As climate change accelerates, South African businesses face increasing risks from extreme weather events such as floods, droughts, and wildfires. These disasters can cause financial losses, disrupt supply chains, and halt operations. The World Economic Forum warns that businesses failing to address climate risks could lose up to 7% of their earnings by 2035.
To safeguard operations and minimise financial losses, businesses can take the following six key steps:
- Conduct a Climate Risk Assessment
A climate risk assessment helps identify vulnerabilities to extreme weather and long-term climate shifts. By evaluating geography, historical climate data, and infrastructure readiness, businesses can make informed decisions about upgrades, policy changes, and risk mitigation strategies. - Develop a Disaster Preparedness Plan
Being reactive to climate disasters leads to significant losses. In February, heavy rains rendered 27 schools in the Northwest province inaccessible or severely damaged. In 2022, KwaZulu-Natal (KZN) suffered over R17 billion in damages from floods. A disaster preparedness plan ensures businesses take proactive measures to mitigate potential damage and operational disruptions. - Invest in Resilient Infrastructure
Poor planning and maintenance contribute to infrastructure failures, as seen in the KZN floods. Many insurance claims from industries like construction stem from defective designs and inadequate maintenance. Investing in resilient infrastructure reduces risks and ensures business continuity amid climate challenges. - Secure Adequate Insurance Coverage
A climate risk assessment, combined with a review of insurance policies, can highlight gaps in protection. Whether covering business interruptions or property damage, having the right insurance prevents climate-related losses from derailing operations. Businesses can explore add-ons like Environmental Transport Liability Cover for protection against environmental impairment risks. - Stay Informed About Climate Risks
Monitoring weather alerts and climate reports enables businesses to anticipate risks and act swiftly. The South African Weather Service provides real-time warnings, allowing for timely decision-making. Establishing internal communication channels ensures employees and stakeholders are informed, reducing disruptions and enhancing preparedness. - Adopt Sustainable Practices
To remain competitive in a changing climate, businesses should explore renewable energy, eco-friendly supply chains, and carbon footprint reduction strategies. Climate change is a growing reality, and businesses have a role to play in mitigating risks while contributing to a sustainable future. By implementing these proactive measures, South African businesses can safeguard their operations, minimise financial risks, and build a more resilient and sustainable economy.
