Small and medium-sized businesses in New Zealand are increasingly feeling the pressure from climate change.
Marsh, a global insurance brokerage and risk advisor, has outlined how climate-related events are disrupting local business operations, supply logistics, and workforce stability. These challenges are prompting calls for tailored adaptation strategies.
Marsh detailed five major climate-related risks that are particularly relevant to SMEs in New Zealand – something brokers could share with their business clients.
Floods, storms, and other weather extremes can halt operations directly by damaging infrastructure or indirectly by affecting supply routes. Ongoing risks include coastal erosion, rising temperatures, and water scarcity, all of which can have significant sector-specific consequences.
As New Zealand advances toward a low-emissions economy, new regulations and changing energy costs are creating compliance and investment challenges for smaller firms.
Consumer expectations are also shifting, with studies suggesting that sustainability now plays a critical role in purchasing decisions.
Reputational risks are growing as customers and investors scrutinize business practices. A weak or poorly communicated sustainability approach can damage public perception. Even disruptions in supply chains or quality issues linked to climate events can carry reputational consequences.
Climate-related litigation is not yet widespread among SMEs, but it remains a potential issue, especially concerning non-compliance with environmental laws or contributing to climate harm. Even unproven claims can carry reputational and financial burdens.
Environmental factors such as extreme heat or poor air quality can impact employee well-being and workplace safety. These conditions may necessitate operational adjustments or increased health risk mitigation.
Marsh recommended starting with a customised climate risk assessment, considering variables such as business location, sector, and supply chain dependencies. The company also promoted the use of self-assessment tools like its ESG Risk Rating to benchmark performance and identify gaps.
Developing a forward-looking sustainability strategy is another recommended step. This could involve investing in renewable energy, enhancing energy efficiency, reducing supply chain emissions, or preparing for business continuity in the face of natural hazards.
Marsh also advised SMEs to review their insurance coverage, highlighting options like property insurance, business interruption, and environmental liability policies that can offer financial protection against environmental risks.
These insights echo broader concerns raised in Aon’s recent Client Trends 2025 report. The study highlighted how global megatrends – climate, trade, technology, and workforce – are converging to increase strategic uncertainty for organisations.
“The interconnectedness of these trends means that leaders need access to integrated data and analytics, capabilities, and expertise to effectively respond to increasingly linked risk and people issues,” said Greg Case, CEO of Aon.
Delta Insurance also recently commented on the rising risk profile of SMEs, pointing to regulatory demands, cost pressures, and tight cash flow as key vulnerabilities. It said SMEs may struggle to respond to legal and compliance issues without robust risk planning.
