Re-evaluating climate projections for businesses

*Edited to reflect new articles in comments* The Southern Ocean around Antarctica is undergoing an unexpected and alarming transformation: instead of becoming fresher from melting ice, it's rapidly getting saltier. Since 2015, sea ice has shrunk by an area the size of Greenland and hasn't returned, suggesting a major shift in the climate system. Saltier surface water draws heat from the deep ocean, making it harder for sea ice to regrow and triggering a feedback loop that accelerates warming, intensifies storms, threatens wildlife, and raises global sea levels. Scientists warn this may mark a climate tipping point. ⚠️ Implications for Business Risk 1. Global Supply Chain Disruption 🔍 Sea-level rise and extreme weather may worsen, particularly in Asia-Pacific and coastal hubs. 🔍 Antarctic changes may alter storm tracks, increasing shipping risks, insurance premiums, and port disruptions. 2. Carbon Price Volatility 🔍 If oceanic carbon sinks fail, carbon markets will tighten. Carbon-intensive companies may face higher offsets or penalties. 🔍 Climate policy could move faster and more severely than anticipated. 3. Asset Revaluation 🔍 Physical assets (real estate, infrastructure, agriculture) in vulnerable regions will face write-downs or stranded asset risks. 🔍 Water-intensive industries will suffer from changing freshwater availability and ocean acidification. 4. Investor and Regulatory Scrutiny 🔍 Climate transition and physical risks are increasingly priced into ESG frameworks, TCFD/ISSB reporting, and investor expectations. 🔍 This new data will likely accelerate regulatory demands for climate scenario planning and risk disclosure. 5. Reputation and Resilience 🔍 The narrative has shifted: climate impacts are no longer distant or abstract. Stakeholders are watching how companies respond to planetary tipping points. 🔍 Businesses seen as slow to adapt may face loss of social license or talent, especially from younger generations. 🧭 What Can Business Leaders Do Now? ➖ Reassess climate risks using worst-case scenarios. The models are evolving, so must your resilience planning. ➖ Review your exposure to supply chain bottlenecks, insurance liabilities, and vulnerable assets. ➖ Accelerate decarbonization, not just for compliance but for long-term viability. ➖ Engage in collective action, especially in sectors like finance, shipping, food, and mining that shape global climate dynamics. The UN Global Compact Network Australia is creating a climate reporting community of practice, the content and discussions will respond to the demands of the businesses participating in the community. Deep dives into climate risks and scenario planning have already been raised as areas to explore.

🌍 The latest World Meteorological Organization El Niño/La Niña Update brings important news for climate-sensitive sectors: 🔹 Current cooler-than-average Pacific sea surface temperatures are expected to return to neutral conditions (neither El Niño nor La Niña) between March and May 2025 — with a 60% probability, rising to 70% by April-June 2025. 🔹 The risk of El Niño redeveloping in this period is negligible, but uncertainty remains high due to the spring predictability barrier, a well-known challenge for long-range climate forecasts. Why should businesses care? 👉 Seasonal climate forecasts like this are not just scientific updates — they are powerful risk management tools that translate into economic savings worth millions of dollars for industries like #agriculture, #energy, #transport, #supplychains, and #insurance. 👉 Understanding how ENSO patterns will evolve helps businesses: ✅ Plan for #climaterisks and supply chain disruptions ✅ Anticipate shifts in #wateravailability, #energydemand, and #cropyields ✅ Align operational strategies to climate-sensitive markets (#commodities, #foodsecurity, #renewableenergy production) ✅ Enhance disaster preparedness and reduce costly damage from climate extremes Even in a warming world, businesses can no longer rely solely on historical weather patterns — they must actively integrate climate intelligence into decision-making. 📊 The latest forecast also comes in the context of record-breaking heat: January 2025 was the hottest January ever recorded, despite the presence of weak La Niña conditions since December 2024. What’s next? WMO’s Global Seasonal Climate Updates (GSCU) provide even broader insights — covering key climate drivers like the North Atlantic Oscillation, Indian Ocean Dipole, and tropical Atlantic temperatures — all critical for regional weather and climate risks that matter to business continuity and resilience. ✅ Takeaway for leaders: Climate intelligence is a competitive advantage. Use it to future-proof your business strategy and build climate resilience into your operations. 💡 Want to stay ahead of #climaterisks and opportunities? Follow #WMO for ongoing updates and insights. https://lnkd.in/e-hXFXPC

Climate change has become a financial equation 🌍 Companies are beginning to quantify what inaction could cost, translating climate risk into direct revenue impacts. The data show that addressing climate impacts through mitigation and adaptation measures represents about 8% of FY24 revenues, while the cost of inaction reaches 15%. This means the financial exposure of not acting almost doubles the investment required to act. The chart shows how this varies across sectors. Energy, materials, and building industries face some of the highest projected costs of inaction, driven by physical and transition risks. In contrast, the real estate sector stands out with a cost of action near 96%, reflecting the capital needed to protect assets from floods, fires, and hurricanes. Financial asset owners and managers estimate the cost of inaction at 120% of FY24 revenues, the highest across sectors, signaling a growing understanding of portfolio-wide climate risk. These figures show that climate change is now treated as a balance sheet issue, not a sustainability add-on. They also reveal that value protection depends on early adaptation and strategic investment. The financial logic is clear. Acting today reduces the future cost of disruption, regulation, and loss of assets. The next step is to internalize these insights into decision-making, linking climate risk directly with business strategy. How prepared are companies to make that connection before the cost gap widens? Source: EY Global Climate Action Barometer 2025 #sustainability #esg

So many targets. So few ways to get there. 2030 is not far away. ⏳ I’m increasingly working with clients who set bold, admirable climate ambitions years ago. They’ve worked hard on decarbonization roadmaps. They’ve taken the early wins. But now? The reality is setting in. ⚡ Economics that no longer add up. ⚡ Supply chain bottlenecks. ⚡ Organizational challenges that stall progress. Some are quietly stepping away. Others are taking a harder, more strategic look at their pathways. And here’s the hard truth: even understanding the starting point and financial implications is not easy. Supply chain transparency, scenario modeling, and true cost projections all require a robust, data-driven approach. The first step is often the same: 👉 Strip it back to facts. 👉 Rebuild a clear view of today’s baseline. 👉 Recalculate the real cost of reaching those ambitions. Because the business cases and roadmaps created a few years ago? Most are already outdated. It’s time to face reality. Not to abandon ambition, but to ground it in truth. That’s how progress is made. 🌍 #Decarbonization #ClimateAction #NetZero #RealityCheck #SustainabilityStrategy #GreenTransition #FutureOfBusiness Boston Consulting Group (BCG) World Economic Forum Eden Cottee-Jones Mikkel Pedersen | Christiana Figueres | UN Climate Change Nanna Gelebo Anna Avdeitchikova Trine Filtenborg de Nully

By 2050, climate-related financial risks are projected to more than triple—rising from $7.8 trillion to $28.3 trillion in global GDP according to the latest LSEG report: 🔥 Wildfires, floods, cyclones and extreme heat will affect 839 million people, up from 155 million today. 💸 Insurance markets are straining: 60% of climate-related losses were uninsured in 2024, and that gap is growing. 🏙️ In the U.S. alone, $2.4 trillion in GDP is at rising flood risk. 💼 Wildfire exposure in tech and logistics hubs like Silicon Valley is expected to rise sharply, with massive implications for operations and infrastructure. Read more: https://lnkd.in/dmqHG3qe The implications? It’s not just about direct damage—climate events are disrupting supply chains, municipal finance, and business continuity. 👉 For Australian businesses, the signals are clear: - Asset stress testing is no longer optional. - Physical risk disclosure and insurance re-pricing must be integrated into decision-making. - CFOs, COOs and CSOs need to co-lead adaptation responses. If you’re ready to lead this transformation from inside your business, we want to hear from you. 📩 Interested in joining ? Get in touch via DM or visit https://lnkd.in/gQmwy7Te #ClimateRisk #CorporateFinance #Adaptation #PhysicalRiskDisclosure #Insurance #BCSDA #WBCSD #CFOs #COOs #Sustainability #LaurenSchenkman @ESGDive @LondonStockExchangeGroup @ClimateWorksAustralia

🌍 The World Economic Forum and BCG's report, "The Cost of Inaction: A CEO Guide to Navigating Climate Risk," emphasizes the urgent need for businesses to address climate change. Inaction will severely impact the global economy, with potential GDP losses of up to 22% by 2100. The report details both physical risks (extreme weather events) and transition risks (policy changes, carbon pricing) facing companies. Key takeaways: 1️⃣ Damages from climate change have already exceeded $3.6 trillion since 2000 and are projected to worsen significantly. Mitigation is more economically sound than dealing with the consequences of inaction. 2️⃣ Companies face mounting physical risks from extreme weather, potentially impacting EBITDA by up to 25% in the next two decades. Transition risks from regulations like carbon pricing could impact EBITDA by up to 50% in energy-intensive sectors by 2030. 3️⃣ While many recognize climate risks, they often underestimate their financial implications and overestimate mitigation costs. 4️⃣ Early movers in climate action can gain a "green advantage," including higher revenues, easier hiring, and reduced regulatory risks. A $14 trillion market for green technologies is projected by 2030. 5️⃣ Companies must invest in adaptation and resilience measures to mitigate physical risks. Many find these investments yield positive business cases. 6️⃣ Companies must decarbonize their operations and supply chains to mitigate transition risks and seize opportunities in the green economy. 📢 The report provides a four-step guide for CEOs: 1) Conduct a comprehensive climate risk assessment. 2) Manage risks in the current business portfolio. 3) Pivot the business to unlock new opportunities. 4) Monitor risks and report on progress. This also includes enabling factors, like upgrading climate risk governance, integrating climate risks into business-as-usual, and developing effective climate risk systems. 📚 Governments also have a critical role to play by expanding carbon pricing, doubling down on incentives, removing subsidies for fossil fuels, preparing for more drastic transition measures, and developing national adaptation plans. The report emphasizes the interconnectedness of climate risk and business strategy, urging companies and governments to act decisively to mitigate risks, unlock growth opportunities, and ensure long-term sustainability and resilience. #EnergyTransition #Decarbonization #Sustainability #ClimateRisk #ClimateChange 

Long-term climate risks often feel abstract, while strategic decision-making tends to revolve around 3–5-year cycles. The result: critical gaps between climate ambition and business execution. Alarmingly, only one-third of companies disclosing to CDP have performed climate scenario analysis, underscoring the imperative to align foresight with strategy. The article “Weaving climate considerations into corporate operations”, authored by Jenny Kwan and Inês Estrela Amorim of WBCSD – World Business Council for Sustainable Development, along with Vignesh Gowrishankar, Elfrun von Koeller, Anastasia Kouvela, Elizabeth Hardin, and Annika Zawadzki of Boston Consulting Group (BCG), outlines three actionable unlocks: — Apply scenario analysis to stress-test strategic plans and uncover risks. — Select decarbonization levers that balance ambition with feasibility. — Integrate adaptation and resilience measures into daily operations. The data speaks volumes: up to 50% of Scope 1 & 2 emissions reductions in key sectors can be achieved for practically zero cost. Sustainability is an engine of resilience, competitive advantage, and innovation. Read the full article here: https://lnkd.in/dFrY7iau #CorporateStrategy #Resilience #BCG #WBCSD