How Canada’s small and medium-sized businesses can better prepare for fires, floods and heatwaves: BDC study
MONTREAL, November 25, 2024 – Small and medium-sized enterprises (SMEs) that plan for weather-related impacts can enhance their appeal to investors, bolster supply chain resilience, and reduce insurance costs and operational disruptions, according to “Fires, Floods, and Heatwaves. Are Canada’s Small Businesses Ready?” a study by BDC, Canada’s bank for entrepreneurs.
“By focusing on both mitigation and adaptation, SMEs can reduce their environmental impact while building resilience against weather-related events,” said Sandra Odendahl, Senior Vice President and Head, Sustainability, Diversity & Social Impact. “And by integrating actions to protect critical assets into their business planning, SMEs will safeguard their future.”
How businesses can win
To support SMEs in navigating weather-related risks, the report provides practical insights on what to expect and how to safeguard their businesses. It offers a comprehensive range of resources, guidelines, and actionable recommendations by type of climate risk and disruption.
According to a macroeconomic analysis done by the Canadian Climate Institute, every dollar spent on adaptation measures yields $13 to $15 in total benefits. For example, updating flooding and wildfire guidelines and standards for new construction could save Canada an estimated $4.7 billion a year—a savings of nearly $12 per dollar invested. Likewise, implementing climate-resilient building codes could have an estimated 1,100% return on investment.
In addition, companies that take steps to manage the physical risks associated with weather-related events may find unexpected business opportunities, such as new products or services they could offer.
Effects on the economy
The world is experiencing more frequent and severe weather events, posing significant risks to the environment, people, and the economy. In Canada, where warming occurs at twice the global average, the threat is even more pronounced with increased wildfires, thawing permafrost, and shifting ecosystems. In the first three quarters of 2024, climate-related insured property losses reached a record $7.7 billion.
Indeed, all of Canada’s businesses are increasingly vulnerable to the impacts of weather-related events such as floods, wildfires or intense heat. Extreme weather events have already impacted over a third (31%) of Canada’s SMEs. Impacts include sales losses, higher operating and insurance costs, and supply chain and water disruptions.
SMEs require support
Despite these impacts, only 12 percent of SMEs surveyed have made climate adaptation a priority. According to the BDC study, Canada’s SMEs will need more information and expertise to assess the physical risks to their business and implement adaptation measures. However, the perceived cost of adaptation investments is an obstacle, and one-third (34%) of survey respondents would welcome funding to implement adaptation measures.
About BDC: 80 years as Canada’s bank for entrepreneurs
BDC is a partner of choice for all entrepreneurs looking to access the financing and advice they need to build their businesses and tackle the big challenges of our time. Our investment arm, BDC Capital, offers a wide range of risk capital solutions to help grow the most innovative firms. BDC’s development role means we are in a state of perpetual evolution – wherever entrepreneurs go and whatever the Canadian economy needs – we will be there to help them defy the odds. 80 years later, that commitment remains very much alive. The financial value of BDC’s services is estimated to add $23.6 billion in GDP to Canada’s economy over the next five years. We are one of Canada’s Top 100 Employers and Canada’s Best Diversity Employers and the first financial institution in Canada to receive the B Corp certification in 2013. For more information on our products and services and to consult free tools, templates and articles, visit bdc.ca or join BDC on social media.
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