SMEs: Climate Resilience Is Missing

The analysis of the economic damages associated with extreme weather events reveals a worrying scenario. According to the joint report of the European Central Bank and EIOPA released in December 2024, natural disasters in the EU linked to climate change have caused direct economic losses estimated at around €900 billion. Particularly alarming is that damages are concentrated in recent years: one fifth occurred in the 2021-2023 three-year period alone, with costs of €65 billion in 2021, €57 billion in 2022, and €45 billion in 2023.

In this scenario, SMEs present multiple aspects of vulnerability. First, SMEs generally have more limited financial reserves than larger companies, and this reduces their ability to absorb external shocks without compromising business continuity. Second, their often-circumscribed geographical presence exposes them more to localized risks, without the benefits of territorial diversification that multinational companies can rely on. Furthermore, their limited access to advanced financial instruments and specialized skills compromises the ability to adopt climate adaptation strategies. Finally, their dependence on local supply chains, while on the one hand can act as a mitigation strategy, on the other hand it increases vulnerability to extreme climate events.

But how aware are European SMEs of such risks, and what strategies do they implement to mitigate or transfer climate risk?

With reference to the first point, recent research conducted by the SDA Bocconi Sustainability Lab has highlighted a heterogeneous picture when it comes to climate risk awareness in European SMEs. The study shows that, on average 50% of SMEs analyzed are aware of their exposure to climate risks, with geographical variance ranging from 75% in Italy to 31% in Slovenia. Particularly interesting is the relationship between maturity in terms of sustainability and risk perception: 69% of companies that have adopted sustainability strategies early on exhibit high awareness, significantly higher than the sample average, while latecomers stop at 33%.

With reference to the second point, that of climate risk management, the study highlights how traditional insurance against extreme events remains the main instrument, with an average adoption rate of 31%. Purchase of business interruption insurance follows at 16%, while more innovative solutions such as public-private partnerships and risk-transfer and risk-sharing agreements show more modest adoption rates.

The research reveals a particularly significant aspect: companies that are farther ahead in their sustainability journey adopt more sophisticated and complex management solutions than companies that lag behind in this compartment. The greater propensity of “sustainable” companies towards climate risk transfer tools, together with their higher implementation of adaptation strategies, seems to highlight a positive relationship between sustainability maturity and resilience. This connection seems to demonstrate that companies that have integrated sustainability into their business models are not just responding to stakeholder expectations, they are also developing a superior ability to identify, assess and mitigate climate risks. This approach allows them to strategically position themselves to more effectively address the challenges arising from global warming in the current economic context.