Finance & Investment

CDP:
Timely Climate Action Offers Sizeable ‘Disclosure Dividend’

Companies that measure, manage and disclose environmental risks are better positioned to reap an average of 7x financial returns from climate action.

Published 3 months ago | About a 5 minute read

Image: CDP

In yet another argument for the business case for climate action, a new analysis from CDP outlines how companies stand to gain up to 21 times return for every dollar invested in physical climate-risk mitigation.

As climate-related disasters intensify, the financial cost of inaction is rising – projected to reach $38 trillion annually by 2050. Against this backdrop, the economics of disclosure are clear: Companies that measure and manage environmental risks are better positioned to unlock the ‘disclosure dividend’ – reaping, as CDP has outlined repeatedly, tangible financial returns from climate action.

Drawing on analysis from disclosures of nearly 25,000 companies – covering two-thirds of global market capitalization – in 2024, The 2025 Disclosure Dividend reveals that every $1 spent on addressing physical climate risks could deliver a return of up to $21 for some firms, with an average return of up to $81. The study also found that a median $33.1 million worth of opportunities per company could await firms that take environmental action, for just $4.6 million in costs to realize them.

CDP’s findings echo a recent analysis from BCG, which revealed the trillions’ worth in opportunities that the Climate Adaptation & Resilience market offers forward-thinking investors in the short term.

Risky business

Global companies are already weathering environmental business disruptions:

Cocoa prices have hit record highs due to extreme weather in West Africa – producer of 80 percent of the world’s total cocoa.
In Taiwan, droughts have shuttered semiconductor plants and forced companies to bring in water on trucks.
The EU’s agriculture sector is already losing €28 billion each year as a result of extreme weather.
Insurance premiums in the US have doubled since 2017, due to huge increases in climate-related disaster spending and federal aid.

Another recent report from BCG, in collaboration with the World Economic Forum’s Alliance of CEO Climate Leaders, asserts that every dollar invested in climate adaptation and resilience can generate up to $19 in avoided losses; whereas companies that fail to address climate-related risks could see upwards of $560–610 billion in annual fixed asset losses by 2035.

Disclosure as economic imperative

As CDP explains, the disclosure dividend is the return companies receive from disclosing and acting on their environmental risks, impacts, and opportunities. The dividend can be attained across three use cases: access to capital, business resilience and compliance.

These returns can be financial or strategic. They reward early environmental leadership. By investing in disclosure, companies unearth risks, empowering companies to respond effectively and build resilient business models.

But it goes beyond risk management to positioning companies for growth. The disclosure dividend pays out year after year, enabling better decision-making and attracting investment. It also prepares companies for a rapidly changing regulatory landscape and helps identify new revenue streams.

Disclosure remains a critical enabler helping businesses surface material risks and chart credible action. The vast majority (90 percent) of large companies disclosing to CDP already have a process for identifying and assessing their environmental dependencies, impacts, risks and opportunities or intend to do so within the next two years – and close to half (43 percent) of large corporates reported having a climate transition plan in place.

Yet the multiplier effect comes from taking swift action on the insight. Almost two-thirds of companies (64 percent) identified environmental opportunities – and of those, 12 percent unlocked a staggering $4.4 trillion in opportunity value in 2024 alone. The quantified opportunities yet to be realized represent another $13.2 trillion.

Companies in Japan and Canada are identifying the largest environmental-related financial opportunities. Based on median values, Japanese firms identified $73 million in potential gains per company — followed closely by Canada at $72 million. Those in the US identified just $15 million worth of opportunities, while Chinese firms perceived $10 million worth of gains.

While the disclosed value of opportunities varies greatly and may be influenced by factors such as thresholds used to define a substantive opportunity, methodological choices and commercial sensitivity, the analysis confirms that companies in nearly all sectors and regions stand to benefit from acting on environmental opportunities.

“The economics behind disclosure are becoming clear – data-driven decisions help to manage business risk and unlock opportunity,” said CDP CEO Sherry Madera. “Disclosure is the foundation of action. Our data shows that companies that measure and manage their environmental impacts not only future-proof their operations but also unlock tangible financial and strategic gains. The disclosure dividend is real – and the business case for seizing it has never been stronger.”

The report highlights a growing shift: Disclosure is no longer just a transparency exercise – it's becoming an economic imperative. As the financial case for climate action strengthens, companies that act on their disclosure data stand to unlock measurable returns. The dividend lies not simply in awareness, but in translating insight into impact.

Methodology

The median benefit-cost ratio is based on companies’ self-reported estimates of the potential financial impact of physical climate risks over medium and long-term horizons (whichever is higher), and the associated response costs. Figures vary widely across companies within the same industry, likely due to differences in geography, size, risk exposure and methodologies.