Council on Sustainability Transformation calls on business leaders to recognize the urgency of climate adaptation

Council on Sustainability Transformation calls on business leaders to recognize the urgency of climate adaptation

28 October 2026

The Council on Sustainability Transformation, a group of senior leaders from corporations, governments, and academia convened by ERM, has released a new white paper, Adaptation and Resilience: How business can thrive in a changing climate.

It argues that many climate impacts are now unavoidable, and that climate adaptation has become an urgent business priority requiring investment, leadership, and broader systemic change. Climate impacts do not remain confined to individual assets, operations, or communities. Their effects can cascade through supply chains as well as insurance and financial markets, reshaping business performance, value, and growth. As climate impacts compound existing business pressures, the cost of inaction is becoming increasingly visible. Organizations that understand their exposure and act early can protect workers and assets, strengthen resilience, preserve access to critical resources, insurance and capital, and identify opportunities for innovation and growth.

The paper emphasizes that adaptation and mitigation are complementary. Preparing for unavoidable climate impacts, it argues, is now critical alongside continued efforts to reduce emissions and limit future climate change.

It outlines seven actions leaders can take to embed adaptation across strategy, investment, and operations. The leadership challenge is no longer whether businesses need to adapt, but how quickly, effectively, and responsibly they can do so.

Seven actions for business leaders

• Build climate intelligence: Use tools such as scenario analysis, stress testing, and digital twins to quantify exposures and inform capital allocation.

• Address immediate material risks: Act first where exposures threaten worker safety, operational continuity, or critical infrastructure.

• Evaluate adaptation through a long-term value lens: Apply normal investment discipline while counting avoided losses, reliability, insurability, and wider benefits.

• Embed adaptation into business decisions: Build it into operations, capital allocation, procurement, health and safety, and innovation, rather than treating it as a separate budget line.

• Make the distribution of costs and benefits explicit: Identify who is exposed, who benefits, and who bears the costs, and check that measures reduce risk rather than transfer it.

• Engage stakeholders to build trust: Involve affected groups early and be transparent about priorities and trade-offs.

• Strengthen adaptive capacity and protect credible mitigation commitments: Reassess priorities as conditions change and make trade-offs between adaptation and mitigation explicit.

Embedding adaptation across the business

The paper emphasizes that adaptation cannot sit within a single function and requires action across the organization. Boards and CEOs play a critical role in setting direction, overseeing interconnected risks, and informing capital allocation. Business-unit leaders integrate adaptation into operational and investment decisions, while sustainability, risk, and finance teams provide the analysis and oversight needed to support delivery. The paper also highlights the importance of working with governments, communities, suppliers, and customers, recognizing that long-term resilience depends on the strength of the wider systems on which businesses rely.

Council member Feike Sijbesma, the Chairman of the Supervisory Board of Philips, CEO of Darwin International, and former CEO of Royal DSM said: "Climate impacts are already affecting the conditions in which businesses operate. The cost of inaction is becoming more visible, while investment in adaptation can protect assets and supply chains and help companies remain competitive. For CEOs and boards, understanding both the risks and the opportunities is becoming central to protecting and creating long-term value."

Sabine Hoefnagel, ERM's Interim CEO, said: "Adaptation is becoming a defining leadership challenge. Decisions about investment, operations, and growth increasingly need to account for how climate-related risks could evolve over time. Organizations that build adaptation into the way they plan, invest, and make decisions will be better placed to navigate uncertainty, maintain resilience, and create long-term value."

About the Council on Sustainability Transformation

Convened by ERM, the Council marshals the extensive experience of its members across industries to provide C-suite executives and board members with practical guidance on how to tackle obstacles to progress on ambitious sustainability targets, while preserving and growing financial value.

Current Council members are:

• Peter Agnefjäll, former CEO of IKEA Group, former Chair of Ahold Delhaize
• Mark Cutifani, former CEO of Anglo American
• Connie Hedegaard, former EU Commissioner for Climate Action
• Naoko Ishii, former CEO and Chairperson, Global Environment Facility
• Hixonia Nyasulu, former Chair of Sasol, former board member of Anglo American
• Feike Sijbesma, former CEO of Royal DSM, current CEO of Darwin International, Chairman of the Supervisory Board of Philips
• Johannes Teyssen, former CEO of E.ON, Chairman of the Supervisory Board of Deutsche Lufthansa AG

About ERM

Sustainability is our business.

As the world's largest sustainability consultancy, ERM combines integrated expertise and implementation capabilities, powered by AI and technology, to help clients turn sustainability into measurable business value.

With more than 50 years of experience, ERM's diverse team of 8000+ experts in 40 countries and territories helps clients create innovative solutions to their sustainability challenges, unlocking commercial opportunities that meet the needs of today while preserving opportunity for future generations. Learn more here.