Business on the Edge 2024

High LowHigh Low37 55 39 33 11 181314 48 33 9147 21 Extreme heat Wildfire Coastal flooding Tropical cyclone Water stress Drought Fluvial flooding2035 2055Utilities Power outages exacerbate threats Power outages during extreme events disrupt essential services such as healthcare, water supply and sewage treatment. This can prevent individuals from meeting their basic needs, including cooking food, maintaining hygiene and accessing information.Public health risks Electricity and water supply disruptions can affect heating, cooling and sanitation systems. This increases exposure to health complications – for example, heat-related illnesses, infections, dehydration or water- borne diseases – especially for the elderly, children and other vulnerable groups.Rising utilities costs As infrastructure damage from climate hazards increases, utilities may pass on the costs of repairs, upgrades and resilience measures to consumers, leading to higher bills. Vulnerable populations may struggle to afford rising costs, exacerbating energy poverty and widening social inequality. Financial overview Average company EBITA margin (2023) Total industry fixed assets value (2023) Average company fixed assets value (2023)17.8% $4,100.52 billion $14.2 billion Sector overview The utilities industry is responsible for generating, transmitting and distributing electric power and natural gas, as well as water supplies and sewage disposal. The sector provides essential public services and is integral to economic infrastructure and the built environment. Financial implications of climate hazards Financial losses driven by climate hazards set to climb steadily Average listed utilities company fixed asset losses under low and high emissions scenarios ($ million per year; 2035, 2045, 2055) Extreme heat & water stress set to be the major drivers of losses Estimated fixed asset losses for all listed utilities companies under high and low emissions scenarios, by climate hazard ($ billion per year; 2035, 2055) Notes: Analysis of n=290 listed utilities companies. Source: S&P Global Sustainable1, Accenture analysis.Losses climb above a quarter of earnings by 2045 Fixed asset losses as a proportion of EBITA under low and high emissions scenarios (% EBITA per year; 2035, 2045, 2055) Societal implications of climate hazards233 Low High (additional losses) Total losses (High)2055 2035 2045369454 20499 27035599 29 20.7%23.6%27.6%37.7% 36.3%46.3% 2035 2045 2055 Low High By 2035, the average utility company is expected to face fixed asset losses of $204–233 million per year due to climate hazards, increasing to $270–369 million by 2045 and $355–454 million by 2055, depending on the emissions scenario. These projected losses underscore the need to invest in reinforcing infrastructure and ensuring service continuity. The losses to property, plant and equipment are set to equate to 20.7–23.6% of earnings by 2035, which could lead to higher charges for consumers. Extreme heat is expected to be the primary driver of these losses, accounting for $33–37 billion (55–57%) of the industry total in 2035, emphasizing the need for heat-resistant infrastructure and cooling technologies. Water stress is set to drive 24–32% of annual losses in 2035, highlighting the importance of sustainable water management practices. Business on the Edge: Building Industry Resilience to Climate Hazards 61