Business on the Edge 2024

Infrastructure and transportationHigh LowHigh Low Extreme heat Wildfire Coastal flooding Tropical cyclone Water stress Drought Fluvial flooding2035 205524 21 6 25 3736 48 4 Loss of critical services Destruction of roads, bridges and public transit systems impacts access to healthcare, education and emergency services, hindering recovery efforts. Prolonged service outages threaten public safety and wellbeing.Climate migration and displacement Repeated climate events force entire communities to migrate from areas prone to hazards such as flooding and fires. This may result in housing shortages, strained public services and social tension in receiving areas. Displacement can also fracture communities, disrupting social ties and local economies.Employment instability Disruption across key transportation networks hinders the flow of goods and services. This could lead to slower growth and increased unemployment, especially in sectors reliant on infrastructure, such as logistics, retail and tourism. Financial overview Average company EBITA margin (2023) Total industry fixed assets value (2023) Average company fixed assets value (2023)10.7% $1,833.2 billion $3.07 billion Sector overview The infrastructure and transportation industry comprises public and private structures such as roads, railways, bridges, tunnels and air systems. It encompasses the services and facilities necessary for economies, households and companies to function. Financial implications of climate hazards Fixed asset losses set to climb steadily Average fixed business asset losses for infrastructure and transportation companies under low and high emissions scenarios ($ million per year; 2035, 2045, 2055) Extreme heat & fluvial flooding will drive fixed asset losses Estimated fixed asset losses for all listed infrastructure and transportation companies under high and low emissions scenarios, by climate hazard ($ billion per year; 2035, 2055) Notes: Analysis of n=598 listed infrastructure & transportation companies. Source: S&P Global Sustainable1, Accenture analysis.Rising climate-related losses could significantly lower 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 hazardsINFRASTRUCTURE AND TRANSPORTATION Low High (additional losses) Total losses (High)2055 2035 2045536985 50606619 9 3INFRASTRUCTURE AND TRANSPORTATION 2035 2045 2055 Low High6.9% 7.3%8.3%9.5% 9.2%11.8% By 2035, the average listed infrastructure and transportation company is expected to face fixed asset losses of $50–53 million per year due to climate hazards, increasing to $60–69 million by 2045 and $66–85 million by 2055, depending on the emissions scenario. This highlights the urgent need for adaptation of critical infrastructure to ensure operational continuity. The losses to property, plant and equipment are set to equate to 6.9–7.3% of earnings by 2035, potentially leading to higher transportation costs and reduced funds for maintenance. Extreme heat is expected to be the primary driver of these losses, accounting for $21–24 billion (73–76%) of the industry total in 2035, emphasising the need for heat-resistant materials and cooling technologies. Fluvial flooding is set to account for 14–20% of losses in 2035, underscoring the importance of robust flood defences and drainage systems. Business on the Edge: Building Industry Resilience to Climate Hazards 53