The World Economic Forum (WEF) is warning businesses that they may face steep financial losses if they do not mitigate growing climate risk. The WEF released two new reports titled, Business on the Edge: Building Industry Resilience to Climate Hazards, and The Cost of Inaction: A CEO Guide to Navigating Climate Risk. In the reports, new data finds that companies that delay finding effective solutions to climate change risks could see up to 7 percent of their annual earnings "wiped out by 2035."

Among the biggest factors to influence this trend is extreme heat and other climate hazards, which are predicted to cost businesses $560 billion to $610 billion in annual fixed asset loses, according to the reports. The WEF reports this will be an impact on the same scale as the economic disruptions of the pandemic every two years. 

Additionally, the report noted that companies in energy-intensive sectors that fail to decarbonize could see their earnings fall by 50 percent by 2030. The WEF added that these risks, combined with cascading impacts on supply chains and communities, underscore the critical need for resilience strategies.

“Pathfinders leading the charge on net-zero transitions and nature positive solutions are showing how businesses can create value while improving the environment and supporting the communities,” said Gim Huay Neo, managing director of the World Economic Forum. “By holistically and systematically addressing climate-related risks and opportunities, businesses can build stronger and more sustainable operations, safeguarding and restoring ecosystems, and fostering long-term economic and social resilience in an increasingly complex and uncertain world."

New data shows that businesses that invest in adaptation, resilience and decarbonization have already experienced tangible returns pointing to new research from the Alliance of CEO Climate Leaders, which shows that every dollar invested in climate adaptation and resilience can generate up to $19 in avoided losses.

The WEF reports that green markets are set to grow from $5 trillion in 2024 to $14 trillion by 2030, with the largest segments being alternative energy at 49 percent, sustainable transportation at 16 percent and sustainable consumer products at 13 percent. 

Failure to take proactive measures will result in a significant climate catastrophe, including the collapse of the Greenland and West Antarctic ice sheets, resulting in a rise of 10 meters in sea levels and an increase in food insecurity to over 500 million individuals.