Climate adaptation: Why it matters for SMEs and what they can do about it

 In News & Updates, Thought Leadership

These 5 measures will help you protect your business and become more resilient.

Green Economy Canada shines a spotlight on our newest network sponsor The Co-operators, an insurance and financial services co-operative. We sat down with Michael Spadafora, Associate Vice-President at The Co-operators, to ask for his thoughts on the insurance industry’s role in climate adaptation, and tips for small and medium-sized businesses (SMEs) to reduce their climate risk.

Green Economy Canada (GEC): Climate change is a major concern for Canada’s insurance industry. What impact has this had on The Co-operators and the insurance industry more broadly?

Michael Spadafora (MS): The most obvious way we see climate change impacting the insurance industry is through increased claims as a result of extreme weather. In 2019, insured damage from floods, rain, snow and windstorms reached $1.3 billion, and 2019 is seventh on the top 10 highest loss years on record. These figures speak to the magnitude of the threat — both to our industry and to Canadians and our communities – from extreme weather events that are linked to climate change. These events are increasing in frequency and severity, resulting in greater property damage and losses.

And that’s just the financial cost; we know that experiencing property loss can also lead to significant mental health implications, so we really must consider all the different ways we can support our clients in this reality.


“SMEs face many of the same climate risks as larger businesses, including the risk of property damage to owned or rented space, stock, equipment and/or vehicles; risk of lost revenue from disruptions to business operations; supply chain interruption;  and mental health impacts on employees.”
– Michael Spadafora, The Co-operators


GEC: Climate mitigation is increasingly on the radar of business, but climate adaptation is more nascent. Why is it important for businesses to start thinking about adaptation? What are the particular climate-related risks faced by SMEs?

MS: As we continue to see an increase in claims related to extreme weather, the risks of inaction can be particularly dire for smaller businesses which may be less able to recover than larger companies.

SMEs face many of the same climate risks as larger businesses, including the risk of property damage to owned or rented space, stock, equipment and/or vehicles; risk of lost revenue from disruptions to business operations; supply chain interruption;  and mental health impacts on employees. In addition to ensuring they have the appropriate insurance coverage for such risks, SMEs can take adaptive measures to protect their assets and become more resilient, by:

  • Understanding their risk. Geographic location is a significant factor in determining risk for events like extreme weather, wildfires and floods.
  • Creating a business continuity plan for when a loss occurs. Items to consider include:
    • Could you operate from a different location if needed? If you couldn’t access your usual location would you have access to necessary records and documents?  What would you need to start up your operations again?
    • Do you have backup power supply for perishable stock?
    • Do you rely on specific suppliers? Would there be options to obtain supplies from others if your supplier has a major climate event?
    • What if your employees can’t get to your location – could they work remotely?
  • Using flood and wildfire-resilient landscaping.
  • Taking an inventory of business contents to help make things easier in the event of a claim.
  • Considering the impacts on their supply chain if a major climate event occurs.

GEC: In what ways is The Co-operators supporting its financial advisors and clients with climate adaptation?

MS:  We have over 500 Financial Advisors across Canada who are small businesses themselves, and who offer insurance and wealth services to clients. We equip our Financial Advisors with the knowledge and resources to engage clients in conversations about how to reduce their climate risk. One key action is for clients to understand their coverage. The Co-operators offers products with sustainability features, socially responsible investments, hybrid and electric vehicle discounts, specialized insurance for non-profits and more.


Property damage and business disruption from extreme weather caused by climate change is driving a major increase in insured losses in Canada. (Image by David Mark from Pixabay)


GEC: Climate Adaptation will challenge and change our communities. How can SMEs support adaptation efforts in our cities?

MS: Climate change is a complex and interconnected issue that requires an “all-hands-on-deck” approach. Co-operation and collaboration across sectors, levels of business, and communities will be key. Staying informed, equipped and prepared for the changing nature of risk is an important first step for SMEs to help de-risk our communities. At a community level, businesses can also advocate for improved adaptation plans, sustainable infrastructure, and access to climate-risk information at all levels of government, to help ensure education and investment toward more resilient Canadian communities.

For more information on The Co-operators ongoing efforts to build more resilient Canadian communities, read their integrated annual report.  If you’re ready to take action and are looking for community-based support, talk to your Green Economy Hub.