Few businesses in the capital have strategies to deal with the impact of climate change on their operations, overseas investments and international supply chains, according to a report by the London assembly economy committee.
The report highlights research by the CDP that found that 54% of FTSE 100 firms have no business adaptation strategy in place for climate change. A separate survey by the Federation of Small Business found that 60% of small and medium-sized businesses have no plan to deal with extreme weather conditions.
The capital’s status as a global city makes its economy increasingly vulnerable to climate change, says the report. Climate change will generate imported risks, such as the insurance sector, which is likely to increasingly pay for the damage wrought by climate-related events, overseas investment and international supply chains. It also faces heightened conventional risk, including flood, drought and heatwaves.
The committee recommends that adaptation to the indirect impacts of climate change should be integrated into the mayor’s economic development strategy, which it says currently does not occur. The strategy should consider the risk of impacts cascading through markets, supply chains and investments based in vulnerable regions, the report says.
The politicians also call on the London Climate Change Partnership, which brings together private and public sector organisations, to work with the economics team at the Greater London Authority and trade associations to map the major supply chain vulnerabilities of the city’s economy.
The report highlights the threat to the financial sector from fossil fuel investment. London’s stock market increased its exposure to carbon, particularly coal, by 7% between 2011 and 2013, according to analysis by the Grantham Research Institute and the Carbon Tracker Initiative.
The committee recommends that the mayor consider divesting from fossil fuels and invest instead in the green economy, for example, encouraging public-private partnerships to finance sustainable infrastructure projects under London’s 2050 infrastructure plan.
“Too little is being done to understand and prepare for the potential costs of climate change. London faces a great unknown when it comes to how our supply chains and economy will be hit by extreme weather events,” report author and former committee chair Jenny Jones said.
She pointed to the example of the 2011 floods in Thailand, which disrupted the supply of electrical and electronics components, such as circuit boards, and resulted in higher prices across the IT industry, including in London.
