Business on the Edge 2024

High LowHigh Low Extreme heat Wildfire Coastal flooding Tropical cyclone Water stress Drought Fluvial flooding2035 20559 8 214 10 3223 1Food and beverages Food shortages and price increases Climate-related disruptions result in decreased agricultural output and increased food spoilage, reducing market supply. This causes volatility in food prices, making it more challenging for low-income consumers to access nutritious foods and alters household budget expenditure.Reshaped dietary patterns Prices typically rise when crops fail or supply contracts. This can lead consumers to shift their preferences toward cheaper, but less nutritionally dense foods. As a result, dietary diversity may decrease, causing a reliance on easily accessible but nutritionally poor processed foods, which contribute to obesity and diet-related disease, further increasing healthcare costs.Sector redundancies Rising commodity costs and inflationary pressures driven by climate hazards may result in mass layoffs as companies implement cost-saving measures. This can significantly impact entire communities that depend on the food production industry, leading to a rapid increase in unemployment in certain regions.Financial overview Average company EBITA margin (2023) Total industry fixed assets value (2023) Average company fixed assets value (2023)10.7% $647.84 billion $2.36 billion Sector overview The food & beverages industry includes all sectors from primary production to retail and food services level. It involves the processing of raw ingredients, food and beverages manufacturing, packaging, storage, distribution and sales of ready-to-eat products. Financial implications of climate hazards Fixed asset losses set to rise steadily over coming years Average fixed business asset losses for food & beverages companies under low and high emissions scenarios ($ million per year; 2035, 2045, 2055) Extreme heat the major threat, with water stress risks growing Estimated fixed asset losses for all listed food & beverages companies under high and low emissions scenarios, by climate hazard ($ billion per year; 2035, 2055) Notes: Analysis of n=274 listed food & beverages companies. Source: S&P Global Sustainable1, Accenture analysis.Fixed asset losses equate to a growing proportion of earnings Fixed asset losses as a proportion of EBITA under low and high emissions scenarios (% EBITA per year; 2035, 2045, 2055) Societal implications of climate hazardsLow High (additional losses) Total losses (High)2055 2035 204576 58 41495818 9 443 2035 2045 2055 Low High4.6% 4.9%5.6%6.6% 6.6%8.6% By 2035, the average food & beverages company is expected to face fixed asset losses of $41–44 million per year due to climate hazards, increasing to $49–58 million by 2045 and $58–76 million by 2055, depending on the emissions scenario. These losses highlight the urgent need for protection of production facilities and supply chains. The losses to property, plant and equipment are set to equate to 4.6–4.9% of earnings by 2035, potentially leading to higher food and beverages prices and reduced funds for product innovation and quality improvements. Extreme heat is expected to be the primary driver of losses, accounting for $8–9 billion (77–80%) of the industry total in 2035, emphasising the need for heat-resistant storage and processing facilities. Fluvial flooding is set to contribute 12–16% to these losses in 2035, highlighting the importance of resilient supply chain logistics. Business on the Edge: Building Industry Resilience to Climate Hazards 51