Businesses Weren’t Ready for the 2024 Hurricane Season

Ignoring the reality of climate change is no longer an option; the resilience and sustainability of business now heavily depends on companies’ ability to address and manage their climate exposure.

Brand Provided | By Sailesh Chutani and Deanna Cook | Published 2 hours ago | About a 4 minute read

Image: David Berkowitz

Catastrophic damage from Helene — and that to come from Milton and other hurricanes that will likely follow over the course of the season — has proven what many in the climate community have been saying for decades: Businesses are not prepared to adapt to the changing climate.

Record-breaking climate disasters continue to upend lives and businesses, with over 20 extreme weather events in the US this year to date, resulting in losses greater than $1 billion. Risk modeling firm Verisk expects annual insurer losses due to climate-related disasters — such as destruction of office and manufacturing facilities — will only continue to rise and could increase by more than 40 percent. Insurance rates for real estate markets in Florida and California are becoming unaffordable and may translate to businesses needing to insure themselves. Businesses need to quickly recalibrate the value of their assets and their operational resilience in the face of climate-related disruptions to survive in this new environment.

Per the World Economic Forum’s Global Risks Report 2024, the top four risks in the next 10 years will be related to the environment and climate change. Climate-related disruptions to direct operations and value chains are expected to occur more and more frequently, impacting business continuity. Extreme heat will lead to health and safety impacts and lowered productivity — especially in industries where the workforce operates outdoors, such as agriculture and construction. Wildfires have devastating impacts on businesses and individuals directly within the line of fire, as well as indirect impacts on industries including tourism and outdoor recreation. And a McKinsey analysis found that the likelihood of hurricanes like Helene that cause significant enough damage to disrupt semiconductor supply chains may grow two to four times by 2040.

Regulators are already starting to require that these risks — which are increasingly material — be disclosed and managed. The EU has put forth the Corporate Sustainability Reporting Directive (CSRD); Canada has issued the Guideline for Climate Risk Management (B-15) for federally regulated financial institutions; France has introduced a law that will impose jail terms on the directors of companies that fail to comply with CSRD; and California passed both the Climate Corporate Data Accountability Act (SB 253) and Climate-Related Financial Risk Act (SB 261), amended and signed into law at the end of September as Senate Bill 219 — which will require assurance of Scope 1, 2 and 3 greenhouse gas emissions and disclosure of climate risks.

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Companies will need to prepare for these climate-related risks and regulations in the same way they learned to manage cyber security and data privacy risks with the advent of the Internet. They also need to have climate-adaptation and -mitigation strategies in place as part of enterprise risk management and have climate exposure reflected in their balance sheets.

For corporations, managing climate exposure can take the form of measuring and reducing emissions, building supply chain resiliency, relocating physical assets to lower-risk geographies, and rethinking insurance coverage. Most boards, however, are ill prepared to adequately manage these risks. A 2021 survey by INSEAD and Heidrick & Struggles, Changing the Climate in the Boardroom, found that nearly half of respondents (46 percent) said their Board has insufficient or no knowledge of climate change’s implications for financial performance. Companies will need to augment climate risk expertise among their Board members and revisit their strategy and decision-making in the context of climate considerations to prepare business for the future.

The 2024 hurricane season has been a stark reminder that no one is immune to the effects of climate change. Companies in its path have felt that acutely in the past few weeks — Sibelco and The Quartz Corp, two key players in the mining of high-purity quartz critical to semiconductor manufacturing, have seen their operations entirely shut down in its wake. This disruption could cause ripple effects throughout the tech industry, exactly as McKinsey predicted.

Ignoring these warnings is no longer an option; the resilience and sustainability of business depends on a company’s ability to address and manage its climate exposure.

Sailesh Chutani

Senior Advisor
Boston Consulting Group (BCG)

Sailesh Chutani is a Senior Advisor with BCG, and a Farley Fellow and Adjunct Faculty at Northwestern University. Prior to that, he was the CTO of Logitech and an executive at Amazon — identifying and creating new business opportunities in sustainability. His current board and advisory work are focused on decarbonization, sustainable business models, innovation and digital transformation.

Deanna Cook

Senior Sustainability Manager, ADEC ESG

Deanna Cook is a Senior Sustainability Manager at ADEC ESG, where she provides sustainability and ESG advisory services to clients across diverse sectors — from private firms to the Fortune 100. Her current focus is climate-related regulation and materiality. She holds an MBA from the Kellogg School of Management at Northwestern University.

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Climate Action