The Financial Impact of Natural Disasters: Why Corporate Responses to Climate Change Matter
The Hidden Costs of Climate Change
In recent years, global climate change has become increasingly pronounced, marked by the rising frequency of extreme weather events and natural disasters. Floods, typhoons, wildfires, and geological hazards not only disrupt daily life but also impose significant pressures on business operations and broader economic development.
Beyond general awareness, many may not fully appreciate the magnitude of the financial impact arising from these events. When formulating strategies and assessing risks, companies that fail to consider these impacts may face unforeseen economic losses.
Global and China-Specific Economic Losses from Natural Disasters
According to Munich Re’s 2025 Report, global climate change continued to evolve in 2025, resulting in total economic losses from natural disasters of approximately USD 224 billion, of which insured losses amounted to around USD 108 billion. Weather disasters represented the primary risk factor, accounting for 92% of total global losses and 97% of insured losses. In China, data from the Ministry of Emergency Management indicate that major natural disasters in 2025 led to direct economic losses amounting to approximately RMB 241.6 billion.
These figures clearly demonstrate the substantial economic and societal impacts of climate change, underscoring that climate financial impact is no longer a “potential” or “future” concern, but an immediate and pressing financial challenge confronting business today.
Practical Approaches for Corporate Climate Action
In responding to climate risks, companies should not approach climate disclosure as a mere compliance exercise. Instead, they should address the financial implications of climate change from an operational perspective. By adopting scientific methodologies and structured tools, companies can progressively conduct high-quality climate financial impact analyses and disclosures, including:
- Identifying Climate Risks and Opportunities: Assess potential financial impacts across supply chains, operations, and market demand.
- Evaluating Anticipated Financial Impacts: Leverage historical data and industry benchmarks to estimate potential losses under different climate scenarios.
- Developing Response Strategies and Disclosure Plans: Enhance corporate resilience and transparency through risk mitigation measures, contingency planning and robust information disclosure.
For companies unsure where to start, GreenCo’s professional team provides comprehensive support for climate risk management, assisting companies in designing tailored workflows based on their operational characteristics. From data collection, financial impact assessment to disclosure, we support companies in scientifically identifying and quantifying financial impacts arising from climate change, enhancing corporate climate resilience while ensuring transparency, credibility and robustness in both analysis and reporting.
In the context of global climate change, climate financial impact assessment is not only a compliance requirement but also a core component of resilient operations and sustainable development. Through rigorous analysis and meaningful disclosure, companies can better understand potential risks, capture emerging opportunities, and maintain resilience and competitiveness in an evolving environment. Contact us today to learn how to take the next critical step in developing corporate low-carbon resilience.
Munich Re, 2026. “Natural Disasters in 2025 Resulted in Over USD 100 Billion in Insured Losses.” China Economic Net, 15 January. Available at: http://www.ce.cn/xwzx/gnsz/gdxw/202601/t20260115_2703038.shtml
About GreenCo ESG Consulting
GreenCo is a professional ESG advisory firm accredited with ISO 9001 in the Provision of ESG / Sustainability Reporting, Sustainanbility and Climate Disclosures and GHG Accounting Advisory Services. Established in 2016, we were born to tackle ESG and climate risk management challenges. GreenCo has a professional team consists of talents with multiple backgrounds with
- PhD
- Practitioner Member of the Institute of Sustainability and Environmental Professionals (ISEP)
- CFA (the CFA Institute) and Certificate in ESG Investing
- EFFAS Certified ESG Analyst (CESGA)
- GRI Certified Sustainability Professional
- Certified Public Accountant (for assurance in accordance with ISAE 3000)
- Member of Global Association of Risk Professionals
- Master’s degree in envirnomental science
GreenCo has solid track record in ESG advisory for over 70 listed companies in Hong Kong, Mainland China, Singapore and Korea, covering all industries under the Hang Seng Industry Classification System.
