The World Economic Forum and Boston Consulting Group share in their report, “Climate-related disasters have inflicted over $3.6 trillion in damage since 2000, with risks accelerating.” Featuring innovative case studies and comprehensive frameworks for managing climate risks, this report equips CEOs and their companies with a blueprint to take action.
Business leaders need to build their business case on risk and ROI. Operational data shows that every $1 spent on climate adaptation today could save $2–$19 in future losses, making inaction the most expensive option. This urgency is driven by real-world events, from supply chain halts due to drought to multi-billion-dollar liabilities from wildfires.
Essential Facts for Business Leaders:
- Profit at Risk: Companies could lose 5% to 25% of their future profits by 2050 if they fail to address growing climate risks in their strategy.
- High ROI on Adaptation: Every $1 spent on climate adaptation today is estimated to save $2–$19 in future losses, establishing a clear financial incentive for action.
- Operational Shock Costs: Supply chain resilience is severely impacted; a 2022 drought in Sichuan, for example, cut hydropower to 20% of normal, halting industrial production.
- Growing Liability Exposure: Litigation is increasingly shifting adaptation costs onto emitters, exemplified by PG&E’s $30 billion wildfire-linked bankruptcy in 2019.
- Regulatory Cost Spike: Energy-intensive sectors face significant financial pressure, with carbon pricing potentially adding up to 50% of EBITDA by 2030.
- Immediate Financial Burden: Climate-related damage is an existing operating cost; one highway operator already spends 5% of EBITDA on climate-related repairs.
The time to integrate these risks into your financial planning is now.
Read the Report “The Cost of Inaction: A CEO Guide to Navigating Climate Risk” by The World Economic Forum, December 2024
