Flood risk set to drive up UK supermarket climate losses
New study by climate risk specialists TransZero estimates that 4% of the UK’s leading supermarket locations could see increased flood losses due to climate change.
The study was aimed at understanding how current and future climate risk might impact the sector through the coming decades based on alternative climate scenarios. The research highlighted how annual losses from climate risks such as flood, windstorm, fire, and extreme temperature could increase by up to 67% in 2050, and potentially double by the end of the century (2100) under the worse case scenario.
While most climate risks showed an increase, it was flood risk that appears to be most significant driver of future impacts, constituting up to 44% of the average yearly loss that UK retailers could see in 2050, and up to 58% by 2100.
Flood Risk in the UK - yellow points highlight those supermarkets with 100-year flood exposure.
The team at TransZero analysed over 18,000 UK store locations from 37 leading supermarkets. The sites were then assessed for a range of climate perils based on projected emission scenarios as defined by the IPCC (Intergovernmental Panel on Climate Change).
This included scenarios that assume that future global greenhouse gas emissions level off mid 21st-century and then reduce gradually reduce through to 2100 (referred to as Shared Social Pathway 2 - RCP 4.5) as well as more severe scenarios which assume global emissions continue to rise throughout the 21st century unchecked (SSP 5 RCP 8.5)
Annual losses due to climate risks in 2025 (Baseline), 2050, and 2100, SSP5 8.5 scenario
The study provides a comprehensive review of the physical risk challenges faced by UK business in a rapidly changing climate. As society transitions to net zero, the study also shows the return on investment (ROI) for early intervention measures and proactive climate adaptation on mitigating future losses.
Rising UK Temperatures bring implications across the sector
One of the trends highlighted by the underlying global climate change models used to help understand future climatology is that increasing temperatures are increasing the potential for more extreme rainfall and longer spells of warmer weather in the future.
More critically for UK businesses, these phenomena have different spatial impacts in the UK, with wetter weather largely projected to be more focused in North-Western regions whereas increasing temperature and wildfire risk may be more of a concern in the South-East.
Risk to UK supermarket locations from rainfall and wildfire conditions
Such trends clearly have very different impacts for regionally-focused retailers compared to the larger, more geographically diversified supermarkets.
Implications for companies will be different as some may see increased annual costs of running air conditioning units during heat waves, whereas others may be subject to increasingly wetter weather bringing river and flash flood risk as well as the secondary concerns of increased moisture and damp.
Significant savings can be made with proactive interventions
The study compared how different retailers would be impacted. On average, most supermarkets saw a doubling in climate losses under the worse-case scenario by 2100.
For the worst impacted retailers, annual losses could be up to seven times higher than the 2025 baseline, while for a few companies, climate change impacts made little to no change.
UK food retailers and the potential impacts of climate adaptation investment
The TransZero team then re-ran the same locations assuming the introduction climate adaptation measures on helping offset future losses. These included property investments such as flood defences and improved thermal efficiency.
Contrasting the modelled results, it was clear that there could be a substantial financial benefit to investing in climate adaptation, with reductions in modelled climate losses of between 60-90% per year.
Transzero are a team of dedicated climate risk specialists, helping businesses understand how climate risk will impact their business. If you’re interested to learn more about the Transzero’s climate risk services, please contact info@transzero.co.uk
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