Why Are CEOs Paying Attention to Climate Change?

For years, businesses treated climate adaptation as a peripheral issue, handled through insurance policies, emergency plans, and risk registers. These measures offered recovery support after disruptions but rarely influenced how companies operated or expanded.

By 2026, that mindset is no longer viable, according to analysis from SAP.

S&P Global’s Energy Horizons research shows that physical climate risks could more than triple corporate financial exposure by 2050, driven by damage to assets, supply chain breakdowns, and productivity losses. Extreme heat, water scarcity, flooding, wildfires, and volatile energy costs are already affecting profit margins, capital allocation, and labour availability, SAP notes in its analysis of S&P’s findings. Meanwhile, the low-carbon transition remains uneven, with carbon now increasingly priced, regulated, and scrutinised by investors.

For CEOs and boards, climate risk now intersects with geopolitical competition, supply instability, and capital access. It is no longer just an environmental or reputational concern.

Building on this theme, SAP’s analysis highlights that climate risk is at once financial, operational, strategic, and reputational—shaping asset values, insurance availability, supply dependability, and long-term growth choices.

Embedding risk management

Progress remains constrained by how organisations approach climate risk. When viewed chiefly as contingency planning, responses tend to be reactive, fragmented, and triggered only after a crisis. Responsibilities are often spread across risk, sustainability, operations, and finance teams, preventing it from being embedded in core decisions.

According to SAP’s Chief Sustainability and Commercial Officer Sophia Mendelsohn, companies must shift toward a capability-based model—one that integrates climate risk, resilience, and carbon considerations into everyday planning, investment, and operations. In this framework, climate capability becomes as essential as financial management or cybersecurity.

Climate capability

SAP identifies four pillars defining how leading organisations are evolving:

1. Supply chains designed for disruption
   Global value chains built purely for cost efficiency have proven vulnerable to climate volatility and tightening regulations. Many companies are now redesigning supply systems to boost resilience and cut emissions. Increasing supplier diversity, regionalising production, enabling circular material flows, and improving data visibility can all lower exposure to disruption and often reduce Scope 3 emissions. Reliable, real-time supply chain data is now critical for CEOs to translate insights into action.

2. Assets and infrastructure built for a changing climate
   Facilities and logistics networks face mounting chronic pressures—heat, drought, and resource stress—alongside acute threats like flooding. Carbon-intensive assets also face growing transition risks. A climate-capable company assesses its assets through both physical risk and carbon intensity, guiding capital decisions on retrofits, electrification, efficiency improvements, and clean energy investments.

3. Workflow resilience as a business priority
   Climate change already affects people. Rising temperatures and extreme weather reduce productivity and increase health and safety risks. According to SAP, the International Labour Organization warns that heat stress alone could cost the equivalent of 80 million full-time jobs globally by 2030. Businesses prioritising workforce resilience are adapting schedules, working conditions, training, and safety standards to protect employees and maintain performance.

4. Financial decision-making informed by climate reality
   Although many firms identify climate-related risks, SAP’s research and market data show far fewer can quantify them sufficiently to drive investment choices. A mature climate capability integrates physical and transition risks, along with carbon costs, into financial modelling—allowing decision-makers to evaluate resilience and returns together.

All sustainability, net zero and sustainable supply chain leaders should attend:

• Sustainability LIVE: The Net Zero Summit - QEII Centre, London, March 4-5
• Sustainability LIVE: The US Summit - Navy Pier, Chicago, April 21-22

Co-located with Procurement & Supply Chain LIVE, these events brings together CSOs, ESG leaders and senior decision-makers at a moment when sustainability, supply chains and commercial performance are increasingly interconnected.

Tickets can be booked online today for The Net Zero Summit and The US Summit. Group discounts available.

Defining climate-centric CEOs

Across sectors, companies building genuine climate capability display consistent leadership behaviours: embedding carbon and climate factors into governance and planning, redesigning value chains for resilience and decarbonisation, protecting assets and workers through anticipation rather than reaction, and aligning adaptation, mitigation, and finance strategies.

For CEOs, the conclusion is clear. Climate capability is no longer about damage recovery—it defines how enterprises compete, operate, and grow amid an era of permanent climate risk.