Businesses must act now to address growing climate risks or face steep financial losses, according to two new reports released by the World Economic Forum. Companies that delay could see up to 7% of annual earnings wiped out by 2035—an impact akin to COVID-19-level disruptions every two years.
The reports—Business on the Edge: Building Industry Resilience to Climate Hazards, produced with support from Accenture, and The Cost of Inaction: A CEO Guide to Navigating Climate Risk, produced with support from Boston Consulting Group (BCG)—provide a roadmap for companies to navigate climate risks and unlock long-term value through decarbonization, safeguarding nature, adaptation, and building resilience.
Extreme heat and other climate hazards are expected to cause US$560–610 billion in annual fixed asset losses for listed companies by 2035, with telecommunications, utilities, and energy companies most vulnerable. Companies in energy-intensive sectors that fail to decarbonize face mounting transition risks as global climate regulations tighten, with carbon pricing alone potentially slashing up to 50% of earnings by 2030.
These risks, combined with cascading impacts on supply chains and communities, underscore the critical need for resilience strategies.
In contrast, businesses that invest in adaptation, resilience, and decarbonization are already seeing tangible returns. Based on data from CDP, which assists companies and public authorities in disclosing their environmental impact, research from the Alliance of CEO Climate Leaders, comprising 131 global CEOs representing 12 million employees, reveals that every dollar invested in climate adaptation and resilience can yield up to US$19 in avoided losses.
It provides a guide for CEOs and their companies to manage risks and capitalize on opportunities, demonstrating that most industries could economically reduce over 50% of their emissions costs in a fast-transition scenario.
Opportunities amid risks
Despite the risks, the evolving climate landscape presents substantial growth opportunities. Early movers will gain competitive advantages in sustainable solutions and adaptation offerings as green markets grow from US$5 trillion in 2024 to US$14 trillion by 2030.
These markets span sectors and value chains, with the largest segments being alternative energy (49%), sustainable transport (16%), and sustainable consumer products (13%). All are growing well above GDP.
“Pathfinders leading the charge on net-zero transitions and nature-positive solutions are showing how businesses can create value while improving the environment and supporting the communities,” said Gim Huay Neo, Managing Director, the World Economic Forum.
“By holistically and systematically addressing climate-related risks and opportunities, businesses can build stronger and more sustainable operations, safeguarding and restoring ecosystems, and fostering long-term economic and social resilience in an increasingly complex and uncertain world.”
Rising climate risks: A call to action
Prominent scientists, such as Johan Rockström from the Potsdam Institute for Climate Impact Research, caution that five Earth systems are approaching irreversible turning points.
Earth systems, including ice sheets, ocean currents, and permafrost, are interconnected natural processes that regulate the planet’s climate, sustain ecosystems, and provide vital services such as carbon storage, water filtration, and temperature stabilization, which enable societies and economies to thrive.
These include the potential collapse of the Greenland and West Antarctic ice sheets, which are on track to unleash up to 10 meters of sea-level rise and worsen food insecurity for at least half a billion people.
While the science behind these tipping points and climate hazards is alarming, it can be difficult to translate into actionable business risks. These reports aim to bridge that gap, providing a foundation for business leaders to safeguard stakeholder value while contributing to sustainable, resilient societies. Both reports also provide full details on the methodologies, sources, and datasets behind the findings.
