Climate-Proof Your Business Financially
Climate change poses both direct and indirect financial risks to businesses. Financial resilience can make a huge difference in the long-term sustainability and success of a company. The following is a framework of steps a business or individual could take to build climate financial resilience. Not all aspects of the framework will apply to every business, and this does not constitute professional constitute financial advice, but the approach of evaluating and avoiding climate risk are useful tips to climate-proof a company.
Steps to Build Financial Resilience to Climate Change
1. Assess Risk Exposure
Identify climate risks relevant to your location, industry, or lifestyle and (e.g. flooding, heatwaves, supply chain disruptions).
Conduct a Vulnerability Assessment to evaluate said risks: Is your business located in a high-risk area? Are you dependent on climate-sensitive resources? Do you have an action plan to address operations disruptions?
Monitor Climate trends and weather forecasts for possible disruptions in short-, medium- and long-term.
2. Build a Financial Buffer
Emergency Fund set aside to cover unexpected expenses caused by climate-related events (e.g. temporary relocation, repairs, increased insurance costs).
Diversify income sources to reduce financial vulnerability, especially if income is dependent on at-risk activities.
Adequate insurance covering climate-related risks to property, business interruptions, crop failure and disasters like flooding, etc.
3. Climate-Proof Assets
Retrofit buildings for energy efficiency and weather resistance (e.g. insulation, flood barriers, fire-resistant materials).
Invest in resilient infrastructure: Consider solar panels, rainwater harvesting, or backup power systems to reduce costs and reliance on external services. Becoming self-reliant can protect businesses from events such as regional energy outages or water shortages.
4. Adapt Operations & Supply Chains
Diversify suppliers and operation regions to reduce exposure to regional climatic events.
Conduct a climate risk audit of your supply chain.
5. Green Your Finances
Sustainable investments with environmentally responsible and authentic funds, companies and banks.
Consult environmental risk experts and financial advisors to review your assets.
Contact the experts; find our key partners on the Community Network.
Seek green funding or grants: Many governments and organizations offer incentives for climate resilience or sustainable practices.
See Techies Go Green’s Community Network section on Grants and Finance for more info.
8. Educate & Empower
Train staff on emergency plans and risk management, ensure protocol to address climate-related disruptions is effectively taught.
Scenario planning to develop and update contingency plans for different climate scenarios.