The financial impact of climate change on UK industrial sites
Published: 13 March 2025
The impacts of climate change continue to pose significant challenges to businesses worldwide. In the UK, industrial sites are particularly vulnerable to the economic implications of climate change – Storm Babet in October 2023 caused over £450m in flood damage alone.
From operating costs to supply chain disruptions and the need for climate-resilient infrastructure, adopting a proactive approach is essential for UK businesses.
Increased operating costs
One of the most immediate financial impacts of climate change is increased operating costs. Extreme weather events such as heatwaves and floods can lead to higher energy consumption for cooling and heating, and potential damage to facilities.
Rising temperatures can lead to increased energy consumption and higher utility bills. Investing in energy-efficient evaporative cooling systems can help to maintain safe working conditions and protect sensitive equipment from expensive damage during heatwaves.
The recent national assessment of flood and coastal erosion risk shows a significant increase in those at risk of flooding in England with 1 in 5 properties – some 6.3 million – at risk. Over 1.2 million of these are commercial or industrial properties. Flooding can cause significant damage to infrastructure such as drainage systems, leading to costly repairs and downtime. Drainage systems can be upgraded and properly maintained to handle increased rainfall and prevent flooding by installing channel drains to efficiently manage surface water, for example.
Proactive steps can mitigate the need to manage uncertainty surrounding the frequency and severity of these extreme weather events and the difficulties in forecasting expenses accurately. Investing in energy-efficient technologies and renewable energy sources can help site operators meet the UK's climate targets, leading to longer-term savings. These investments include upgrading to more efficient machinery, installing renewable energy systems such as solar panels, and implementing energy management systems to optimise consumption.
By streamlining compliance with environmental regulations, businesses can not only meet stricter standards but also potentially save money. Efficiently managing environmental permits, including application fees, annual charges and site inspections, can lead to cost-effective monitoring and reporting of emissions.
Strategies for managing operating costs
- Invest in energy efficiency: Upgrade to more efficient machinery and systems and implement energy management practices to reduce consumption and lower utility bills.
- Enhance maintenance planning: Develop a proactive maintenance schedule to address potential issues before they become costly repairs and allocate funds for emergency repairs.
- Leverage renewable energy: Install renewable energy systems such as solar panels to reduce reliance on traditional energy sources and benefit from long-term savings.
Supply chain disruptions
As we’ve witnessed in the UK in recent years, climate change can severely disrupt supply chains and the movement of goods. Extreme weather events such as floods, droughts and storms can impact the availability and cost of raw materials and components. They can also damage transportation infrastructure such as roads, railways and ports, leading to delays and increased transportation costs.
Additionally, climate change can affect the availability of natural resources. Changes in temperature and precipitation patterns can impact agricultural yields, water availability, and the production of raw materials. This can lead to shortages and increased prices for essential inputs, affecting the entire supply chain. For example, the 2020 floods in the UK led to a substantial reduction in wheat yields, resulting in the lowest production levels since 1981. This affected the food industry and had a ripple effect on other sectors reliant on wheat-based products.
Industrial sites that rely on global supply chains are particularly vulnerable to these disruptions. Businesses must develop strategies to enhance supply chain resilience, such as diversifying suppliers, increasing inventory levels, and investing in more robust transportation infrastructure.
Strategies for enhancing supply chain resilience
To mitigate these risks, businesses must develop strategies to enhance supply chain resilience. Some effective strategies include:
- Diversifying suppliers: Sourcing materials and components from multiple suppliers in different geographic locations can reduce dependency on any single source, mitigating the risk of disruptions.
- Increasing inventory levels: Maintaining higher inventory levels can provide a buffer against supply chain disruptions.
- Implementing advanced monitoring systems: Using technology to monitor supply chains in real-time can identify potential disruptions early, allowing time for proactive measures.
The need for climate-resilient infrastructure
To mitigate the financial impact of climate change, UK industrial sites must invest in climate-resilient infrastructure. This involves designing and constructing facilities that can withstand extreme weather events and adapting existing infrastructure to cope with changing climate conditions.
For industrial sites located in flood-prone areas, investing in flood defences is crucial. This can include building flood banks, flood walls, and advanced drainage systems to manage excess water. Buildings may need to be elevated or constructed with materials that can withstand prolonged exposure to water. Elevating buildings on stilts or raised platforms can prevent floodwater from reaching critical infrastructure. Additionally, using water-resistant materials such as concrete and steel can help minimise damage and reduce repair costs. On a smaller scale, industrial sites can install flood barriers and improve drainage systems to prevent water from entering buildings and damaging equipment.
In the south and east of the UK that are more prone to heatwaves, industrial sites may need to incorporate cooling systems, reflective roofing materials, and green spaces to reduce heat absorption. Installing energy-efficient cooling systems like evaporative coolers or advanced HVAC systems can help maintain safe working conditions and protect sensitive equipment. Reflective roofing materials such as cool roofs can reflect more sunlight and absorb less heat, reducing the need for air conditioning. Green spaces such as rooftop gardens can also help lower temperatures by providing shade and absorbing heat.
Investing in robust infrastructure design is essential for enhancing climate resilience. This includes designing buildings and facilities to withstand extreme weather events such as high winds, heavy rainfall and temperature fluctuations. For example, reinforcing structures with stronger materials and incorporating flexible design elements can help buildings withstand the stresses of extreme weather. Additionally, implementing smart technologies such as sensors and monitoring systems can help detect and respond to potential issues before they become critical.
Investing in climate-resilient infrastructure not only helps protect businesses from the immediate impacts of climate change but also enhances their long-term sustainability. By reducing the risk of damage and downtime, businesses can maintain continuous operations and avoid costly repairs and replacements.
Strategies for improving infrastructure climate resilience
- Implement flood defences: Install flood barriers, improve drainage systems, and consider elevating buildings in flood-prone areas to prevent water damage.
- Enhance cooling and heat management: Invest in energy-efficient cooling systems, reflective roofing materials and green spaces to reduce heat absorption and maintain safe working conditions.
- Reinforce infrastructure: Design buildings to withstand extreme weather by using stronger materials, flexible design elements and smart technologies for early detection and response.
Addressing the impacts of climate change ensures long-term sustainability and operational continuity
Climate change presents significant financial challenges for UK industrial sites, impacting operating costs, supply chains and infrastructure resilience. For businesses to effectively increase their site’s climate resilience, they must go beyond corporate-level climate strategies to understand and quantify the risks and opportunities at a granular level.
Our in-house advisory and engineering experts can assess the major climate risks to your assets and operations over the near, medium and long term. Once the risks are understood, we can work with you to devise practical and actionable adaptation plans tailored to the needs of your business.
As the UK continues to pursue its climate targets, businesses must adapt and innovate to thrive in this evolving landscape. Addressing these challenges head-on not only helps protect your business from immediate financial risks but also ensures long-term sustainability and operational continuity.
Contact our experts to find out more about how we can help assess and mitigate the impacts of climate change on your business.
More from our Knowledge Hub
InsightsThe financial impact of climate change on UK industrial sites
Case studyEcological monitoring helps Heathrow Airport assess watercourse health and ensure regulatory compliance
Case studySecuring critical fuel supply for a leading medical institution
InsightsBalancing progress and preservation: The impact of the ecological survey calendar on developers
Environmental compliance today, creating a sustainable tomorrow
Helping you reduce risk to the environment and your operation by managing assets compliantly while achieving commercial, ESG, and net-zero goals.
Contact our experts