Physical climate risks are no longer just an isolated environmental issue. They have become a huge threat multiplier, drastically affecting corporate profits, insurance prices, financing costs and overall market competitiveness. However, as the report shows,„Climate Resilience as Strategy“" from June 2026, the vast majority of companies today are unable to translate their concerns about this climate change into real and strategic actions.

Climate as a risk multiplier and a threat to profits

Today’s businesses operate in an era of overlapping crises – from geopolitical tensions to supply chain disruptions to technological threats. The physical consequences of climate change, such as extreme heat, flooding, droughts and devastating wildfires, are all exacerbating and complicating these crises. For example, a drought can exacerbate existing shortages of critical materials, while floods can completely paralyze a company’s logistics.

These events are already shaping corporate performance. It is estimated that without adequate adaptation to physical climate change, the world’s major companies will face projected annual losses of up to $1.2 trillion by the 2050s. Operations and infrastructure are not only facing direct damages, but also serious strategic and operational risks. These include critical downtime, supplier outages, and workforce health restrictions due to extreme heat. There is also an increase in financial and legal risks – Commercial insurance coverage is becoming increasingly expensive and inaccessible due to more frequent disasters, while companies are also facing climate litigation and pressure from stricter legislation. As many as 44 % companies report that commercial insurance is already too expensive to fully protect their at-risk assets.

Awareness exists, but organizations are unprepared

While 65% of publicly traded companies now report on physical climate risks in their annual reports, their response is inadequate. S&P Global data for 2025 reveals that only 42% of companies have any adaptation plans in place, and only a quarter of those that are active have taken any truly strategic action. Most companies are taking a strictly reactive approach to addressing this issue – focusing only on responding and staying afloat after a specific disaster (event by event), rather than systematically building resilience at the enterprise level.

The main reason for this failure is not a lack of information, but rather a lack of organizational structure. Responsibility for the climate agenda is usually fragmented within companies. The agenda is often driven by sustainability leaders who, however, often have no influence on capital expenditures, material procurement, or the physical operation of the plant itself. These companies lack a strong internal leader with a mandate across the entire company. Furthermore, teams within the organization often do not use a common language to share this information.

From protecting the planet to strict financial discipline

Ability Translating climate risk into strict financial terms is absolutely critical for real implementation of measures. If risk is only vaguely defined in business processes (for example, as „high“ or „low“), CFOs will not consider it a priority. However, if threats are quantified explicitly in the form of specific operational downtime, revenue losses and value at risk, investments in resilience are much easier to justify.

It has been proven that investments in adaptation pay off for companies. As many as 82 % companies that have invested in operational resilience report positive results: not only in improved reputation, but also in more favorable insurance conditions and better access to capital. Leaders therefore emphasize that the approach to climate can no longer be seen simply as avoiding losses, but rather as building a sustainable competitive advantage.

Six steps on the path to advanced corporate resilience

Experts have compiled a model divided into six modules that help companies successfully move from simple risk perception to full-fledged solutions:

1. Understanding and assessing risks: Building an accurate picture of the vulnerability of your assets and value chains using data models.
2. Integration into management and operations: Climate risk must leave the sustainability departments and become a permanent part of corporate risk management and strategic decision-making.
3. Pricing and building: Defining a clear business case that assesses measures through quantified loss savings and building market power.
4. Funding: Designating dedicated budgets and drawing on preferential green loans for better financial conditions.
5. Disclosure of information: Transparent reporting of achievements according to global standards for investor reassurance and better information.
6. Ecosystem engagement: The capabilities of a company alone are not enough if external infrastructure fails. Active collaboration with suppliers, local governments, communities and, in some cases, even competitors themselves is required.

How to set up a system change?

Although the landscape of different guidelines is rapidly expanding, it remains unclear for companies. Firms lack the connection between the initial risk assessment and the specific investment allocation. Therefore, the authors of the publication from C2ES and Systemiq institutions come up with four solutions to unify the market:

• Navigation catalog: A clear and updated "signpost" of guidelines that will save companies months spent searching for appropriate procedures.
• Maturity model: A standardized framework that allows any company to easily diagnose its current position and find out what steps it needs to take to move to a higher stage of strategic maturity.
• Standardized corporate framework: A single, generally accepted mechanism for assessing, pricing and disclosing risks that will unify the efforts of regulators to date.
• Sector Playbooks: Practical and tailored guidelines that respect that the agricultural sector requires a fundamentally different approach than, for example, telecommunications or metallurgy.

Companies that understand that managing the impacts of climate change requires transforming their internal structure and governance will be much better equipped to absorb ongoing shocks and keep their businesses running in the future. Ignoring physical risks already poses the threat of trillions of dollars in hard losses today. Competitive advantage will be gained by those who remove organizational silos, learn to express climate action through clear financial metrics, and join forces not only within their company but also within the broader ecosystem. JRi&CO2AI