Climate change is one of the most substantial risks facing Australian businesses today. As bushfires rage and coastal storms grow more severe, it's evident that climate change is a current threat, not just a future one. Businesses, especially in industries like construction, should be aware of these risks.
As bushfires raged last summer and coastal storms grow more severe, it’s evident that climate change is a current threat, not just a future one. Businesses, especially in industries like construction, should be aware of these risks.
Construction accounts for 39% of process-related CO2 emissions globally, making it ripe for environmental reform policy. The nature of construction work may put these companies at greater physical risk, too. If the industry hopes to stay safe, both financially and physically, it will have to adapt.
Here are some of the most significant climate-related risks facing the Australian construction industry.
Risks from Physical Hazards
As climate change worsens, natural hazards like extreme weather intensify. Take the 2019-2020 bushfires, for example, when drier climates and record-breaking temperatures created an unusually destructive fire season. These disasters can cause unforeseen delays, or worse, endanger employees.
Bushfires aren’t the only physical threat companies could encounter as a result of climate change. Construction companies working in coastal areas should be aware of rising sea levels. Other conditions, like severe thunderstorms, flooding or extreme temperatures, may also present a risk.
Construction companies operating in disaster-prone areas need to take extra precautions to account for worsening conditions. Teams working in these locations should have an emergency response plan in place should the worse happen. To prevent any unforeseen risks, these teams should keep a close eye on weather conditions.
Risks from Changing Policies and Preferences
Whether or not a construction company ever faces physical threats, climate change will still affect them.
As more people take climate change seriously, it will lead to policy change and shifting market preferences. The construction industry will have to adapt to these to stay afloat.
In light of surmounting climate threats, construction companies may have to comply with new building codes. Anti-fossil fuel regulations may also mean fewer opportunities in building structures for coal mines or gas plants. Similarly, there may be more demand for sustainable buildings and lowered demand for less eco-friendly designs.
Construction companies may face economic challenges as a result. They may have to take measures like renting equipment, which decreases operational costs, instead of buying it outright. In the long term, construction firms will likely need to become more eco-friendly to meet changing demand.
Climate change may present other business risks for construction companies as well. Since some physical hazards are worsening, insurance coverage may change, leading to increased expenses.
Construction companies in disaster-prone areas may have to pay higher premiums or find that some risks are no longer insured.
If a natural disaster affects a project, it could lead to legal issues. Any delays or disruptions could cause contract disputes, ending in financial losses or a tarnished reputation. Construction companies should keep these increasingly likely situations in mind when drafting future contracts.
Extreme weather may also affect the supply chain, putting some projects on hold. Supply chain disruptions were unusually high in 2018, and severe weather accounted for 41 disruptive events, more than any other factor. Construction companies will have to anticipate and adjust to these types of disruptions.
Australian Construction Companies Need to Consider Climate Change
Climate change may affect more areas of business than some companies realize. The accumulative threats from climate change are too many and too severe for construction to ignore. The industry needs to start preparing for climate-related hazards.
Even if environmental situations improve, it may be a while before they do. The Australian construction industry can’t afford to gloss over the threats that climate change presents. With proper consideration and preparation, though, construction firms can take on climate issues with confidence.