How climate resilience enhances business resilience

For years, corporate sustainability and climate resilience have been framed around long-term organizational commitments: net-zero targets, annual sustainability reports and public pledges. However, as climate impacts become more disruptive, the question that business leaders face is shifting from “What have we pledged?” to “How resilient is our enterprise?”

At the ASEAN Climate Week 2026, Singapore’s Minister for Sustainability and the Environment, Grace Fu, highlighted the impact of climate change and how Southeast Asia needs to place equal urgency on adaptation and building the resilience of its communities, infrastructure and economies. 

Indeed, as companies navigate regulatory requirements amid rising consumer demand in relation to sustainability and climate resilience, many find themselves in a bind managing sustainability commitments amid daily business operations. 

The 2025 EY Global Climate Action Barometer notes that while 64% of respondents have a climate transition plan, most of them either show no progress or have moved backward regarding their previous commitments. Climate inaction can be costly to businesses, with future inaction estimated to cost 15% of their annualized revenue on average. Yet less than one in three respondents assess the financial impact of both the cost of action and the long-term cost of inaction in relation to climate-related risks, whether those are physical or transition risks.

This means that for many organizations, the real cost of climate change on the business is a big unknown. 

Gap between ambition and action

This is not to say that organizations have not made progress in sustainability. In fact, sustainability reporting is now more established, climate targets are more common and board-level oversight has improved. Yet a persistent gap remains between commitment, disclosure and execution.

In some companies, sustainability still sits outside the core strategy, where it is managed as a specialist function rather than embedded into capital allocation, product development, procurement, operations and risk management. In others, targets were set without detailed transition plans, investment roadmaps, owners or milestones. The result is a growing disconnect between what companies say they will do and how ready they are to deliver.

Data remains another major obstacle. Companies often struggle with fragmented systems, inconsistent definitions and limited visibility across value chains, particularly in areas such as Scope 3 emissions, supplier resilience, physical climate risk and nature-related impacts. This is especially important for businesses operating from regional hubs like Singapore, where supply chains often stretch across multiple markets.

There is also a resilience gap. Listing requirements incorporating ISSB standards are progressively pushing businesses to quantify climate risks, but few are adapting their assets, supply chains and operating models quickly enough. This has direct implications for businesses. For example, with climate change radically changing how insurers price risks, manage assets and offer coverage due to losses from extreme weather events, the cost impact to businesses can rise swiftly. 

Making sustainability an enterprise discipline

Moving from intent to impact is challenging as business leaders are dealing with competing priorities. Economic uncertainty, cost pressures, geopolitical shifts and changing regulations can make sustainability investments harder to prioritize. Regulatory fragmentation adds another layer of complexity. Companies operating across markets need to respond to different disclosure requirements. 

At the same time, many companies rely on large networks of suppliers, contractors and partners, yet have limited visibility into their emissions, climate exposure and adaptation readiness. This makes it harder to manage risks that sit outside the organization’s direct control but still affect continuity, cost and trust.

Based on EY experience in advising organizations and setting up the EY Climate Resilience Center of Excellence, companies need to move beyond reporting and treat sustainability as an enterprise-wide transformation.

Foremost on the agenda is to anchor sustainability in the business strategy. The board and management should define how climate and sustainability affect growth, market access, cost of capital, customer relevance and competitive positioning. This is particularly important for long-term capital decisions. A clear example is seen when planning investments in infrastructure, buildings, plants and utilities, as organizations need to consider the cost of acting now against future disruption and decide when to retrofit, relocate, redesign or retire exposed assets.

Another consideration is developing credible transition and resilience roadmaps. High-level targets must be supported by practical plans covering emissions reduction, energy transition, physical climate adaptation, supplier resilience and nature-related dependencies. These plans should specify funding, ownership and milestones, with clear links to financial performance.

Operational practices must also become more forward-looking. For instance, historical data has long been used to set design specifications. However, such data may no longer be a sufficient guide to future conditions. Businesses need to supplement historical information with forward-looking scenarios for rainfall, flooding, sea-level rise, heat and other relevant weather conditions.

There should also be asset-level adaptation plans to help organizations identify vulnerabilities, sequence interventions and assign funding and ownership over time. For example, a logistics operator might elevate critical equipment and improve drainage at a flood-prone hub, while a manufacturer could strengthen cooling systems and diversify water or energy supplies to manage heat and resource risks.

Finally, the entire organization must be invested in the sustainability journey, and functions, including finance, operations, risk, procurement and human resources, all have important roles to play.