2.4 Corporate adaptation investments have an increasingly positive business case Investments in adaptation and resilience measures can reduce companies’ financial exposure. These solutions can be divided into three categories: strategic, financial and operational. Strategic solutions involve adjustments to the business model to enhance long-term resilience. This includes increasing the role of service-based revenue streams and/or reducing reliance on physical assets such as owned real estate. Financial solutions involve managing climate risks through financial strategies. Companies can transfer risk via innovative financial tools – such as catastrophe bonds or parametric insurance which provide rapid pay-outs based on predefined events – or retain risk through designated budget allocations for climate contingencies. Operational solutions focus on protecting and enhancing the resilience of key assets and operations. This can include both physical infrastructure improvements and nature-based solutions to mitigate climate risks, including the following: –Fortifying assets, such as installing flood protection barriers and/or reinforcing critical facilities to withstand extreme weather. Nature- based solutions, such as mangrove plantations, can economically buffer against natural hazards while enhancing the security and livelihoods of surrounding communities. –Resource security, such as investing in water conservation technologies, for example drip irrigation or energy storage systems to ensure operational continuity. Additional strategies include onsite water reuse systems and nature- based solutions such as permeable surfaces and retention ponds to manage flooding and support continuous operations. –Supply chain resilience, as highlighted in the World Economic Forum’s report From Disruption to Opportunity: Strategies for Rewiring Global Value Chains. Leading companies are already pre- qualifying new suppliers as standby options and building globally connected, multi-local supply chains to enhance resilience and flexibility.33 Companies can reduce their exposure to physical risks through a mix of strategic, financial and operational measures. The Cost of Inaction: A CEO Guide to Navigating Climate Risk 20

The Cost of Inaction 2024