating. In fact, almost 40 percent of small businesses never reopen their doors following a disaster event.

Because small businesses often do not have the time or resources to learn about climate change and how to prepare for extreme weather events, C2ES has prepared a new report that provides recommendations for how state and local governments can help small business owners.

Small businesses make up 99.7 percent of all businesses and account for more than half of sales and jobs in the United States. Their share of the nation’s employment and economy are among several reasons that small businesses are at particular risk to even a single extreme weather event.

Many small businesses are not aware of the risks they face from changing climate conditions, and may not have plans in place to respond and recover from weather events. Small businesses are also dispersed, diverse, and have few resources to prepare for and respond to climate risks. Businesses that have no direct experience with weather impacts may also find it hard to see the importance of the issue.

However, it’s not hard to see how one brief event can take a severe toll on small businesses. The July 30, 2016 flash flood that devastated the historic Main Street district in Ellicott City, Maryland, is a prime example. In what the National Weather Service identified as a thousand-year rainfall event, more than six inches of rain fell in two hours. The deluge sent water gushing through an area filled with antique shops, art galleries, boutiques, and restaurants. The flood damaged 90 businesses and caused more than $22 million in damages to infrastructure. Months later, many businesses remain closed.

C2ES conducted research on small business resilience in Maryland, where more than 500,000 small businesses account for more than 97 percent of all the state’s businesses, and employ about half of the state’s private workforce. A C2ES survey found that fewer than half of small businesses in Maryland were aware of their risks and knew where to go for more information. Furthermore, while 98 percent of the businesses surveyed had experienced impacts from extreme-weather events, only 38 percent of them changed their operations or planning in response. Our survey also revealed that most small businesses do not know where to find additional information on climate risks, and that available resources do not directly address local risks that would be most relevant to small business.

In response, C2ES developed a framework that outlines four key recommendations for state and local officials on engaging with small businesses on weather and climate resilience:

1.     Use trusted messengers to convey climate information. These include organizations that small businesses frequently interact with, like city or county chambers of commerce, trade associations and other business organizations.

2.     Leverage existing channels of communication. State agencies and local agencies often already interact with businesses on preparedness, emergency planning, flood management, long-term planning, and economic development. Climate resilience information can be incorporated into these interactions. Likewise, existing resilience efforts can be broadened to include the business community.

3.     Identify new opportunities. New programs and information can be developed on small business resilience, such as public-private partnerships and business resilience networks. Training materials and other resources that are available can be distributed via trusted messengers.

4.     Distribute targeted information. Businesses need more information on what they can realistically do to become more resilient to extreme weather and climate change. Sector- and location-specific information can help businesses better understand their risks and opportunities for enhancing resilience. 

Extreme weather and other climate impacts will always be a threat to small businesses and the communities they help support. By developing additional opportunities and channels to communicate with small businesses about those risks, state and local governments can enable more businesses to build resilience now to help better prepare them for the future.

Are businesses prepared for climate impacts?

Increased extreme weather and climate-related impacts are imposing significant costs on communities and companies alike. While some businesses are taking steps to assess and address climate risks, many face internal and external challenges to building climate resilience.

In a new report, Weathering the Next Storm: A Closer Look at Business Resiliencereleased at Climate Week NYC, C2ES examined how major global companies are preparing for climate risks, and what is keeping them from doing more.

C2ES reviewed public disclosures of S&P Global 100 companies, conducted in-depth interviews, and held workshops with business leaders, government officials, academics and other stakeholders. Key findings include:

Major companies recognize and report climate risks.

We found 91 of the world’s largest 100 companies see extreme weather and other climate impacts as business risks. Business leaders see climate risks firsthand – in damaged facilities, interrupted power and water supplies, disrupted supply and distribution chains, and impacts on their employees’ lives.

Most (84 companies) discussed climate risk concerns in CDP questionnaires. Fewer companies did so in their sustainability reports (47) or financial filings (40).

More companies are assessing their vulnerabilities.

The vast majority of companies rely on existing risk management or business continuity planning to address climate risks.

Many see climate change as a “threat magnifier” that exacerbates risks they already know and understand. This lens puts climate change into a familiar business context, but companies could overlook or underestimate the threats they face.

Companies are planning for Climate Risks

Photo by Ellie Ramm

Emilie Mazzacurati, founder and CEO at Four Twenty Seven, Inc., spoke at a C2ES-sponsored workshop on corporate climate resilience at the 2015 Climate Leadership Conference.

Many businesses are moving beyond identifying the potential risks posed by climate change impacts and are taking the next step: developing solutions.

More intense heat waves, rising sea levels, and heavier rainfall could lower crop yields and labor productivity, increase energy costs, damage property, and disrupt operations.

None of these impacts are good for business.

More than 80 individuals from companies, cities, and nonprofits shared their climate resilience ideas and experiences at a C2ES-sponsored workshop, “Emerging Best Practices for Identifying Climate Risk and Increasing Resilience,” at the 2015 Climate Leadership Conference in Washington.

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Tipping points and climate change: Revisiting The Day After Tomorrow

It has been 10 years since the movie The Day After Tomorrow offered a highly embellished vision of a climate “tipping point” in which polar ice sheets melt, shut down the Gulf Stream, and plunge Europe and much of the U.S. into a deep freeze.

While most of The Day After Tomorrow is safely in the realm of science fiction, there is real science to back up concerns that tipping points in the climate system could cause potentially irreversible, and in some cases drastic, changes in our climate.

Figure 1: Potential tipping elements in the Earth’s climate system overlaid with population density. Question marks indicate systems whose status as tipping elements is particularly uncertain. Source: National Climate Assessment 2014.

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Climate change poses national security risks at home and abroad

More than a dozen military leaders say the impacts of climate change threaten military readiness and response and will increase instability and conflict around the globe.

Their assessments are included in a recent report, National Security and the Accelerating Risks of Climate Change, by the CNA Corporation’s Military Advisory Board. The report’s authors – including 16 retired generals and admirals from the Army, Navy, Air Force, and Marine Corps – conclude that climate change impacts will act as threat multipliers and catalysts. Projected warming, changes in precipitation, sea level rise, and extreme weather events will pose risks to security within the U.S. and abroad.

At home, some of the threats are here and now. Many of the nation’s military installations are in coastal areas vulnerable to rising sea levels and storm surges. For example, the low-lying Hampton Roads area of Virginia is home to 29 military facilities. Sea level in the area is projected to rise 1.5 feet over the next 20-50 years and as much as 7.5 feet by the end of the century. One advisory board member, Brig. Gen. Gerald Galloway, stressed that “unless these threats are identified and addressed, they have the potential to disrupt day-to-day military operations, limit our ability to use our training areas and ranges, and put our installations at risk in the face of extreme weather events.”

Figure 1: Sea level rise projections for the Hampton Roads region, which is home to 29 different military facilities. Source: CNA, 2014