Finance & Investment

WEF Reports Provide Roadmap for Company Leaders Bewildered by Climate Risks

Companies investing in adaptation, decarbonization & resilience are seeing up to $19 in avoided losses for every dollar spent; businesses that fail to adapt to climate risks could lose up to 7% of annual earnings by 2035. In layman’s terms: You snooze, you lose.

Published 5 days ago | About a 4 minute read

Image: MrDm

In the past two months alone, we’ve seen a flurry of research not only highlighting the societal, health and financial risks we’re in store for, thanks to climate change — but also the trillions in opportunities that await those who seize them:

According to CDP, the world's biggest businesses now identify nearly $5 trillion in potential gains from tackling climate change — a figure that’s more than doubled in the past six years.
And IPBES studies highlight that while concurrently addressing five urgent, interrelated crises — biodiversity loss, water and food insecurity, health risks and climate change — will create trillions in economic benefits and help ensure our long-term survival, the costs of addressing them separately or delaying action even a decade will add at least $500 billion per year in additional costs.

Now, two recent reports from the World Economic Forum (WEF) drive home the conclusion that businesses must act now to address growing climate risks or face steep financial losses (companies that delay could see up to 7 percent of annual earnings wiped out by 2035 — an impact akin to COVID-19-level disruptions every two years) — while also providing a roadmap for companies to navigate climate risks and unlock long-term value through decarbonization, safeguarding nature, climate adaptation and building resilience.

As Business on the Edge: Building Industry Resilience to Climate Hazards (produced with support from Accenture) reveals, extreme heat and other climate-related hazards are expected to cause $560–610 billion in annual fixed asset losses for listed companies by 2035 — with telecommunications, utilities and energy companies most vulnerable. Companies in carbon-intensive sectors that fail to decarbonize face mounting transition risks as global climate regulations tighten, with carbon pricing alone projected to slash up to 50 percent of earnings by 2030.

These risks, combined with cascading impacts on supply chains and communities, underscore the critical need for resilience strategies.

Conversely, businesses that invest in adaptation, resilience and decarbonization are already realizing tangible returns. The Cost of Inaction: A CEO Guide to Navigating Climate Risk — from the WEF’s Alliance of CEO Climate Leaders, in collaboration with Boston Consulting Group (BCG) — shows that every dollar invested in climate adaptation and resilience can generate up to $19 in avoided losses, based on data from CDP. The report builds on findings of a 2024 BCG study — in which businesses with proactive climate-action strategies reported decarbonization benefits equal to over 7 percent of their revenues for an average net benefit of $200 million a year — and offers a blueprint for CEOs and their companies to seize these opportunities.

The sobering science

Leading scientists, including Johan Rockström of the Potsdam Institute for Climate Impact Research, warn that five Earth systems are nearing irreversible tipping points. 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 resilient societies. Both reports also provide full details on the methodologies, sources and datasets behind the findings.

Opportunities amid risks

Despite the risks, future-proofing business operations presents substantial growth opportunities. Globally, ‘green’ markets are set to grow from $5 trillion in 2024 to $14 trillion by 2030, with early movers gaining competitive advantages through cleantech solutions and adaptation offerings. These markets span sectors and value chains — with the largest segments being alternative energy (49 percent), sustainable transport (16 percent) and sustainable consumer products (13 percent) — all of which 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 communities,” said WEF Managing Director Gim Huay Neo. “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."