Telling the truth about SME life today

Climate change: ignore at your peril

If there was ever any doubt that climate change is an issue for small businesses as well as for major corporations, last winter’s cold snap should have dispelled it.

The sudden snowfall meant one in ten workers was unable to get to work. The total bill to the UK economy ran to ?600m a day.

Small firms may not contribute as much to climate change as large companies, but they are especially vulnerable to its malign impacts.

Yet the sad truth is that only a minority of small- and medium-sized enterprises (SMEs) see climate change as a business priority.

According to research by MORI for the Department for Environment, Food and Rural Affairs (Defra), one in three businesses has been significantly affected by extreme weather in the last three years but fewer than a quarter have taken any action to increase their resilience.

This picture is confirmed by research CIMA has recently published from its quarterly Mid-size Business Confidence Monitor, which shows that a third of SMEs see sustainability as either a low priority or not a priority at all. Only a quarter see it is as a high priority.

Our survey of more than 300 CIMA members and students at medium-sized businesses also found only a quarter had a formal sustainability plan.

Of course I understand SMEs have a lot on their plate right now. The repercussions of the financial crisis still affect many businesses in the form of weaker demand and reduced access to credit.

On top of that, worries about the nuclear situation in Japan and the implications of conflict in the Middle East on supply chains and orders are creating real headaches.

But ensuring resilience against climate change is a central element of long-term business planning that should be the focus for the board of any company of whatever size.

Hotter summers, wetter winters and greater incidence of extreme weather events will cause disruption, damage supply chains and make certain goods and services unprofitable.

But as well as posing potential risks, climate change offers new opportunities to businesses that act swiftly. Warmer temperatures will make crops such as wine grapes easier to grow in southern England for example.

Hotter summers will also increase the demand for efficient and affordable cooling systems for shops and offices. The list is endless.

An example may help highlight how SMEs can protect themselves against risks and seize the opportunities.

Taylerson’s Malmesbury Syrups in Wiltshire makes flavoured syrups for coffees and cooking. The owner realised that demand for its products, which were linked to cold weather, would disappear within the next 20 years.

He reviewed the product range and decided to offer syrups to be used with ice creams and cold frapp’s. Existing clientsexpressed an interest in the product and he picked up some new clients as a result.

This is exactly the sort of analysis all SMEs should carry out. Many will say they do not have the time and resources to invest in that sort of forward planning.

This is why CIMA and Defra have launched an online climate resilience toolkit?that provides companies a tailored report highlighting areas of risk and offering tips on how to mitigate those impacts and turn threat into opportunity.

Many SMEs see their immediate priority as ensuring they are still in business tomorrow morning, next week and next year while climate change is something they can leave for the long-term.

Our message is that delay is dangerous. Climate change can have serious short-term implications for businesses and will also be a crucial factor affecting long-term success.

While climate change may be a moral and environmental issue on a global scale, its impact is most definitely a local business issue.

The warm spring weather that Britain is enjoying may have dulled memories of the big freeze. But in this climate conscious century such complacency will be small businesses” fatal weakness.

Charles Tilley is CEO of the Chartered Institute of Management Accountants.

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