Businesses that disregard the risks associated with climate change expose themselves to various consequences, including business disruptions, financial implications such as limited access to capital, stranded assets, damage to reputation, and potential legal liabilities.

According to the Global Risk Report 2021 by the World Economic Forum, climate change-related risks rank among the most impactful and likely global risks.

The escalating urgency surrounding climate change mitigation and adaptation efforts has elevated climate change to a prominent position on boardroom agendas as a significant business risk. Businesses are now tasked with comprehending the impact of their operations on climate change and vice versa, understanding how climate change may affect their operations, markets, and supply chains, and formulating and executing suitable mitigation and adaptation strategies.

In many instances, regulatory pressures and the looming specter of regulation are compelling businesses to alter their behavior. However, while there is growing political consensus for action on climate change, it is not universal, and momentum for action is increasingly driven by businesses, shareholders, local governments, NGOs, and consumers. The repercussions of business inaction are becoming increasingly severe due to regulatory measures, stakeholder activism, supply chain and market disruptions, reputational damage, and the potential for litigation.