Impact of Climate Change on Small Businesses

Small Businesses Impacting Climate Change

Climate change is a multifaceted global phenomena, which requires a global solution. It is linked with many physical manifestations, consumer preferences, regulatory standards, and various uncertainty levels. An imperative aspect of it is the interrelationship between climate change and businesses.

Businesses, especially small-scale businesses, cannot run smoothly without adequate climate conditions, as unpredictable weather conditions can directly impact businesses, resulting in a lack of water, for instance, or even floods, and wildfires. This can cause serious damage, mainly to small businesses, and impact business operations.

Similarly, businesses also contribute largely to the change in climate conditions, as they have the power to positively or negatively affect the environment. Millions of tons of greenhouse gases are produced every year by heating and air conditioning systems, as well as plastics, large amounts of waste paper, and old electronic equipment are ending up in landfills, which is causing destruction to our planet and, by causing change in climatic conditions. Companies can contribute positively to this issue by taking steps toward inculcating green practices.

Moreover, just offering good products and customer service doesn’t satisfy customers anymore. They want to understand where the product came from and how the manufacturing process can help in fighting against greenhouse emissions of gases. They are demanding and opting for green products that are not only safer for them to use but are also environment-friendly.

The change begins from initiating small steps, hence, small businesses need to step up to work toward appropriate solutions, by adapting to small changes, like reducing energy consumption, minimizing waste, using raw materials more efficiently, and preventing pollution, especially hazardous gases, which can also cut down costs, improve efficiency, as well as improve their long-term success.

How Climate Change Effects Small Businesses
How Climate Change Effects Small Businesses

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What Climate Change Means For Small Businesses?

A dire report by the United Nations’ Intergovernmental Panel on Climate Change spooked pretty much everyone around the world in October 2018 when it said humans have only about 12 more years to head off the most catastrophic effects of climate change.

What role do small businesses play in the problem, and how can they be part of the solution?

The State of Climate Change

The UN panel’s terrifying report urges sweeping action on the part of governments around the world. But what are the numbers behind this catastrophic warning? The most crucial figures surround rising global temperatures.

What does this mean?

The numbers we’re talking about may seem tiny, but scientists and experts agree that even the smallest increase in global temperatures will have wide-ranging effects.

Here’s a look at some of the projected (and already ongoing) effects of global warming:

  • Rising surface temperatures
  • Unpredictable weather patterns
  • Droughts and heat waves
  • Stronger, more intense hurricanes
  • Sea-level rise
  • Water and food scarcity

Global Economic Catastrophe

Few, if any, effects of climate change will be limited to the planet itself.

Climate change threatens to disrupt nearly every industry from health to finance to agriculture to education.

From reducing the workforce to increasing the cost for materials to complicating distribution, unchecked global warming stands not only to create an environmental catastrophe but an economic one as well.

  • 15% projected drop in global GDP from 2010 levels under a scenario where temperature rises by 2.5C.
  • That represents more than $9 trillion in loss.
  • 1.2 billion jobs are threatened by global warming.

Impact on Small Business

While we’ve seen the very broad economic impact of global warming, those effects will play out every day for small businesses. Here’s a look at just a few of the areas of concern:


Both you and your employees will get sick and injured more often, leading to fewer hours worked and higher healthcare costs. Additionally, many companies will be affected by global migration and pollution that impacts their suppliers.

9.4% current average annual GDP loss due to disease; this number will only go up in the future.

Loss of business

As sea levels rise and ocean temperatures increase, hurricanes and floods will become worse and more frequent. For many small businesses, a natural disaster threatens their very existence.

4 in 10 small businesses in FEMA-declared 2017 disaster areas lost revenue due to natural disasters.

Cost of regulation and insurance

As the effects of climate change continue to emerge, governments and insurers are likely to pass the cost of mitigation along to small businesses and other employers. Already, the cost of regulation is often high, particularly for small businesses, and that cost will only go up in the future.

$40 billion annual cost to small businesses to implement federal economic regulations.

Loss of opportunity

Particularly for coastal areas, tourism dollars are the very lifeblood of local economies. Such areas are incredibly vulnerable to climate change-related natural disasters, whether direct impacts like needing to shut down while they recover to fewer people having the resources to travel in the first place.

52% of hospitality businesses in 2017 disaster areas reported disaster-related losses.

A Closer Look: How Employees Will be Affected

Every small-business owner knows a company is only as successful as its employees. While we touched on GDP losses due to illness, here’s a closer look at how climate change will impact health around the world.

Direct effects on human health

  • Severe weather: Injuries, deaths, stress
  • Pollution, increasing allergens: Respiratory disease
  • Water and food supply/scarcity: Malnutrition, disease
  • Environmental decline: Migration, conflict, mental stress
  • Ecological changes: Infectious diseases like malaria and Lyme disease
  • Extreme heat: Death, heat-related illness

How long could your company survive if you or your employees regularly faced any of these issues?

Small Business to the Rescue?

Since 1988, more than half of industrial emissions can be traced to just 25 companies.

So regardless of governmental action (or lack thereof), it’s clear that businesses must do their part to combat this crisis.

Small-business owners may be uniquely positioned to make a real difference. And it’s critical that they do, as nearly half of Americans rely on small businesses for their jobs.

In addition to their centrality to American jobs,

here are a few other qualities of small businesses that they can leverage in the climate change battle:

Agility: With their small size, these businesses can respond more quickly than their huge counterparts.

Community Involvement: Many small businesses are heavily involved in their local communities, meaning they can exert influence and help other organizations make the needed changes.

Innovation: Necessity breeds invention. With smaller budgets and staff, small businesses often develop novel solutions to common problems.

More than 60% of Fortune 100 companies have set at least one Clean-Energy Target.

What can your small business do to mitigate its own impact on the environment?

  1. Establish and implement clean-energy targets; for instance, pledge to ensure the exclusive use of renewable materials in production.
  2. Reduce energy use by installing energy-efficient lighting and ensuring lights are switched off when not in use.
  3. Shut down non-essential office equipment at the end of the day.
  4. Reduce use and inefficiencies in heating/cooling systems.
  5. Take advantage of video conferencing to reduce company travel.
  6. Consider eliminating or consolidating locations.
  7. Encourage and incentivize employee carpooling or use of public transportation.
  8. Lobby state and local governments to act on climate change.
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