Small businesses at particular risk from climate change, extreme weather, U.S. groups say

Small business in the United States are particularly at risk from climate change and extreme weather, argues a new report from two industry groups.

“Because small businesses are distinctly critical to the U.S. economy, and at the same time uniquely vulnerable to damage from extreme weather events, collective actions by the small business community could have an enormous impact on insulating the U.S. economy from climate risk,” argues the report from Small Business Majority (SBM) and the American Sustainable Business Council (ASBC).

“The median cost of downtime from a small business affected by an extreme weather event is $3,000 per day,” according to the groups. “Small businesses’ physical assets tend to be more concentrated: A single building or factory could represent most of the book value of a small business, whereas large businesses benefit from greater geographic diversification.”

Most small businesses also haven’t analyzed their potential losses from an extreme weather event or other climate-related risks, partly because they don’t have the resources to do so, the groups also note.

They argue that 57% of small businesses have no disaster recovery plan, and for those small businesses that do have continuity, or risk management plans, 90% spend less than one day a month preparing and maintaining them.

Small businesses are particularly vulnerable because they lack the same access to capital and resources as large corporations, the report says. They also tend to operate out of one location and derive most of their business from within a few miles of those locations, it argues.

Of the 60,000 to 100,000 small businesses negatively affected by Hurricane Sandy, up to 30% are estimated to have failed as a direct result of the storm, the groups argue. Overall, about a quarter of small to medium-sized businesses don’t reopen after a disaster, the report also suggests.

The report suggests business owners invest to make their businesses more resilient, develop business continuity plans and understand how their community is responding to climate  change.

“More and more entrepreneurs are seeing real-life impacts to their businesses and their bottom lines from climate change and the extreme weather events it creates, and they want something done to help curb those effects,” noted Rhett Buttle, vice president of external affairs for Small Business Majority.

“They also see huge opportunities in the renewable energy arena that will help boost their bottom lines, and believe government can create financial incentives that can help them take energy efficiency measures to save money and create market opportunities for small firms.”