Continuing a streak of extraordinary global temperatures, 2025 was one of the three hottest years ever recorded, according to the World Meteorological Organization. With an ever-growing body of research revealing that climate change is happening faster than scientists predicted, it can no longer be treated as a corporate box-ticking exercise. Climate change is now a core business risk.
Financially, the risks may be greater than previously thought. To date, corporations have naturally relied on the financial modeling used by governments and central banks to assess climate risks.
However, new research from the think tank Carbon Tracker shows that the dominant economic models still assume that climate impacts will unfold linearly, as in historical experience, when science shows they will cascade in complex, unexpected ways. For example, an influx of freshwater into the North Atlantic from the disintegration of the Greenland ice sheet would not only cause sea-level rise and more extreme weather events but also destabilize the ocean’s currents, leading to significant cooling in Europe.
To ensure long-term business resilience, C-suite leaders must adapt to this complicated new reality. Here is our guide to four climate risks that they must consider in 2026.
The most obvious climate risk is the increase in the frequency and intensity of typhoons, hurricanes, wildfires, droughts and floods, all of which will destroy, damage or limit access to company premises, factories and infrastructure, while impacting customer behavior.
Even current financial models, which now appear conservative, predict that climate hazards could drive $560-610 billion in annual asset losses across listed companies by 2035, rising to $1.1 trillion by 2055. The way to avert such a scenario is to integrate climate intelligence into decision-making, strengthen supply chains (for example, by moving manufacturing closer to retail), invest in resilient infrastructure (think flood barriers, improved drainage and green roofs) and purchase specialist insurance.
When it comes to insurance, too many firms still focus only on their own assets and do not address broader vulnerabilities. They are not considering the systemic climate risks that could affect wider value chains and critical infrastructure. The reality is that a portion of this infrastructure—such as coal-fired power plants and gas pipelines—will become stranded assets, meaning they will become obsolete before the end of their economic life.
Decarbonization is key to tackling climate change, as humanity’s reliance on oil and gas is the primary driver of rising greenhouse gas emissions. Only by switching to renewable energy can we stop the worst climate impacts, so businesses that do not get a handle on their carbon emissions are only putting themselves at risk.
The challenge is that around 70% of a company’s emissions come from its supply chain, and these ‘Scope 3’ emissions are notoriously hard to quantify. With supply chains plagued by emissions data gaps, firms often rely on estimates or industry averages, even though they lack accuracy. Thankfully, technology is increasingly providing solutions in the form of AI-driven digital platforms, often sector-specific, that fully track and measure supply chain emissions.
For example, Danish sustainability platform BeCause streamlines Scope 3 emissions reporting for the tourism industry by automating data collection across hotels, certifications, and booking platforms.
Promises are no longer enough. Failure to implement a viable, real-world plan to meet companies’ climate targets carries significant risks. At a base level, it risks physical infrastructure, but it also risks non-compliance with changing ESG regulations, which can lead to fines, legal fights and even the loss of operating licenses.
Reputationally, failure to meet climate targets causes harm too. Despite the current U.S.-led political backlash against sustainability, 84% of institutional investors say progress on sustainability will either continue or accelerate over the next 10 years. Meanwhile, 61% of global consumers care about climate change, but they believe that brands, not individuals, have the power to drive systemic transformation–so they expect credible and transparent corporate leadership.
Consumers are no longer merely frustrated by greenwashing; they are increasingly motivated to boycott or even sabotage brands because of it. In the U.K., for instance, more than half of consumers (54%) are prepared to boycott brands over misleading green claims. In this context, businesses must have a comprehensive understanding of all corporate climate risks and impacts to avoid accusations of greenwashing. Today, only transparency and data-driven sustainability claims are acceptable.
Take Nike’s British experience as a case in point. In 2025, it was one of three fashion brands, alongside Lacoste and Superdry, that the U.K. Advertising Standards Authority rebuked for failing to provide sufficient evidence to support the environmental claims made in its Google adverts. As a result, it banned all ads. In the modern era, companies need to be all over their sustainability data, including in marketing and communications departments.
The world is changing. Our love affair with oil and gas has irrevocably altered our climate. Significant impacts are already locked in for decades to come. But we can still stop the worst of it and adapt to this new reality. The corporations that will succeed in the long term are those that embed climate risks into their strategy. Those who simply react to events as they unfold expose themselves to a much greater risk of being left behind.
For a deeper look at how companies are navigating climate risk, regulation, and scrutiny, read Disruption, Doubt and a New Direction.
We launched THINKINK to fill a significant marketplace void: the lack of specialization across the PR agency landscape, and no communication partners driven by top-line business growth.
Please tell us a bit about yourself and how we can help. We'll get in touch right away.
