Weeks of record temperatures, mega-fires raging for days, drought waves, hailstorms. Extreme weather events are "the new normal", warns the European climate monitoring service Copernicus. A normality that businesses too must contend with, in many ways: from protecting employees' working conditions to adapting buildings. Climate adaptation is therefore a very concrete and urgent issue that businesses can no longer afford to ignore.

Some impacts of global warming are unavoidable

For years, the corporate response to the climate crisis has focused primarily on decarbonisation: reducing CO2 emissions, improving energy efficiency, rethinking products and supply chains. This is a fundamental part of the solution, but not the only one. Even in a scenario of drastic acceleration in the energy transition, the heat already accumulated in the oceans and atmosphere will continue to influence the climate for decades to come.

According to the latest Emissions Gap Report by the United Nations Environment Programme (Unep), even if all countries were to honour their national climate commitments made under the Paris Agreement (nationally determined contributions, NDCs), the global average temperature could still rise by around 2.8°C above pre-industrial levels by the end of the century. Certain effects of global warming are now unavoidable.

It therefore becomes essential to work on adaptation — that is, the set of strategies designed to reduce the vulnerability of territories, infrastructures and economies to climate impacts. This approach rests on two pillars: physical interventions — such as flood barriers, water storage systems, early warning systems, drought-resistant crops, and so on — and planning tools, risk analysis and financial mechanisms that help territories and businesses prepare for climate impacts.

Who has handled adaptation so far, and what role do businesses play

The coordination of this process remains primarily public. The Paris Agreement introduced a Global Goal on Adaptation, while during COP28 the UAE Framework for Global Climate Resilience was adopted, seeking to make countries' progress on this front more measurable. At the European level, the Commission adopted a Adaptation Strategy in 2021 aimed at making the Union more resilient to climate impacts by 2050, while cities and national governments are developing local plans to address increasingly concrete risks such as heatwaves, droughts and floods. In the European Union, more than half of cities have an adaptation plan, with around 19,000 measures recorded in 2022.

This does not mean, however, that businesses can remain bystanders. While public planning plays a central role — from land protection to water resource management and infrastructure — a significant part of adaptation also plays out within production supply chains and companies' investment decisions. It is businesses, for example, that must assess whether their suppliers operate in areas increasingly exposed to drought or flooding, whether plants and warehouses are adequate for more extreme temperatures, or whether workers are protected from growing heat-related risks.

The stability of the economic and productive system depends on climate adaptation

The stakes, after all, are nothing less than the stability of the economic and productive system. According to the European Environment Agency (EEA), between 1980 and 2024 extreme weather and climate events caused direct economic losses of more than 822 billion euros across the 27 European Union member states. The most significant figure, however, is the recent acceleration: more than a quarter of these losses — roughly 208 billion euros — were concentrated between 2021 and 2024. Floods account for one of the most significant categories of damage, but impacts linked to heatwaves, droughts and wildfires are also growing. Beyond direct damage to infrastructure, buildings and productive activities, extreme events are pushing up insurance costs, disrupting supply chains and putting pressure on labour productivity, particularly in the most exposed sectors such as logistics, agriculture, construction and manufacturing.

Hence the need to direct investments so as to prevent these costs from rising further. A recent study by the European Climate, Infrastructure and Environment Executive Agency attempted to estimate the European Union's actual adaptation needs: it analysed the climate risks identified by individual member states, linked them to the measures required to address them, and estimated costs through to 2050. The conclusion is that Europe will need to mobilise around 70 billion euros per year until the middle of the century. The largest share (30 billion euros per year) relates to infrastructure — energy networks, transport, buildings, flood and heatwave protection systems — followed by investment in ecosystems (21 billion) and food security (12 billion).

The report is also interesting for another reason: it shows that adaptation does not consist solely of major public works. Among the measures considered are also diversification of supply routes, operational continuity of industrial plants, insurance systems for high-risk areas, climate disclosure, water-saving technologies and protection of workers exposed to heatwaves. In other words: a growing share of adaptation will take place within companies.

Investing in adaptation pays off, in economic terms too

Despite this, financial flows for adaptation remain far below actual needs and are very difficult to track, particularly with regard to the private finance component. And yet, they also prove advantageous in purely economic terms. According to an analysis by the World Resources Institute covering 320 adaptation investments between 2014 and 2024 across 12 countries, every dollar invested generates on average more than 10.5 dollars in benefits over ten years.

One interesting aspect is that more than half of the monetised benefits do not depend on whether a flood, drought or heatwave actually occurs. A significant portion of returns in fact comes from more stable collateral economic effects: greater productive efficiency, higher agricultural yields, lower maintenance costs, improved access to services, new investment attracted to territories less exposed to risk, and environmental benefits such as better management of natural resources.