Hosepipe bans across the South East could cripple small businesses this summer, shadow environment secretary Peter Ainsworth warned.
Ainsworth said the drought across southern England was the "worst on record" and water companies were facing massive shortages as reservoirs dried up.
"This summer we will see the full impact of drought orders on thousands of small businesses such as golf clubs, car washes, other leisure users of water," he said.
"Politicians need to collectively realise and admit that climate change is for real.
"The economy is part of the environment, a subsidiary of the environment, and not the other way round.
"The forces of nature will always win, which is why, for example, we should think slightly harder about building millions of new homes in areas that are either prone to flood risk or suffering already from drought," he said.
He commended the ABI's work in the field, describing the organisation as "a kind of new age eco-warrior type organisation" and highlighted its achievements through "the amount of assets represented by the carbon disclosure project every year".
"Four years ago, I think it was around $1bn, and then last year it was $21 trillion and the latest carbon disclosure project, $31 trillion worth of assets, represented by people, industries, concerned about climate change, and asking industry what they're going to do to sort the problem."
Ainsworth said he was disappointed the Labour Party had not signed up to the cross-party agreement on climate change issues, and he called for an independent climate change body to be set up.