Editing IPCC:AR6/WGII/Chapter-13 (section)

==== 13.6.1.3 Business and Industry ====

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European industrial and service sectors contribute 85% to gross value added in EU-28 ( [[#Eurostat--2020|Eurostat, 2020]] ); while their direct exposure and vulnerability is smaller compared with sectors directly reliant on weather, they are directly and indirectly affected by heat, flooding, water scarcity and drought ( [[#Weinhofer--2013|Weinhofer and Busch, 2013]] ; [[#Gasbarro--2016|Gasbarro and Pinkse, 2016]] ; [[#Meinel--2018|Meinel and Schule, 2018]] ; [[#Schiemann--2018|Schiemann and Sakhel, 2018]] ; [[#TEG--2019|TEG, 2019]] ). Heat reduces the productivity of labour particularly in construction, agriculture and manufacturing ( [[#13.7.1|Section 13.7.1]] ; [[#García-León--2021|García-León et al., 2021]] ; [[#Schleypen--2021|Schleypen et al., 2021]] ). Direct losses from floods in Europe are highest for manufacturing, utilities and transportation; indirect losses arise, for example, for manufacturing, construction, and banking and insurance ( [[#Koks--2019a|Koks et al., 2019a]] ; [[#Sieg--2019|Sieg et al., 2019]] ; Mendoza–Tinoco et al., 2020). Drought and water scarcity directly affect European industries in the sectors of pulp and paper, chemical and plastic manufacturing, and food and beverages ( [[#Gasbarro--2019|Gasbarro et al., 2019]] ; [[#Teotónio--2020|Teotónio et al., 2020]] ); additionally, drought may indirectly affect sectors relying on shipping, hydropower or public water supply ( [[#Naumann--2021|Naumann et al., 2021]] ). The European financial and insurance sector is affected by climate-change impacts via their customers and financial markets ( [[#Bank%20of%20England--2015|Bank of England, 2015]] ; [[#Georgopoulou--2015|Georgopoulou et al., 2015]] ; [[#Battiston--2017|Battiston et al., 2017]] ; [[#TCFD--2017|TCFD, 2017]] ; [[#Bank%20of%20England--2019|Bank of England, 2019]] ; [[#de%20Bruin--2020|de Bruin et al., 2020]] ; [[#Monasterolo--2020|Monasterolo, 2020]] ).

The vulnerability to climate hazards varies by European region, type of risk, sector and business characteristics ( [[#Gasbarro--2016|Gasbarro et al., 2016]] ; [[#Forzieri--2018|Forzieri et al., 2018]] ; [[#ECB--2021a|ECB, 2021a]] ; [[#Kouloukoui--2021|Kouloukoui et al., 2021]] ). Current damages are mainly related to river floods and storms, but heat and drought will become major drivers in the future ( ''medium confidence'' ). Until 2050, the probability of default of firms located in particularly exposed locations may increase to up to four times that of an average firm in all sectors ( [[#ECB--2021a|ECB, 2021a]] ).

Many European sectors are exposed to multiple and cross-cutting risks ( [[#Gasbarro--2019|Gasbarro et al., 2019]] ; [[#Schleypen--2021|Schleypen et al., 2021]] ). Indirect effects via supply chains, transport and electricity networks can be as high as, or substantially higher than, direct effects ( ''medium confidence'' ) ( [[#Koks--2019a|Koks et al., 2019a]] ; [[#Koks--2019b|Koks et al., 2019b]] ; [[#Knittel--2020|Knittel et al., 2020]] ).

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