Small businesses in New Zealand are under growing pressure to respond to climate-related disruptions, as extreme weather events and shifting regulatory demands create new operational and financial risks.
Marsh has released a new resource designed to help these businesses identify climate vulnerabilities and implement strategies to manage them.
The guide, focused on climate risk management for SMEs, arrives amid increased scrutiny over how businesses are preparing for environmental change.
Marsh identified five broad categories of risk:
“The first step to understanding how climate change can affect your businesses is to do a risk assessment,” the company said.
The guide underscored that climate risk goes beyond property damage. Physical risks – such as flooding, landslips, or prolonged drought – can disrupt daily operations or limit access to products and services.
In agricultural and coastal areas, long-term environmental shifts are also expected to alter business models.
Transitional risks, tied to New Zealand’s broader move toward decarbonisation, are increasingly relevant. As climate regulations tighten and emissions reporting becomes standard, businesses may face rising compliance costs or need to upgrade infrastructure to meet new efficiency standards.
Meanwhile, consumer expectations are evolving; a growing portion of the population now considers environmental responsibility when choosing where to spend their money.
Reputational risks are also growing, with businesses expected to take meaningful action on sustainability, rather than minimal or symbolic efforts. A poorly managed environmental incident – or even the perception of inaction – can affect both public image and market position.
The report encourages SMEs to consider legal exposures, including those linked to non-compliance with environmental legislation or unintended impacts on others caused by climate-related events. Health and safety risks, such as heat stress or pollution exposure, can also disrupt operations or necessitate changes in working hours or conditions.
As part of its recommendations, Marsh advised SMEs to adopt a tailored climate adaptation plan, explore insurance options that address environmental exposures, and assess their standing with environmental, social, and governance (ESG) frameworks.
Insurers, meanwhile, are becoming more vocal in advocating for coordinated national strategies. The Insurance Council of New Zealand (ICNZ) has backed proposals from the Finance and Expenditure Committee that aim to standardise adaptation policy across government and improve access to climate risk data.
Parliament is currently considering legislation that would establish a national climate adaptation framework, following major weather events in recent years, including the 2023 Auckland floods and Cyclone Gabrielle.
The proposed policy would define central and local government roles, establish funding mechanisms for resilience projects, and improve data sharing.
