United StatesFor many companies, the impacts of climate change have long been treated as a strategic risk to be confronted tomorrow. They are commonly seen as too abstract or too complex to grapple with today.
That position is becoming increasingly hard to defend. Extreme heat, flooding, wildfire, water stress and storms are already affecting operations, supply chains, employees, insurance costs and capital allocation.1
As such, climate resilience is moving from a sustainability discussion to becoming a mainstream business, finance and risk management issue.
I outline below how four overarching themes are encouraging companies to enhance their resilience to climate-related risks and – in so doing – contribute to an expanding opportunity set for innovative solutions to the challenges they face.
External pressures are rising
The first driver is external pressure on companies to manage risks.
Investors are increasingly asking companies to disclose not only their exposure to climate-related risks, but also the quality of their analysis and the credibility of their response. This marks a clear step change from earlier ’tick box’ ESG reporting, where disclosures were often broad, qualitative and difficult to compare. The emerging expectation is for decision-useful information: which assets are exposed, which time horizons matter, what assumptions are being used and what management intend to do.
Regulators are reinforcing this shift. The International Sustainability Standards Board’s IFRS S2 standard requires companies to disclose information about climate-related risks and opportunities that could affect enterprise value, including their assessment of climate resilience and the use of scenario analysis.2 Similarly, California’s SB 261 requires large companies doing business in the state to publish climate-related financial risk reports.3
Even where litigation or implementation delays create uncertainty, the direction of travel is clear: structured, comparable and financially-relevant disclosure is becoming the norm.
Employees are also raising expectations. Workforces and unions are demanding practical protection from climate impacts, particularly extreme heat.4 This is not only an issue affecting outdoor labour: warehouses, logistics hubs, factories, offices and transport networks all face productivity, safety and liability risks as heat stress increases.
Understanding of risks is improving
At the same time, the tools available to companies are improving.
Longer-range weather forecasting, climate modelling and hazard mapping are becoming more sophisticated, allowing businesses to assess physical risks with greater granularity. These capabilities are especially important for companies with fixed assets, complex supply chains or long-dated capital expenditure plans.
Corporate planning is beginning to reflect these developments. Microsoft’s investments in data-centre cooling illustrates this point. As water availability becomes an increasingly material risk for its operations, the company has designed next-generation data centres that use closed-loop cooling systems intended to reduce or eliminate the need for evaporated water for cooling.5 Meanwhile, consumer goods company Unilever has highlighted climate change as a principal business risk, with potential impacts on agricultural yields, suppliers, consumers and value-chain resilience.6
Scenario analysis is also becoming more advanced. Instead of asking whether climate change is a general risk, analysts are increasingly asking which hazards matter, which assets are exposed, which mitigations are available, what they cost and what losses they could avoid. This is a foundation for better capital allocation.
Business opportunities are growing
Markets for products and services that enhance climate resilience are expanding significantly.
The McKinsey Global Institute estimated in 2025 that the world already spends around US$190bn a year on 20 proven adaptation measures, including cooling, irrigation and coastal protection.7 The MSCI Institute reported that 82% of companies surveyed in 2025 said investments in operational resilience had produced positive financial or reputational outcomes.8
Three areas of related opportunity stand out.
The first is within engineering services. Consultants such as Aecom and TetraTech can support adaptation-related investments because resilience plans ultimately need to be implemented at specific locations. That can mean flood defences, stormwater systems, heat-mitigation measures, building retrofits, wildfire protection, water management or asset-level adaptation plans.
A second opportunity set is within data. Businesses need tools to gather, process and use climate, geospatial, asset, supply-chain and insurance data. The winners will be those that can translate complex climate science into board-level decisions, underwriting models, procurement policies and capital plans.
A third opportunity lies in products that directly address climate impacts. Cooling technologies are an obvious example, spanning data centres, buildings and industrial processes. As heat becomes a material operating constraint, efficient cooling will increasingly become a productivity and resilience issue.
Financial instruments are evolving
Innovative forms of resilience finance are emerging, promising to incentivise investments to reduce risks.
Existing tools remain weighted towards the public sector, where the opportunity set is large. Municipal bonds are one of the most promising areas because local governments own or influence much of the infrastructure most exposed to climate risk. The Tokyo Metropolitan Government’s 2025 resilience bond, certified under the Climate Bonds Initiative’s Resilience Criteria, was an important milestone.9 The US$400mn Miami Forever Bond is another relevant example: while broader in scope, it was designed to fund resilience-related investments pertaining to rising sea levels and flood prevention.10
Use of targeted financial instruments is also developing from a low base. One promising model is “resilience underwriting”, where insurers reduce premiums or improve terms when clients use engineering and analytics to lower expected losses. This changes risk management in this area from a compliance cost into a financial lever.
Insurance markets are also evolving. Parametric insurance, for example, provides payouts when pre-agreed triggers such as rainfall, wind speed or temperature thresholds are met. This can provide faster liquidity after a climate event than traditional loss-adjusted insurance, although basis risk remains a limitation.
Pacific Gas and Electric (PG&E), one the largest US utility companies, provides a useful example of how this logic may develop. After severe wildfire-related losses in recent years, the Californian company has invested heavily in wildfire mitigation, including vegetation management, system hardening, risk-informed planning and operational controls.11 The broader lesson is that quantified risk reduction can support more constructive engagement between companies, regulators, insurers and investors.
At a turning point
Companies are replacing high-level narratives regarding climate adaptation with detailed cost-benefit analysis. They are moving from asking whether they face climate risk to asking which interventions produce the highest return on resilience.
Against this backdrop, corporate decision-making will become more integrated. Asset site selection, supply-chain design, capital expenditure, workforce planning and investor communication will increasingly draw on the same climate-risk analysis. Businesses that fail to integrate these decisions may find themselves facing higher costs, weaker disclosures, stranded assets or reduced access to insurance.
Insurance products will become more tailored, more data-driven and more conditional. In some high-risk locations, insurance may become more expensive or be withdrawn entirely. That will force companies and public authorities to decide whether to invest in risk reduction, relocate activity or accept greater balance-sheet exposure.
Financial products will also become more sophisticated, enabling broader and more efficient risk sharing. Public-sector capital will remain essential, but it should increasingly be used to crowd in private finance, in my view. Fire containment, flood protection, urban cooling and water resilience are all areas where public money can reduce system-wide risk while creating investable opportunities.
Climate resilience is therefore not only a defensive agenda. It is becoming a test of management quality, operational discipline and strategic foresight. Companies that act early will be better placed to protect assets, employees and supply chains – and to capture the opportunities emerging from one of the defining business transitions of our generation.
1 World Economic Forum, 2025: Global Risks Report 2025
2 IFRS Foundation, 2023: IFRS S2 Climate-related Disclosures
3 State of California, 2023: Senate Bill 261 – Climate-Related Financial Risk Act
4 International Labour Organization, 2024: Heat at Work – Implications for Safety and Health
5 Microsoft, 2024: Sustainable by Design – Next-generation Datacenters consume zero water for cooling
6 Unilever, 2024: Annual Report and Accounts 2024 – Principal Risks
7 McKinsey Global Institute, December 2025: Advancing adaptation: Mapping costs from cooling to coastal defenses.
8 MSCI Institute, October 2025: What the market thinks: A corporate resilience survey
9 Climate Bonds Initiative, 2025: Tokyo Metropolitan Government Resilience Bond Certification
10 City of Miami, 2017: Miami Forever Bond – Programme Overview
11 Pacific Gas and Electric Company, 2023: 2023–2025 Wildfire Mitigation Plan
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