CDP’s 2026 Disconnected Defenses report warns that companies could face up to $900 billion in losses from extreme weather risks and climate-related disruptions. The assessment highlights major gaps in corporate climate resilience, including underinvestment in climate adaptation, fragmented governance, and weak integration of physical climate risks into enterprise risk management and financial planning. The findings reinforce the growing importance of climate resilience, climate-risk disclosure, and adaptation planning under evolving ESG and sustainability reporting frameworks.
A new 2026 assessment by CDP warns that companies worldwide could face up to $900 billion in losses from extreme weather risks and climate-related disruptions, reinforcing growing concerns around corporate climate resilience, physical climate risk exposure, and climate adaptation planning.
Published in CDP’s latest report, Disconnected Defenses, the assessment examines how corporates, cities, and financial systems are responding to escalating climate risks linked to floods, droughts, heatwaves, storms, and wildfires. The report highlights that physical climate risks are increasingly generating material financial impacts across infrastructure, operations, global supply chains, and insurance systems.
According to the assessment, many companies remain significantly underprepared for the scale and interconnected nature of climate-related financial risks. While climate disclosure practices have expanded rapidly under ESG and sustainability reporting frameworks, the report identifies a widening gap between climate-risk disclosure and the implementation of concrete resilience and adaptation measures.
CDP warns that extreme weather events are no longer isolated operational disruptions. Climate risks are increasingly systemic, with impacts cascading across energy systems, transport infrastructure, water availability, agriculture, logistics networks, and financial markets. As a result, climate-related disruptions in one region or sector can rapidly affect supply chains, production capacity, insurance costs, and business continuity globally.
The report identifies several major weaknesses in current corporate climate resilience strategies:
- insufficient investment in climate adaptation and resilience infrastructure,
- fragmented governance between public and private actors,
- limited visibility over supply-chain and asset-level climate vulnerabilities,
- weak integration of climate scenario analysis into enterprise risk management, and
- continued reliance on historical climate assumptions that no longer reflect accelerating climate realities.
A key finding of the report is the growing disconnect between rising climate exposure and corporate adaptation investment. Despite increasing awareness of physical climate risks, many organisations continue to prioritise short-term reactive measures instead of embedding long-term climate resilience into governance, strategy, financial planning, and capital allocation decisions.
The assessment also highlights growing financial-system exposure to climate-related risks. Investors, lenders, insurers, and regulators are increasingly evaluating how companies manage climate resilience, operational continuity, infrastructure exposure, and adaptation planning. Organisations unable to demonstrate credible climate adaptation strategies may face rising financing costs, insurance pressures, operational disruptions, and supply-chain instability.
The findings are particularly relevant in the context of evolving ESG disclosure and sustainability reporting requirements under frameworks such as the International Sustainability Standards Board standards and the EU sustainability reporting framework developed by European Financial Reporting Advisory Group. These frameworks increasingly require companies to disclose climate-related risks, resilience assessments, climate scenario analysis, and anticipated financial effects arising from climate change.
CDP emphasises that climate adaptation and climate resilience are becoming core business and financial priorities rather than standalone environmental initiatives. The report encourages organisations to strengthen climate governance, improve climate-risk assessments, diversify supply chains, integrate resilience metrics into enterprise decision-making, and increase investments in adaptive infrastructure and nature-based solutions.
As physical climate risks continue to intensify, the report signals a broader shift in the ESG and sustainability landscape: companies are increasingly expected not only to disclose climate-related risks, but also to demonstrate measurable resilience planning, climate adaptation capacity, and long-term operational preparedness.
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