According to Bloomberg, more than 4,000 companies worldwide have made substantial climate pledges to mitigate emissions in recent decades. Aside from the proposed benefits this could bring in transitioning to a lower-carbon society, organisations that heavily marketed such initiatives also enjoyed a ‘Halo-Effect’ in recent years, which bolstered corporate reputations and developed competitive market positions.  

However, as it stands, emissions continue to rise, and the results of these pledges are incomplete and underwhelming. There has also been a steady increase in the number of large corporations and conglomerates publicly rolling back on these targets, including Coca-Cola, H&M, HSBC and BP, suggesting that addressing the climate crisis is being deprioritised at a high level. It is unsurprising to see that serial polluters are part of this cohort, but it does suggest a worrying trend.  

From a regulatory perspective, there has also been a softening of policies at a European level with the introduction of the Omnibus Simplification Package. Although aimed at reducing compliance costs and reporting demands, the development is likely to impede necessary progress in meeting legally-binding 2030 climate targets.   

So, what does this mean for businesses?  

Some organisations might welcome the postponement of mandatory reporting requirements by the European Commission; however, these measures will ultimately leave companies more vulnerable to nature-based risks and penalties arising from non-compliance. 

Businesses both depend on, and impact, nature in order to operate and provide goods and services. This interconnected system gives rise to what are known as ‘nature-related risks’ which can result in material and financial consequences. As the climate continues to change, these risks will become more pronounced and should therefore be integrated into ongoing risk management strategies.      

Three ways that climate inaction could cost businesses:  

Aside from supply-chain disruption, non-compliance penalties or other well-known issues that could arise, there are additional systemic risks that should be familiar to all companies. It is worth noting that the below will be of more importance to larger corporations in the short-term; however, they should be on the radar of all organisations. 

• Insurance: The global insurance industry has been vocalising concerns regarding climate-related cases and nature-based risks for some time, along with highlighting the need to transition rapidly to a low-carbon society (Aviva PLC, 2025; Gallagher RE, 2025; Zurich Insurance, 2025). When insurance policies become redundant, this affects financial stability across all facets of society and could result in a “climate-induced credit crunch” should adequate efforts not be adopted in time. In even stronger terms, a senior Board member of Allianz SE recently stated publicly that the climate crisis was on track to “destroy” markets, and capitalism in its current form. 

• Governance: The Commonwealth Climate and Law Initiative released a landmark report advising that as part of good governance, that nature-based risks should be integrated into the duties of company directors. Continuing, it stated that a failure to evaluate and report on such risks within company disclosures would result in shareholder scrutiny, and legal and financial implications.  

• Litigation: Environmental litigation cases have risen exponentially in the last two decades and corporations are a growing focus (A&L Goodbody, 2021; UNEP, 2023). This poses significant financial, reputational and operational threats to companies who do not consider environmental risks already. Some relevant international examples include: 
  • Shareholder litigation (Client Earth v Shell Board of Directors (2023; Catherine Rossiter v ANZ Group Holdings Limited (2023) – linked to risk-management perceptions among shareholders. 
  • Duty of Vigilance litigation (Envol Vert et al. v. Casino (Filed 2021); ClientEarth, Surfrider Foundation Europe, and Zero Waste France v. Danone (Filed 2023. Linked to nature-based risk mitigation.  
  • Climate change litigation (Milieudefensie et al. v. Royal Dutch Shell plc.). Linked to regulatory non-compliance on climate mitigation. 
  • Corporate Disclosure litigation (McVeigh v. Retail Employees Superannuation Trust (2020). Linked to poor governance in assessing nature-based risks.  

Against a backdrop of rising global instability and geopolitical crises, the current business context is increasingly complex and challenging. However, failing to act on climate change will only heighten and expedite these issues. Directives such as the CSRD, once in place, will evolve supply chain expectations as larger companies will increasingly require their SME suppliers to strengthen their commitments to nature-related responsibilities. The best time to get ahead is now. 

The good news is that there are plenty of tactical supports available to aid business adaptation, including government initiatives, the emergence of Transition Bonds, and consultancies that can provide guidance on operational transformation.   

However, one of the most significant and immediate changes that can be made is to integrate climate considerations into management duties, helping to inform decision-making and shape workplace culture. One resource that we recommend is The Taskforce on Nature-related Financial Disclosures  (TNFD). This is a central repository of supports that empower businesses to “integrate” the natural environment into business matters and to shift global markets from “nature-negative outcomes” toward positive outcomes in line with the Global Biodiversity Framework.