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

Tests

This section provides a summary of the tests undertaken to help understand the impact of the policy on a wide range of factors that could affect businesses in Scotland.

Regulatory and EU alignment test

This section considers if the Adaptation Plan is likely to impact on the Scottish Government’s policy to maintain alignment with the EU. Scotland’s commitment to remain close to the EU means Scotland will continue to align with the EU where appropriate, and in a manner that contributes towards protecting and advancing standards across a range of policy areas. We have assessed three main areas to determine the regulatory and EU alignment test.

1. The Scottish Government’s commitment to maintain and advance the high standards that Scotland shares with the EU: The European Commission adopted its new EU strategy on adaptation to climate change on 24 February 2021. The new strategy sets out how the European Union can adapt to the unavoidable impacts of climate change and become climate resilient by 2050. EU law and progress has generally lagged behind mitigation measures. Therefore, adaptation measures and laws in Europe are still in their relative infancy.

The European Climate Law requires EU countries to adopt and implement national adaptation strategies and plans. These must be updated and communicated every two years in reports dedicated to national adaptation actions. Every five years, starting in 2023, the European Commission will then assess collective progress by member states.

The measures in the draft the Adaptation Plan should align Scotland with EU ambitions for member states to become climate resilient by 2050. The main deviation from EU standards is that the Adaptation Plan covers a four years period rather than the two years that will be required for EU national adaptation strategies and plans.

2. Access to EU markets for people, goods, and services: The draft the Adaptation Plan will not affect access to EU markets for people, goods or services.

3. Any potential implications for EU alignment associated with the United Kingdom Internal Market Act 2020 or Common Framework agreements: It is not anticipated that the Adaptation Plan will affect EU alignment associated with the United Kingdom Internal Market Act 2020 or Common Framework Agreements.

In summary, the Adaptation Plan is unlikely to have a significant impact on EU alignment in a positive or negative regard.

Scottish Firms Impact Test

This section considers the impact of the Adaptation Plan on different sectors of the Scottish economy through an engagement process undertaken with businesses and sector representatives. This assessment considers the following areas to determine the impact on Scottish firms:

1. The businesses and sectors most likely and less likely to be affected by the objectives of the Adaptation Plan: This includes consideration for business sizes, particularly small, medium, and large-scale businesses, and the distribution of impacts between these business sizes.

2. The potential impact on Scottish businesses and sectors: This includes consideration of overall costs, and related additional costs to businesses, as well as the potential benefits to businesses and sectors of the Scottish economy.

3. The potential impact on the competitiveness of Scottish business and companies: This area considers the impact on the competitiveness of Scottish businesses in Scotland, within the UK, and around the world.

It is anticipated that the Adaptation Plan may create short-term challenges for competitiveness of Scottish companies, but long-term benefits and opportunities for businesses that embrace climate adaptation.

It is likely that the measures within the Adaptation Plan will result in direct capital-intensive costs, early adoption costs, and short-term disruptions to business continuity. However, it is likely that adaptation measures offer advantages in the short, medium, and long term, fostering business resilience against crises and unknown risks. It is anticipated that the Adaptation Plan will result in specific opportunities for sectors like agriculture and forestry, in relation to nature-based solutions, and competitive advantages in meeting retailer and consumer demands for accreditations and quality marks, as well as benefits from increased resilience, and the related cost savings and reduced recovery time.

It is expected that the impacts of the Adaptation Plan will be widespread affecting all businesses and sectors, however, the impact of adaptation measures is not expected to be felt evenly across Scotland. It is likely that areas facing the greatest risks, such as coastal communities and remote regions, will experience both significant costs and benefits. Additionally, SMEs and micro businesses are anticipated to face the greatest challenges in implementing adaptation measures, particularly in areas prone to climate-related crises.

Competition Assessment

This section considers the potential impact the updates in the Adaptation Plan will have on competition between firms, including the impact of proposed policy developments and their potential to restrict firms. We assessed the following areas to determine the competition assessment test.

• The relevant markets, and services likely to be affected
• The potential for changes in competition due to changing incentives
• The potential impact to the number or scale or suppliers because of the ability or inability to compete
• The potential changes in competition because of changes in consumer choices and information

The revision of the Adaptation Plan will not directly limit the number and range of suppliers across the Scottish economy. The economy will change because of the update to the Adaptation Plan, with some businesses and supply chain companies changing scope and scale of their operations, and diversifying, however these changes will occur in the long-term and because of individual sector level policies.

Additionally, the Adaptation Plan will not limit the ability of suppliers to compete, nor will it reduce suppliers’ incentives to compete vigorously, as per the reasons outlined above. While consumer purchase behaviour can affect business models and competition, it is not possible to predict changes in consumer behaviour from the Adaptation Plan because of presence of other factors responsible for impacting consumer choices such as economic factors.

Digital Impact Test

This section considers the unintended impact of advances in technology on the future delivery of the Adaptation Plan. This section, therefore takes account of the considerations for changing technologies and markets within the Adaptation Plan.

It is not anticipated that the Adaptation Plan will have any unintended significant impact on advances in technology and therefore will not impact the future delivery of the key outcomes of the legislation. The key objectives of the Adaptation Plan include adaptation research, innovation, and knowledge exchange actions and any changes in technology are most likely to impact the land management industry in Scotland, where autonomous practices may reduce the environmental impact of certain land management processes, such as direct drilling. However, these technological changes are not anticipated to impact the future delivery of the Adaptation Plan.

Tests Scoped Out

Legal Aid Impact Test

The BRIA will not create a new procedure or right of appeal to a court or tribunal, any change in such a procedure or right of appeal, or any change of policy or practice which may lead people to consult a solicitor.

Test run of business forms

No new business forms will be introduced as part of the Adaptation Plan.