WEF Presents Business Case for Urgent Climate Adaptation Action

Businesses that lead on climate adaptation and resilience today will be better positioned to meet regulatory expectations, investor scrutiny, and customer demands tomorrow.

Five of Earth’s systems, such as ice sheets, ocean currents, and permafrost, are at the cusp of irreversible tipping points that can place natural and human systems at high risk. Business leaders must act urgently and collaboratively to decarbonise operations, protect nature, build resilient value chains and adapt to climate change.

Climate-related disasters could result in up to $145 billion in insured losses in 2025, according to projections, which is 6% higher than the previous estimate. This upward trend highlights the financial losses associated with climate change, which should prompt businesses to act urgently to mitigate these risks.  

China ranks at the top in terms of economic vulnerability to climate hazards due to the country’s exposure to extreme flooding, heat, and cyclones. In 2023, for instance, China suffered around $45 billion in climate-related losses. To mitigate these losses, China has allocated significant funding for its national disaster prevention and emergency response, which is growing at a rate of 8.85% annually between 2019 and 2023.

In 2024, the Chinese government has allocated an amount equivalent to $46 billion to strengthen its disaster management capabilities. This substantial funding has established a comprehensive meteorological observation system in the country. Combined with advanced weather prediction models and AI-powered forecasting, this has created a cutting-edge early warning system that has enabled fast and targeted responses to extreme weather events.

However, some businesses still consider investing in resilience as a sunk cost or an expenditure that cannot be recovered, but the opposite is true. Businesses and companies that plan by investing in climate adaptation and resilience will be in a better position. Still, those who fail to adapt to climate risks could lose up to 7% of their earnings annually by 2035, according to a new report by the World Economic Forum.

The WEF’s report, “Business on the Edge: Building Industry Resilience to Climate Hazards,” published on December 11, 2024, provides a roadmap for businesses to address potential losses from climate change. It provides a comprehensive assessment of risks and resilience strategies for boards, investors, C-suite executives and operations managers.

It also quantifies the risks to company fixed assets – property, plant and equipment, across 20 global industries from seven climate hazards: extreme heat, wildfires, drought, water stress, tropical cyclones, coastal flooding and fluvial flooding; and assesses supply chain risks across five socio-economic systems: agriculture, the built environment, technology, health and financial services.

The report provides a roadmap for business leaders to decarbonise, protect natural systems, and invest in adaptation, laying the foundation for sustainable and resilient societies.

Click the link to download the report: Business on the Edge: Building Industry Resilience to Climate Hazards.