Climate change - Scottish National Adaptation Plan 2024-2029: business and regulatory impact assessment

Introduction

The following assessment is an assessment based on the partial Business and Regulatory Impact Assessment (BRIA) completed on behalf of the Scottish Government by Land Use Consultants Limited. Copies of the partial BRIA in full can be requested by contacting the Climate Adaptation Team at ClimateChangeAdaptation@gov.scot.

Background

The Climate Change Committee (CCC, 2024) states that:

“Scottish businesses are already impacted by climate change; business activities can be disrupted by flooding, storms and coastal erosion, and are at risk of reduced water availability and higher temperatures in working environments. Businesses are also exposed to infrastructure failure because of extreme weather, and supply chain disruptions both domestically and abroad”

Flooding and extreme weather events which damage assets and disrupt business operations are likely to pose the greatest risk to Scottish businesses now and in the future. New regulation or other government intervention made necessary by climate change could have implications for businesses.

The Wave 88 edition of the Business Insights and Conditions Survey provided some insights into how businesses in Scotland are planning and assessing the effects of climate change on their operations. The most common climate risks that had been assessed were supply chain disruption and distribution (15.6%), increased flooding (6.2%) and temperature increases (4.4%). However, an estimated 60.6% of businesses reported that they had not assessed risks for any of the specified effects, and 19.1% were not sure (BICS, 2023). This suggests that the majority of businesses in Scotland have not prepared for the impacts of climate change on their operations.

Furthermore, the BICS asked businesses that have assessed climate risks about the adaptation actions they have taken. In line with the risks assessed, the top three effects of climate change that businesses have taken action to adapt to were; supply chain disruption and distribution (26.5%), increased flooding (11.5%) and temperature increases (5.7%). An estimated 21.2% of businesses reported that they had not taken action to adapt to any of these effects, and 44.2% were not sure (BICS, 2023). This suggests that many businesses have not yet taken adaptive action, despite being aware of climate risks.

With this in mind, the Adaptation Plan will provide the framework that will aid businesses in Scotland adapt to the anticipated changes in climate and the risks that this will bring. Developing greater climate resilience will ensure that future economic damages are accounted for in the strategic objectives and plans of businesses throughout Scotland, negating some of the impact of climatic events. This BRIA is important as it will help the Scottish Government to understand the potential effects of the Adaptation Plan on businesses throughout Scotland – both positive and negative. This will help the Scottish Government to shape the final policies of the Adaptation Plan, ensuring that any negative effects are considered and positive effects are reinforced.

Legislation

The Scottish Government recommends distinct groups to be consulted on the impact of any proposed legislation, including within government, public, and businesses. The BRIA provides an understanding to interested parties of:

• why the government is proposing to intervene;
• options the government is considering, and which one is preferred;
• how and, to what extent, new policies may impact on them, on business and on Scotland’s competitiveness;
• the estimated costs and benefits of proposed measures.

The tests included in this BRIA are as follows:

• Regulatory and EU Alignment Impacts
• Scottish Firms Impact Test
• Consumer Impact Test
• Digital Impact Test

The tests excluded in this BRIA are as follows:

• Legal Aid Impact Test
• Test Run of Business Forms