Let’s be honest, climate change isn’t just a future threat anymore. It’s happening now, and it’s hitting businesses where it hurts: supply chains, operations, bottom lines. What used to be seen as a sustainability issue is now a full-blown business risk. And the cost of ignoring it? Far higher than the cost of action.

According to the World Economic Forum and Boston Consulting Group, climate-related disasters have already racked up over $3.6 trillion in losses since the year 2000. And if we stay on our current path, the global economy could shrink by up to 22% by the end of the century. That’s not just bad for the planet, that’s catastrophic for business.

If you’re a CEO, this isn’t someone else’s problem. It’s yours to lead on. The time for pledges is over. This is about bold, strategic decisions that protect your business and help shape the economy of the future.

Climate Risk: What Every CEO Needs to Know

Climate risks fall into two main categories: physical risks and transition risks. Both can be brutal, but both can be planned for.

• Physical Risks are the direct impacts of climate change: floods, droughts, wildfires, rising sea levels. These disrupt supply chains, damage infrastructure, and raise costs across the board. According to recent data, companies could lose $560–$610 billion a year in asset damages by 2035 if nothing changes. Industries like energy, utilities, and telecoms are right in the crosshairs.
• Transition Risks come from the global shift toward a net-zero economy. New regulations, changing customer expectations, and technology disruptions are shaking up business-as-usual. Companies that aren’t prepared may get hit hard and some could see profit margins slashed by 50% just from the rising cost of carbon emissions.

This isn’t about fear. It’s about facts. These risks are real, they’re growing, and they’re entirely foreseeable.

Inaction Is Expensive

If you think adapting to climate change is costly, try doing nothing.

A business that ignores climate risk could see a hit of around 7% to annual earnings by 2035 which is almost half the economic damage we saw from the COVID-19 pandemic. This is the trajectory for businesses that fail to act.

And if you’re operating in carbon-heavy sectors like energy, manufacturing, or logistics? You’re even more exposed. The longer you wait to pivot, the higher the cost to catch up, or the harder the fall if you don’t.

The Flip Side: A $14 Trillion Opportunity

Here’s the good news: this isn’t just about minimising losses. It’s about unlocking a significant growth opportunity.

The green economy is booming. It’s set to grow from $5 trillion today to over $14 trillion by 2030. That means opportunities across clean energy, sustainable transport, circular manufacturing, smart agriculture, green finance… you name it.

And the ROI on climate adaptation is huge. For every dollar invested in climate resilience, businesses can see returns of $2 to $19. That’s a powerful business case for investing in long-term sustainability.

What Should CEOs Be Doing Right Now?

This isn’t the time for more reports and committees. It’s time for action. Here’s a practical playbook for CEOs who want to lead from the front:

1. Make Climate Risk a Core Strategy
   Don’t treat climate change as a compliance box to be ticked. Build it into your business model, your risk framework, your product design, and your capital planning. Make it part of the very fabric of your business.
2. Plan for Multiple Futures
   Prepare for extremes: a world that’s 3°C hotter, and one where decarbonisation takes off faster than expected. Build flexible, future-ready strategies.
3. Measure What Matters
   Understand your exposure, physical, financial, reputational and use data to assess risks and opportunities under different climate scenarios.
4. Invest for Resilience and Growth
   Reallocate capital where it counts. That might mean clean tech, climate-proofing infrastructure, or decarbonising your value chain. Whatever it is, start now.
5. Embed Climate Thinking into Your Culture
   Climate risk isn’t just a boardroom topic; it should guide decisions at every level of the business. Train teams. Set targets. Align incentives.

This isn’t about surviving. It’s about genuinely thriving in a world that’s rapidly changing.

Leadership in the Age of Climate Risk

The climate crisis is forcing a major business reset—and that’s not a bad thing. It’s a call to evolve. The companies that lean in now, that take climate risk seriously and use it as a catalyst for innovation, will be the ones that lead tomorrow’s economy.

As a CEO, your leadership matters more than ever. The decisions you make today will shape your company’s legacy and the resilience of our global economy.

We’re no longer debating if climate risk matters. We’re deciding what to do about it. Let’s make that decision count.

Alan Stenson, CEO

Neutral Carbon Zone