Business on the Edge 2024

High LowHigh Low1.1 1.8 0.2 0.2 1.20.2 1.0 0.2 Extreme heat Wildfire Coastal flooding Tropical cyclone Water stress Drought Fluvial flooding2035 2055Agribusiness Rising food prices Disruptions to agribusiness supply chains affect local and global food markets. Rising operational costs for farmers will be passed on to consumers in the form of higher food prices. This impacts household budgets worldwide and contributes to inflation and reduces levels of disposable income.Malnutrition and hunger Climate hazards reduce agricultural output, resulting in food shortages and a decline in nutritional quality, leading to malnutrition and hunger. This a particular concern for subsistence farmers who may be forced to migrate to seek and cultivate new land and fishing grounds, potentially causing social strife.Reduced smallholding competitiveness Smallholder farmers, who typically work with limited margins, will suffer if crop failures and fish shortages lower incomes, hindering their ability to purchase essential inputs. This financial strain and lack of economies of scale may make smallholder farmers less competitive in the market.Financial overview Average company EBITA margin (2023) Total industry fixed assets value (2023) Average company fixed assets value (2023)6.3% $92.85 billion $2.65 billion Sector overview The agribusiness industry encompasses commercial farming, fishing and related activities. It includes producers and suppliers of agricultural inputs, farmers, fisherman, breeders, agro-processors, distributors, traders, exporters and retailers. Financial implications of climate hazards The impact of climate hazards is set to climb steadily Average fixed business asset losses for agribusiness companies under low and high emissions scenarios ($ million per year; 2035, 2045, 2055) Threat of extreme heat set to grow Estimated fixed asset loses for all listed agribusiness companies under high and low emissions scenarios, by climate hazard ($ billion per year; 2035, 2055) Notes: Analysis of n=35 listed agribusiness companies. Source: S&P Global Sustainable1, Accenture analysis.Fixed asset losses pose a major risk to profitability Fixed asset losses as a proportion of EBITA under low and high emissions scenarios (% EBITA per year; 2035, 2045, 2055) Societal implications of climate hazards45 Low High (additional losses) Total losses (High)2055 2035 20453 42445019 8 52698.9%9.5% 9.3%10.9% 10.4%14.4% 2035 2045 2055 Low High By 2035, an average agribusiness company is expected to face fixed asset losses of $42–45 million per year due to climate hazards, increasing to $44–52 million by 2045 and $50–69 million by 2055, depending on the emissions scenario. Building resilience in the sector is critical to protecting food security. The losses to property, plant and equipment are set to equate to 8.9–9.5% of earnings by 2035, potentially leading to higher food prices for consumers and reduced funds for agricultural innovation. Extreme heat is expected to be the primary driver of fixed asset losses, accounting for $1–1.1 billion (71–76%) of the industry total in 2035, highlighting the need for heat-resistant crops. Water stress is set to account for 14–15% of annual losses in 2035, underscoring the importance of efficient water management practices and drought- resistant crop varieties. Business on the Edge: Building Industry Resilience to Climate Hazards 49