Environmental action unlocks huge financial opportunities for firms, study finds
Analysis quantifies relationship between risk mitigation investment and potential gain.
Every $1 invested in mitigating physical climate risks could bring companies a return of as much as $21, according to "The 2025 Disclosure Dividend" report by environmental disclosure platform CDP.
The so-called disclosure dividend is what firms reap from disclosing and managing their environmental risks and impacts. CDP, a global non-profit that analysed disclosures of nearly 25,000 businesses in 2024, said the average return is up to $8.
"A median $33.1m worth of opportunities per company could await firms that take environmental action, for just $4.6m in costs to realise them," noted the independent platform, which sees disclosure as a "critical enabler" in addressing the climate problem.
"The vast majority (90%) of large companies disclosing to CDP already have a process for identifying and assessing their environmental dependencies, impacts, risks, and opportunities or intend to do so within the next two years – and close to half (43%) of large corporates reported having a climate transition plan in place.
"Yet the multiplier effect comes from taking swift action on the insight. Almost two-thirds of companies (64%) identified environmental opportunities – and of those, 12% unlocked a staggering $4.4t in opportunity value in 2024 alone. The quantified opportunities yet to be realised represent another $13.2t in potential upside."
According to CDP, businesses in Japan and Canada are identifying the biggest financial opportunities that relate to the environment.
"Based on median values, Japanese firms identified $73m in potential gains per company, followed closely by Canada at $72m," it reported. "Those in the USA identified just $15m worth of opportunities, whilst Chinese firms perceived $10m worth of gains.
"Whilst the disclosed value of opportunities varies greatly and may be influenced by factors such as thresholds used to define a substantive opportunity, methodological choices, and commercial sensitivity, the analysis confirms that companies in nearly all sectors and regions stand to benefit from acting on environmental opportunities."
Notably, it is estimated that failure to address environmental risk will cost the global economy over a third of its gross domestic product; more specifically, as much as $38t by 2050.
CDP CEO Sherry Madera commented: "The economics behind disclosure are becoming clear – data-driven decisions help to manage business risk and unlock opportunity.
"Disclosure is the foundation of action. Our data shows that companies that measure and manage their environmental impacts not only future-proof their operations but also unlock tangible financial and strategic gains. The disclosure dividend is real – and the business case for seizing it has never been stronger."
