The $4.4 Trillion Payoff: Why Climate Action Is Smart Business

Forbes

2 days ago

In 2024 alone, a small group of companies unlocked a combined $4.4 trillion in financial value by acting on climate-related opportunities. These gains weren't projections,— they were realised, reported and verified through one of the world's most widely used corporate disclosure systems.
The figure comes from CDP's latest report The 2025 Disclosure Dividend, based on environmental disclosures from nearly 25,000 companies worldwide. The conclusion is clear: climate action has moved beyond risk mitigation into the realm of strategic value creation, with direct implications for corporate strategy, capital allocation, and financial performance.
As Kari Stoever, chief growth officer at CDP, explained, 'The $4.4 trillion figure represents the aggregate financial value reported by companies for already-realized opportunities. Only data where both criteria were met: (1) the opportunity had already materially affected the company in the reporting year, and (2) a specific financial value was disclosed, were included in the calculation.'
Climate Action As A Growth Engine
Extreme weather is already costing insurers $145 billion this year and rising. Climate volatility is driving operational costs, disrupting markets, and triggering new regulation. Yet companies acting on their reported data are seeing up to 2,000% ROI. CDP analysis shows companies already earn up to $21 for every $1 invested in resilience, a return better than most capital expenditure options.
More than 64% of companies identified environmental opportunities in 2024, from energy efficiency upgrades and clean energy transitions to new market entries and product innovations. Only 12% acted in the same year and reported measurable financial gains.
The upside for those still on the sidelines is significant. Companies not yet acting risk leaving $13.2 trillion in opportunities unrealised. 'The top types of future opportunities reported but not yet realized are: products and services ($7.5 trillion), new markets ($2.9 trillion), and energy source ($1.6 trillion),' Stoever said. Resource efficiency improvements were the most commonly reported but offered a smaller upside at $0.3 trillion.
Opportunity values varied dramatically by geography. Japan and Canada lead with median values of $73 million and $72 million per company, while the U.S. and China come in at $15 million and $10 million.
This variation reflects sector mix, company size, and disclosure culture more than ambition. Canada's small pool of reporting companies includes a high proportion from financial services, fossil fuels, and power generation, all high-opportunity sectors. Japan also has a high share of these sectors and a striking 97% of companies responding to investor requests, which correlates with higher reported value
By contrast, the U.S. and China have more representation from sectors such as apparel, biotech, and hospitality, which tend to disclose smaller-scale opportunities. Chinese companies also have smaller median revenues (about $800 million) constraining potential opportunity size. Reporting behaviour matters too: U.S. companies tend to report fewer opportunities and favour short-term horizons, which generally yield lower valuations.
Regardless of region, the economic upside of environmental action is no longer abstract. It's quantified, reported and increasingly bankable.
A Market Shift: Climate Risk As Investment Risk
These results land as climate risk is being woven into the architecture of global finance. Physical risks are becoming more systemic, with climate-related disasters projected to cost the world $38 trillion a year by 2050. In the UK alone, climate damage could cut GDP by 12%, a deeper hit than the financial crisis or the pandemic.
Financial institutions are responding with new tools and policies. The Institutional Investors Group on Climate Change's new Physical Climate Risk Appraisal Methodology (PCRAM) gives portfolio managers a replicable framework for assessing exposure not just at the asset level, but across interconnected systems, geographies, and value chains. The logic is straightforward – climate resilience now carries a measurable premium in investment terms.
That shift is now becoming visible in monetary policy. In July 2025, the European Central Bank announced it will begin adjusting the value of corporate bonds used as collateral in its refinancing operations based on climate vulnerability, using a climate factor. From the second half of 2026, bonds exposed to higher transition risk, whether due to sector, issuer, or maturity profile, will face valuation haircuts.
'By integrating climate risk into our collateral framework, we are safeguarding the Eurosystem against future shocks and encouraging banks to shift towards more sustainable investments,' said Christine Lagarde, president of the ECB in a statement. 'This is a necessary step to ensure financial stability in a changing world.'
In other words, resilience now has an identifiable return. The message is to treat disclosure data like any other capital-allocation input, not a CSR checkbox, reframing climate action not as an expense, but as a source of measurable business value.
For companies, the implications are profound. Access to capital will increasingly depend on credible climate strategies, and the cost of inaction will show up not just in physical damage or lost market share, but in bond valuations, insurance terms, and investor relations.
These firms are also aligning with evolving regulations such as the EU's Corporate Sustainability Reporting Directive and new global standards from the International Sustainability Standards Board. But regulation isn't the only driver: customers, employees, and investors are all pushing for credible action.
The value is especially pronounced in sectors where environmental risk intersects with core business models, such as energy, agriculture, manufacturing, logistics, and consumer goods. Investments in nature-based solutions, emissions reduction, and climate adaptation can reduce exposure while generating new revenue streams and cost savings.
Stoever notes that sustainable products are already outperforming peers by up to 25% in revenue. Companies tackling Scope 3 emissions have saved $13 billion, with $165 billion more achievable at a cost of just $94 billion. 'This isn't ESG,' she says, 'It's economics. Disclosure and action are not just risk management tools; they are strategic levers for growth, efficiency, and long-term value creation.'
Despite the compelling data, many companies remain slow to act. While 90% of large firms disclosing through its platform have processes in place to identify and assess environmental risks and opportunities, fewer than half have a credible climate transition plan.
The reasons are familiar: short-term shareholder pressure, limited capacity to manage climate data, and fear of revealing vulnerabilities. SMEs and Global South companies face additional hurdles, from restricted access to transition finance, lack of technical support, or insufficient regulatory clarity.
'These obstacles are real but increasingly surmountable,' Stoever notes. 'As financial institutions, central banks, and governments integrate climate risk into their decision-making frameworks, the tools, capital, and incentives to act are becoming more accessible.' The real gap, she says, is in governance and leadership, aligning CFOs, sustainability leads, and capital allocators, and moving beyond incrementalism to recognise climate resilience as a driver of long-term value.
'Environmental risk is financial risk,' she says. 'Boards and CFOs must shift from viewing environmental data as compliance to treating it as capital strategy.'
Call to Action: Translate Insight Into Impact
'The core insight of The 2025 Disclosure Dividend is that value comes not from disclosing climate risk, but from acting on it,' Stoever says. 'Companies must move quickly from data to decisions, and from decisions to execution. The winners will be those that understand climate data not as a compliance burden, but as an investment signal, a lens through which to identify upside, safeguard continuity, and unlock future markets.'
The message from CDP's report is unambiguous: disclosure is the beginning, not the end. Data alone has no financial impact until it is embedded into core business decisions, capital allocation, procurement, product design, and strategic planning.
This is no longer a sustainability team's sole domain. Boards must treat climate strategy as a fiduciary responsibility. CFOs and risk officers should integrate climate metrics into financial modelling, while investors must hold companies accountable not only for what they report, but for what they do. Policymakers must ensure disclosure frameworks lead to real-world outcomes through just transitions, adaptation finance, and systemic accountability.
'For every $1 a company invests in climate risk mitigation, it could see up to $21 in return,' Stoever said. 'Climate action isn't a cost centre; it's a growth engine.'