Climate change will lead to a drop of between 8.1% and 10.1% in corporate revenues by 2045 and cause damages and losses to fixed assets estimated at between $560 billion and $610 billion annually by 2035. Without evidence-based resilience strategies, the annual decline in average company earnings will range from 6.6% to 7.3%. These are some of the findings highlighted in the report Business on the Edge: Building Industry Resilience to Climate Hazards, published in December 2024 by the World Economic Forum (WEF) in collaboration with Accenture. According to the report, companies are in a unique position to lead the transition to net zero and develop “more robust and resilient economies,” and those that fail to enhance their resilience will lose their ability to compete.

The WEF urges business leaders to “act swiftly and collaboratively”: “The urgency to decarbonize is clear,” it states. However, to date, “little work has been done to connect climate science with immediate business risks and the increasingly pressing need to be more resilient and adaptive,” as noted in Business on the Edge. The report bridges this gap by providing a tangible assessment of climate hazards—particularly extreme heat, wildfires, drought, water stress, tropical cyclones, coastal flooding, and fluvial flooding—and the risks they pose to companies’ fixed assets across 20 global industries.

It also offers business leaders, boards, risk management and strategy experts, and investors information to understand how climate change will affect supply chains and to respond with more informed decision-making. Therefore, it proposes actions to preserve revenues, reduce maintenance and operational costs, and protect workers and local communities.

How will the climate crisis affect companies?

Factories without water, data centers struggling to cool, flooded offices, or agricultural fields affected by floods and droughts. The climate crisis will impact companies in three ways:

• – Direct operational costs: Impacts on fixed assets such as property, buildings, and equipment represent the most direct risks.
• – Supply chain disruption: All stages will be affected, from sourcing to processing, distribution, and consumption patterns.
• – Instability of nature and society: The vitality of businesses and economies is closely tied to societal and environmental stability. This includes lost working hours due to employee health issues and resource shortages.

The primary threat to companies will be extreme heat, estimated to account for 72% to 73% of fixed asset losses in the next decade. These losses will manifest in disruptions to activity, elevated repair and operational costs, and reduced worker productivity. Following extreme heat, the main threats will be water stress, floods, and droughts.

Recommendations for companies

To promote resilience and adaptation, according to the WEF, in the next two years business leaders should:

• – Conduct a detailed audit of core capabilities and processes to ensure that climate resilience and adaptation percolate through every level of the organization and its ecosystem.
• – Master data and strategic intelligence to understand the materiality of new risks and opportunities presented by the climate crisis and invest in skills, technology, and the responsible use of AI to accelerate insights and decision-making.
• – Link climate risks to all decisions related to capital maintenance and investments.
• – Sponsor and integrate scientific insights with commercial models to improve analysis quality and decision-making while working with the scientific community to develop useful insights into local impacts in key regions.

Additionally, the report concludes with recommendations for companies to:

• – Avoid economic losses by increasing resilience. For example, developing contingency plans and practices to maintain worker well-being and productivity during periods of extreme heat.
• – Increase revenues, savings, and sustainability by capitalizing on opportunities. For example, investing in R&D to reinvent products, services, and infrastructures using new materials or circular business models.
• – Protect communities and ecosystems through collaboration. For instance, working across the value chain to find groundbreaking solutions like circular business models that recycle, reuse, and reduce scarce resources and extend product lifecycles.

The sectors most affected by the climate crisis

Telecommunications, utilities, and energy will be, in that order, the three most affected sectors. The telecommunications sector is expected to experience annual losses of between $518 million and $560 million, mainly due to the sensitivity of data centers and network infrastructures to extreme heat and restricted water access.