Companies Achieve 7-fold Profit Increase through Climate Action, According to CDP Report
The world is facing an escalating crisis as climate-related disasters intensify, with the cost of inaction projected to reach a staggering $38 trillion annually by 2050. However, a recent report by CDP, The 2025 Disclosure Dividend, offers a glimmer of hope, highlighting significant room for growth and action among companies with climate transition plans.
The report, which focuses on companies' environmental disclosures, shows a 50% increase in companies disclosing climate transition plans. Notably, Japan and Canada are leading the pack in terms of environmental opportunity value and median gains from climate risk mitigation. These countries boast median gains of approximately $73 million and $72 million per company, respectively.
Every $1 invested in mitigating physical climate risks can yield returns up to $21, with an average return around 7x to 8x across companies globally. The median environmental opportunity value per firm is $33.1 million, with costs to realize these opportunities at $4.6 million, representing a roughly 7x return on investment.
In 2024, 12% of companies that disclosed unlocked $4.4 trillion in environmental opportunity value, while $13.2 trillion in additional opportunities remain untapped. About 90% of large companies disclosing have processes to identify and assess environmental dependencies, risks, and opportunities, with nearly half having climate transition plans in place.
However, only 43% of these companies currently have a climate transition plan in place. This statistic underscores the need for more companies to take decisive action. The report emphasizes that disclosure is no longer just about transparency, but a business imperative with measurable upside for those who act swiftly.
In contrast, the US and China have potential gains of $15 million and $10 million, respectively, but there is still significant room for growth. The report also reveals that 90% of large companies disclosing have or plan to adopt environmental risk assessment processes.
CDP's findings underscore the financial benefits of companies that measure and manage their environmental impacts. By future-proofing their operations, these companies not only contribute to mitigating the climate crisis but also stand to gain financially. As we move towards a more sustainable future, it is clear that action on climate change is not only necessary but also financially beneficial.
Science shows that every $1 invested in mitigating physical climate risks can yield returns up to $21, with significant financial benefits for companies, as evident in the 50% increase in companies disclosing climate transition plans. Notably, Japan and Canada are leading the way, with countries like the US and China still showing room for growth in terms of environmental opportunity value and median gains from climate risk mitigation. Therefore, it's crucial for more businesses to adopt environmental-science-based climate transition plans as a strategic financial move, not just for the protection of the environment but also for long-term profitability in the era of climate-change business.
