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Climate change effects on business

Climate change effects on business

How climate change is affecting businesses

Climate change impacts include changes to our weathercoasts and oceans, and the natural and built environment. These impacts are localised, and the way they impact your business will vary depending on your industry, global location and vulnerability (such as what your business facilities are made from, and the services it depends on).

Adding more complexity are the impacts of climate change from multiple natural disaster events; including exposure to droughtbushfires, and floods in short succession. 

Impacts of climate change on business can be direct or indirect:

  • Direct impacts affect your business directly, such as physical damage from floods or bushfires, or forced closures.
  • Indirect impacts are the flow-on effects of climate change or extreme events, such as a supply chain being disrupted by extreme weather, or income being reduced. An example of this is how the South Coast economy was impacted as a result of reduced visitor numbers following the black summer bushfires of 2019–20.

As each business is unique in its location, operation, and supply chains, it is important to identify the specific climate risks to your business sector and location, and plan accordingly.

Effects on medium sized businesses

For medium business, climate risk exposure varies and will depend on the specific industry and vulnerability. medium business may experience various climate-related risks, such as interruption to supply chains, challenges of comfort and energy efficiency in buildings and other operations, and climate-related liability. Understanding employee health and wellbeing and how this being impacted by climate change is also important.

Businesses in the agricultural, forestry and fishing sectors are most at risk of catastrophic climate change impacts. These businesses operations rely on the natural environment. However, other sectors such as retail trade, tourism and manufacturing are also highly exposed, with all types of business at risk of the effects of climate change. 

Effects on small businesses

Small businesses are the lifeblood of the NSW economy. They provide essential services, support employment in local communities and contribute to the identity of the places we love. When small businesses are impacted by climate change, the effects can be felt by the broader community.

The effects of climate change, including extreme weather events, can be highly disruptive to small businesses. Climate change is increasing the frequency and severity of weather events. This adds extra pressure to businesses as they may be exposed to multiple extreme events within a short time, such as droughtbushfires, and floods. The impacts of these vary depending on the business location, industry, and its vulnerability.

Relevant resources

Get Ready Business - NSW State Emergency Service