For many companies, climate strategy has become synonymous with one question: What is our net-zero target?
Targets remain important. They provide direction, create accountability and make progress measurable. But a target without a credible delivery plan is not a strategy—and a decarbonisation plan that ignores physical climate risk is incomplete.
Businesses are already operating in a world shaped by heat stress, flooding, drought, water scarcity, wildfire, disrupted logistics and volatile commodity supply. These risks do not sit neatly within a sustainability report. They affect asset values, insurance, workforce safety, production continuity, customer demand and access to finance.
The next phase of corporate climate leadership must therefore move beyond disclosure and ambition. It must connect climate action to business resilience.
Net zero is necessary—but not sufficient
A credible net-zero pathway starts with a robust emissions baseline, science-aligned near-term targets and a practical plan to reduce emissions across operations and the value chain.
For most companies, this means addressing more than direct fuel use and purchased electricity. If Scope 3 emissions represent more than 40% of a company’s total footprint, the Science Based Targets initiative requires a near-term Scope 3 target covering at least 67% of those emissions. This is a clear reminder that climate strategy is often a procurement, product-design, logistics and customer-engagement challenge—not simply an energy-management exercise.
But reducing emissions is only one half of the task.
A company may be on track to procure renewable electricity, electrify its fleet and engage suppliers on carbon reductions, yet still face severe exposure to heat, water stress or flood-related supply disruption. It may have a long-term target, but no plan for protecting workers during extreme temperatures, maintaining production when water is scarce or securing critical inputs after climate events.
This is why climate strategy must combine two priorities:
Mitigation: reducing greenhouse-gas emissions and supporting the transition to a low-carbon economy
Resilience: preparing the business, its workforce, value chain and communities for physical climate impacts
These priorities are connected. A transition plan that reduces emissions while increasing water stress, exposing workers to unsafe heat or shifting risk onto vulnerable suppliers is not a durable strategy.
Start with material exposure
The most useful climate strategies begin with a practical question: Where could climate disruption most materially affect our ability to operate and create value?
The answer will vary by sector and location. For a manufacturer, the priority may be heat exposure at facilities, water availability and interrupted supplier production. For a retailer, it may be agricultural inputs, logistics networks and refrigeration demand. For a property investor, it may be flood risk, building performance and insurance availability. For a financial institution, it may be exposure across financed assets and counterparties.
Companies should map climate exposure across:
Owned assets and critical sites
Key suppliers and transport routes
Essential raw materials and natural resources
Workers, contractors and local communities
Customers, products and markets
Insurance, financing and regulatory dependencies
The objective is not to produce an exhaustive risk register. It is to identify the risks that could materially disrupt cash flow, operations, safety, reputation or long-term investment value—and then use that insight in business decisions.
Make climate resilience a capital-allocation issue
Climate resilience becomes real when it changes where a business invests.
That may mean upgrading cooling, drainage and energy systems; redesigning facilities for flood or heat exposure; diversifying suppliers; investing in water efficiency; changing crop sourcing; or improving early-warning and business-continuity systems.
Too often, adaptation is treated as a cost to be minimised. In reality, well-designed resilience investment can protect revenues, reduce downtime, safeguard people and preserve asset value.
Boards and executive teams should require climate considerations in major capital expenditure, acquisitions, property decisions, procurement contracts and strategic planning. A simple test is useful: would this decision still make commercial sense under the climate conditions likely to affect the asset or value chain over its lifetime?
If the answer is unclear, the decision is not yet sufficiently climate-informed.
Put people and suppliers at the centre
Climate strategy is also a social strategy.
Extreme heat, flooding and changing disease patterns can affect employee health, labour productivity, local infrastructure and supplier communities. Businesses that focus only on carbon metrics risk overlooking the people who enable their operations.
Workforce resilience can include heat-health protocols, flexible working arrangements, upgraded protective equipment, emergency support, training and clear escalation procedures. Supplier resilience can include longer-term purchasing commitments, collaboration on energy and water efficiency, shared data, access to finance and support for smaller businesses that lack technical capacity.
This is not philanthropy. It is practical risk management.
A just transition also helps companies build trust. When climate plans are developed with workers, suppliers, customers and affected communities—not simply announced to them—companies are more likely to identify unintended consequences early and secure support for change.
Measure what changes decisions
The most valuable climate metrics are not necessarily the most numerous. They are the ones that inform action.
Alongside emissions, companies should consider tracking indicators such as:
Percentage of priority sites assessed for physical climate risk
Revenue, assets or procurement spend exposed to material climate hazards
Capital expenditure screened for climate resilience
Critical suppliers with transition and adaptation plans
Days of operational disruption linked to weather events
Workforce heat, health and safety indicators
Water dependence and water-risk exposure in priority locations
Metrics should be linked to clear owners, deadlines and decision-making forums. A board cannot govern climate risk effectively if it receives only annual emissions data and high-level narrative.
The new test of climate leadership
The strongest climate strategies are no longer defined by the boldness of their 2050 ambition. They are defined by whether a company can show what will change this year, next year and across the investment cycle.
That means reducing emissions where the company has influence, preparing for physical disruption where it has exposure, supporting people and suppliers through the transition, and allocating capital in ways that protect long-term value.
Net zero remains essential. But resilience is what makes a climate strategy credible in the real economy.