Introduction

Physical risks are currently disrupting global business operations, with estimates suggesting a reduction in EBITDA of 5-25% annually across critical industries by 2050. Research by the World Business Council for Sustainable Development (WBCSD) found that 60% of businesses anticipate increased costs from climate-related impacts, such as extreme weather and supply chain disruption, within the next 12 months. Adaptation is no longer optional but a necessity to protect livelihoods and long-term competitiveness. This guidance sets out a four-step cycle to build resilience: scoping, designing solutions, implementation, and monitoring. It supports the Sharm-El Sheikh Adaptation Agenda’s call for 2,000 Business Adaptation Plans by 2030, ensuring investments reduce future losses.

Setting the scope and adaptation goals

Businesses must establish the business case for action and align stakeholders early in the process. There are four strategic approaches to consider: targeting risk hotspots, increasing baseline resilience, a balanced risk approach (recommended), and opportunity-driven adaptation. Organisations should shortlist 3-5 top priorities using principles such as risk appetite and asset lifespan to prevent the process from becoming unmanageable. Effective governance requires a central taskforce and the appointment of risk owners at the site or asset level. A robust business case must demonstrate value by comparing the cost of inaction with the investment required for adaptation, typically estimating a three-month timeframe for this initial scoping phase.

Designing adaptation solutions

Adaptation options fall into eight categories, including infrastructural, technological, nature-based, behavioural, and financial. For example, ArcelorMittal implemented a Water Master Plan in Brazil involving a seawater desalination plant providing 500 m3/h of industrial water, which cut freshwater use by over 35%. Alibaba’s Freshippo programme increased farmer income by over RMB 18,000 ($2,520) per hectare using AI-digital technology to assess crop damage. It is vital to avoid maladaptation, defined as actions that inadvertently increase long-term risk or shift it to vulnerable stakeholders. Veolia uses a multi-criteria analysis with efficiency scores from 0 to 3 to prioritise resilient, low-regret solutions. A scoring system should evaluate effectiveness, co-benefits, stakeholder acceptance, and associated costs.

Building the plan and implementing adaptation solutions

An investment roadmap must align adaptation needs with corporate financial planning cycles across five steps, from prioritising investments to securing CFO sign-off. The report recommends integrated adaptation plans, which combine adaptation with broader sustainability and transition plans to reduce duplication and ensure consistency in disclosures. Diageo conducted climate risk assessments across over 250 sites and developed registers for 39 high-risk or material locations. Piloting solutions before full-scale implementation is essential to test feasibility; Bayer’s rice cultivation pilot in India expanded from 800 ha to 20,000 ha by its third year, reducing methane emissions by approximately 45% and water use by 40%.

Monitoring and evaluation

A monitoring and evaluation (M&E) framework tracks business resilience, solution effectiveness, and trigger points for future intervention. While calculating the return on investment (ROI) is challenging due to the long-term nature of climate benefits, businesses can compare baseline and adapted internal rates of return (IRR) to demonstrate how adaptation preserves project stability. A resilience scoring system can be used to monitor categories such as infrastructure, operations, workforce, and value chain indicators. Schneider Electric’s microgrids and Alibaba’s DAMO Academy, which achieved 98.1% accuracy in power demand forecasting during extreme weather, illustrate how proactive monitoring improves adaptive capacity and operational continuity.

Call to action: risks are opportunities in disguise

Urgent action is required as only 35% of businesses currently have adaptation plans, and many lack a systemic approach. Key enablers for unlocking resilience include more business uptake of adaptation planning, integrating these efforts into transition plans, and action from financial institutions to price in adaptation benefits. Aligning corporate plans with National Adaptation Plans (NAPs) ensures businesses contribute to national goals while securing their own social licence to operate. Collaboration across the value chain is required to unlock strategic value and ensure that the economies and communities in which businesses operate can thrive.