Companies may see a 7-fold return on investment by implementing climate action initiatives, according to a new CDP Report.
News Article: Top-Performing Countries Embrace Environmental Action for Financial Gains
According to a recent report by CDP, a global non-profit organization, the top-performing countries in terms of financial returns for companies acting on environmental risks and opportunities are those within the European Union and leading global markets. The report, titled the 2025 Disclosure Dividend, emphasizes that disclosure is no longer just about transparency, but becoming a business imperative with measurable upside for those who act swiftly.
The report reveals a 50% increase in companies disclosing climate transition plans, with 90% of large companies disclosing to CDP having or planning to adopt environmental risk assessment processes. This shift towards environmental disclosure is significant, as it unlocks economic advantages by building resilience amid environmental risks.
Companies in Japan and Canada are leading the way, with potential gains of $73 million and $72 million per company, respectively, according to the report. In comparison, US and Chinese companies have potential gains of $15 million and $10 million, respectively. However, it's worth noting that only 43% of large companies disclosing to CDP currently have a climate transition plan in place, suggesting significant room for growth and action.
The report underscores the importance of measuring and managing environmental impacts, as environmental risk translates directly into financial risk. Ignoring these risks could potentially cost the global economy up to US$38 trillion by 2050. On the other hand, companies that acknowledge and act on these environmental risks gain enhanced business resilience, innovation capabilities, and opportunities in new markets.
The data basis for the report includes over 18,700 companies globally, representing a significant portion of market capitalization and assets under management. Strong activity and disclosures come from countries in the European Union and leading financial hubs, as evidenced by the usage of CDP data for investment decisions and disclosures by institutions such as the National Bank of Kuwait and companies like UPM from Finland.
In conclusion, the top-performing countries are those with significant corporate disclosure and engagement with CDP, notably within the European Union and advanced financial centers worldwide, where acting on environmental risks corresponds with stronger financial returns and market resilience. As the cost of inaction on climate change continues to rise, it's clear that a proactive approach to environmental management is not only beneficial for the planet, but also for a company's bottom line.
[1] CDP (2021). 2025 Disclosure Dividend. [Online] Available at: https://www.cdp.net/en/2021/11/17/2025-disclosure-dividend-report [3] CDP (2021). About us. [Online] Available at: https://www.cdp.net/en/about-us [5] CDP (2021). UPM. [Online] Available at: https://www.cdp.net/en/companies/upm
- The 2025 Disclosure Dividend report, released by CDP, highlights that environmental risk assessment and disclosure can lead to significant financial gains, as companies in leading markets, such as Japan and Canada, demonstrate potential returns of $73 million and $72 million per company, respectively.
- As businesses increasingly acknowledge and manage their environmental impacts, they can enhance their financial performance, innovate, and seek opportunities in new markets, as demonstrated by strong activity within the European Union and advanced financial centers worldwide, backed by the usage of CDP data for investment decisions and disclosures by institutions like the National Bank of Kuwait and companies like UPM from Finland.
