Companies expect extreme weather events such as flooding and heavy rain to drive nearly $900 billion in financial losses, through impacts ranging from lost revenue and asset impairments to supply chain disruptions, according to a new report released by environmental sustainability reporting platform CDP.
While the report indicated a high risk of future losses from extreme weather, CDP also said that its research found that the cost to companies to mitigate environmental risks was substantially lower – nearly 13 times – than their anticipated financial impact.
For the report, CDP analyzed data from more than 11,000 companies that disclosed full environmental data through the 2025 CDP corporate questionnaire, as well as 1,005 cities, states and regions.
The report found that companies are projecting $898 billion in losses from extreme weather events across short- and long-term horizons, substantially higher than losses to date, with key drivers of anticipated financial impact including lost revenue from reduced production capacity ($326 billion) and asset impairment or early retirement ($218 billion), in addition to losses from sources such as operational disruption, increased costs, higher insurance premiums, and supply chain disruption.
By event type, flooding dominated as a source of anticipated losses, at $528 billion, followed by cyclones at $161 billion, and heavy rain at $86 billion.
Notably, while the anticipated losses span both short- and long-term time horizons, the study found that companies identified nearly half of the identified extreme weather events as imminent risks, with 48% expected to materialize in the next two years.
According to CDP, the cost of mitigating environmental risks is substantially lower than the potential price tag, with its research indicating a median cost of risks per company of $39.4 million, compared to $3.1 million to mitigate them. The report found that are indeed investing to reduce their exposure to extreme weather hazards, with actions primarily focused on measures aimed at limiting direct exposure and vulnerability, such as physical adaptation, or maintaining operations through continuity and emergency response planning. CDP noted, however, that actions coordinated with other actors or addressing shared system dependencies account for a much smaller share of reported responses.
The study also found that of the cities, states and regions reporting through CDP, a majority (62%) report that they are already being significantly impacted by extreme weather events, and more than 60% expect these hazards to increase in frequency, intensity, or both, in the future, particularly extreme heat, urban flooding and drought. The also report found that nearly half (46%) of subnational government respondents budgetary constraints limiting their ability to adapt to the effects of climate change, with over 60% having at least one adaptation project for which additional funding is needed, and an indicated adaptation investment gap of at least $34 billion.
While environmental risks are anticipated to grow, the study found that only 35% of companies identify extreme weather events as a financially material risk. A key area highlighted by the report as a potentially under-appreciated risk for companies is insurance, with real-economy companies expecting rising insurance premiums to drive only $3.3 billion in future increases, and less than 1% price in expected insurance withdrawal in high-risk areas, which CDP said suggests that “premium increases, coverage restrictions or insurer withdrawal could be significantly larger than companies currently anticipate.”
Amir Sokolowski, Global Director of Climate at CDP said:
“Extreme weather is already a financial risk. It has a dangerous domino effect, disrupting operations, reducing production and driving losses today, with far greater impacts lying ahead. This is a systemic challenge that no single actor can manage alone. Our report highlights that efforts to address this risk coherently are not sufficiently coordinated and that the gaps in collaboration are significant risk in their own right. By aligning investment, strengthening shared systems and scaling adaptation – with disclosure as a guide to enable better decisions – businesses and governments can not only reduce risk, but accelerate the transition to an earth-positive, resilient economy.”
Click here to access the report.
