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

Consultation

The Scottish Government recommends distinct groups to be consulted on the impact of any proposed legislation including within government, public, and businesses.

Within Government

A number of government agencies were involved in the formulation of the Adaptation Plan. Consultation within the government consisted of a short survey that was sent to the policy leads from different policy areas that had a significant role in formulating the draft Adaptation Plan. The responses from this consultation provided further evidence of the costs and benefits of each option. The directorates and agencies that responded to the survey are:

• Agriculture and Rural Economy Directorate
• Environment and Forestry Directorate
• Scottish Procurement and Property Directorate
• Transport Scotland.

Business consultation

To provide robust evidence for the costs and benefits, engagement with seven (7) businesses and business representative groups was carried out. The results of this consultation form the main part of the Scottish Firms Impact Test section of this report and also contribute to the costs and benefits section of the report.

The business consultation comprised of a survey and a follow up interview with relevant businesses and business representative bodies. The survey was open between 15 December to 16 February 2024, and was distributed to seventy-seven (77) organisations. There were seven (7) respondents to the BRIA survey, including five (5) representative bodies, representing between 115 and 1600 businesses, and two (2) public bodies, and eight (8) consultation interviews.

Respondents of the consultation were from the following representative sectors:

• Financial services
• Farming, fishing, and forestry
• Energy
• Public bodies
• Transportation and distribution
• Food and drink
• Businesses, business organisations, business premises/occupiers

Below is a list of the businesses consulted:

• Nestrans
• British Ports Association
• Scottish Enterprise
• South of Scotland Enterprise
• Edinburgh Chamber of Commerce
• Seafood Scotland
• Horticulture Trade Association Scotland/Growforth

Summary of consultation responses

Respondents presented diverse perspectives with regards to consideration of climate change in their respective sectors. Overall, respondents are actively considering and responding to the potential impacts of climate change on their businesses and industries. This includes integrating climate change adaptation into their frameworks, considerations for mitigating risks in the financial sector, recognition of impacts on management practices like crofting, and ongoing assessment of operational impacts. Specific concerns were highlighted about the impacts on energy including the potential for drought to affect hydro power and high winds impacting energy distribution systems and wind turbines. Respondents also noted actions such as producing climate change roadmaps and considering industry-wide effects on product marketing and trade opportunities.

Consideration of climate change impacts on business

All of the respondents stated they had considered how climate change will impact their businesses or members in the near and long-term future.

Adaptation action to date

Respondents indicated that they have introduced a range of initiatives to support adaptation. These include improving staff awareness and training, external awareness, and promotion activities, integrating adaptation into project development processes, engaging in adaptation road mapping exercises, and supporting research for identifying market opportunities and investing in the transition to a low-carbon economy. Respondents emphasised the importance of reviewing options to mitigate impacts and seizing opportunities for climate change mitigation, and evolving business models and operations.

Respondents provided insights into the ways they are considering or currently implementing the use of nature-based solutions in adapting their organizations/industries. These include highlighting nature-based solutions in project development, updating operational practices, awareness activities, and research. However, respondents highlighted the need for further support to integrate measures.

The following potential disruptions to infrastructure components and their potential impacts on their industries/organizations were emphasised during the consultation:

• disruptions in transport, energy, and water-related infrastructure which could affect business continuity, increase costs, and create uncertainty, with the severity and duration of disruptions being key unknown factors;
• financial services sectors foresee impacts on operations, human capital availability, and investment opportunities due to adverse changes in infrastructure networks;
• impacts from extreme weather events, leading to disruptions in transportation, power supply, and agricultural productivity particularly in the Highlands and Islands, as well as impacting industries like fishing, where storms prevent fishing activities.
• It was also stated that disruptions in marine ecosystems, such as smaller haddock sizes and increased jellyfish populations, were disruptors to supply chains, particularly affecting the fishing and salmon industries.

Challenges of adaptation

With regards to the impact of increasing Scotland’s adaptation measures on the competitiveness of businesses, responses from participants indicated there may be short-term challenges, but long-term benefits and opportunities for businesses that embrace climate adaptation. Respondents noted that there will be short-term negative impacts due to additional costs, considerations, and the need to bring stakeholders along in the adaptation process, which could impact competitiveness. However, in the medium to long term, there is optimism for positive impacts, as adaptation becomes a strategic issue and opens up significant market opportunities, especially for companies producing goods addressing climate change globally. Respondents emphasized the importance of considering the resilience of businesses to ensure economic viability while meeting climate ambitions. Additionally, pressure from retailers and funding conditional on net-zero plans highlight the growing importance of climate adaptation in maintaining competitiveness.

Public consultation

While there no business impact specific questions held in the public consultation, many themes. surrounding businesses and the economy came up through other questions

Analysis of written consultation responses

The following section summarises some of the relevant themes raised by 218 responses to the consultation held on the online platform Citizen Space.

Encouraging financial support and investment

A common theme discussed across the written consultation and workshop reports was the significant economic challenges presented by climate change and the corresponding importance of financial support through different channels. Respondents highlighted the extent of challenges presented by climate change, including frequent disruptions to key services leading to road closures and disruptions of public transport, property damage, threats to individuals’ and businesses’ livelihoods across sectors such as agriculture, fisheries, and tourism. More specifically, challenges stemming from supply chain disruptions were highlighted, particularly with respect to food and energy safety.

To address economic challenges, suggested measures included government funding as well as encouraging private investment to improve the resilience of infrastructure and supply chains. Respondents emphasised the importance of financial support from the government for individuals, groups with protected characteristics, and businesses to support them when investing in adaptation measures for buildings, supply chains, and green space. Examples included the use of financial incentives to motivate proactive adaptation action through tax breaks for investments, grants for retrofits, and low-interest loans. In addition to government funding, respondents also recommended motivating individuals and businesses to personally invest in climate-resilient practices and infrastructure. To facilitate such investments, written consultation responses recommended adjusting regulatory frameworks to reduce hurdles and barriers when planning and implementing adaptation measures.

Limited resources for accessing advice and support on climate risks

The most frequent theme was limited business resources and financial constraints as a barrier to accessing advice and support on climate risks. Respondents emphasised issues with financial constraints, for example hiring dedicated staff or contracting external advice. In particular, they highlighted that smaller businesses or organisations may be facing financial constraints that prevent them from accessing the available advice and support. They also highlighted a lack of internal expertise and capacity due to the absence of dedicated sustainability or risk management staff.

“Seeking advice and support on climate risks may require investing in consultancy services or training programs, which could be perceived as too expensive for some businesses.” – (Organisation)

Conflicting short versus long-term priorities

Another common theme was contradictory incentives for business between financial versus sustainability considerations, which was seen to disincentivise access to advice or support. Respondents noted that short-term financial incentives were often prioritised by businesses and organisations over long-term sustainability considerations, such as the need to consider climate risk and adaptation action. They also noted other conflicting short and long-term priorities, such as the impacts of Brexit or market disruptions, which divert resources away from accessing advice and support on climate risks, instead focusing on short-term economic implications.

“Businesses often prioritise short-term goals and profitability over longer-term sustainability and resilience planning. This short-term focus can deter businesses from investing time and resources in assessing and responding to climate risks, especially if the benefits are not immediately apparent.” – (Organisation)

Limited awareness and understanding of climate change

A frequent theme was limited awareness and understanding of climate change impacts as a barrier to accessing advice and support. Respondents emphasised that many businesses have limited awareness and understanding of the consequences of climate change for their organisations and the importance of their role in addressing climate risks. Their limited understanding was compounded by the complexity of climate risks, making it difficult for businesses to understand and respond to climate change.

“Many businesses may lack awareness of the climate risks they face or may not fully understand the implications of climate change for their operations. Businesses also may lack awareness on how to reduce these risks or how to reach services/expertise that can help.” – (Individual)

Additional themes included criticism around the need for a Climate Adaptation Plan and the government itself. Some also stated that there were no barriers to accessing business advice on climate risk, while others expressed scepticism towards the notion of climate change itself.

Consultation workshops and unstructured email responses

The following section summarises some of the relevant themes raised by participants of 16 public consultation workshops, held by the Scottish Government alongside the written consultation analysed above.

Challenges faced by local businesses

A theme highlighted across workshops, particularly across technical workshops, was the challenges faced by local businesses. Participants in technical workshops expressed concerns that businesses often prioritised short-term financial goals over long-term climate resilience. Additionally, businesses were understood to possess limited knowledge about potential management strategies to mitigate and adapt to climate change. While larger businesses sought more information on general trends and cascading risks posed by climate change, smaller businesses would welcome more information on risks and adaptation actions specific to their business and were easy to implement.

“There is a lack of a clear narrative of risks for different types and sizes of business, and how these risks can actually be managed by them, individually or collectively.” - (Technical workshop)

Proposed solutions for businesses’ resilience

Another common theme highlighted across technical workshops was proposed solutions for supporting businesses and the economy, in the context of a changing climate. Participants in technical workshops suggested that the Scottish Government should provide more accessible guidance tailored to different types of businesses. Participants in technical workshops also called for effective monitoring and assessment procedures to track businesses’ progress in meeting climate goals or implementing operational changes. Additionally, calls were voiced across public and technical workshops for the development of education on adaptation to be integrated within the school curriculum and for vocational training to prepare the current and future workforce for a climate-resilient future.

“For medium and large businesses, the lack of appropriate information and data to support decision-making on adaptation measures is a key barrier. It’s much easier to find information about e.g. carbon lifecycle assessments of products or the financial implications of installing solar panels, compared to a cost-benefit analysis of an adaptation intervention.” - (Technical workshop)

Agriculture and food production

A frequently discussed theme was challenges and proposed solutions related to agriculture and food production. While workshops with members of the public focused on perceived challenges, technical workshops focused more heavily on solutions to address food production challenges. Public workshops highlighted concerns regarding the limited support available for smaller agricultural businesses, which were understood to struggle more with responding to the impacts of extreme weather. Workshop discussions with members of the public also raised the impact of extreme weather events on both land quality and crop viability. To address these issues, participants in technical workshops suggested promoting a greater focus on both local and diverse food systems. According to attendees, this could involve increasing public awareness of the benefits of sourcing foods locally, diversifying crop types and using marginal lands. Technical workshops also recommended improving local procurement practices by increasing opportunities for local authorities to procure food locally to strengthen the regional and local food system, as well as to prevent reliance on international supply chains, which may be exposed to greater climate-related shocks due to their greater complexity and length.

“However, ongoing climate change means there is also an increasing need to consider climate resilience as much as yield when choosing what crops to grow on that land.” - (Technical workshop)

“Scottish Government should ensure that Procurement (Scotland) Regulations are revised as a matter of urgency, to take into account the different national and international situation post-Brexit, and to realise the ambitions of the Scottish Government Good Food Nation Plan.” - (Technical workshop)