Pivot your business to unlock opportunitiesStep 3 Reshape the business portfolio As the transition to a net-zero economy accelerates, companies have a significant opportunity to unlock new market potential by reshaping their portfolios and embracing decarbonization. By identifying areas where innovation and sustainable practices can fuel growth, businesses can build strategic resilience. Sectors such as renewable energy and sustainable agriculture, along with circular economy solutions, present substantial long-term opportunities. The Moroccan fertilizer company is making significant investments in green hydrogen and green ammonia to transform its operations and align with global decarbonization goals. By integrating these sustainable technologies, OCP is not only reducing its carbon footprint, but also positioning itself to lead in the emerging markets for sustainable agriculture and new value chains in the energy space. Source: OCP , BCG analysis.CASE STUDY 6 OCP Group’s diversification through green investments Repsol has committed to progressively shift 45% of its CapEx over the next five years64 towards renewable energy and biofuels while protecting shareholder returns. It achieves this by redirecting cash flows from conventional businesses into its climate-transition businesses. This strategy enables Repsol to work towards its net-zero emissions goal while protecting current business in the short term and maintaining investor confidence. Market capitalization rose by over $1 billion the morning the strategy was publicly announced. Sources: Repsol, BCG analysis.CASE STUDY 7 Repsol’s strategy to transition while protecting shareholder returnsCapitalize on physical resilience Similarly, companies with strong adaptation strategies can outpace competitors and seize new business opportunities. Those resilient to extreme climate events recover faster, leverage broader capabilities to manage disruptions and attract more clients, fostering loyalty.Align capital allocation with climate strategy Reshaping the business portfolio will only get as far as capital allocation allows. Balancing short-term profitability with long-term sustainability requires repurposing assets, managing the risk/reward profiles of sustainable investments and ensuring competitiveness in green sectors. Transparent communication with investors is key to maintaining confidence and securing necessary financing. Reshaping your business portfolio is not just about decarbonization — it is about unlocking growth, boosting resilience and ensuring long-term value for shareholders. The Cost of Inaction: A CEO Guide to Navigating Climate Risk 44

The Cost of Inaction 2024