Global companies lag in climate risks readiness as Africa faces urgent adaptation gap

As the world ramps up efforts to meet 2030 climate targets, a stark reality remains: most major global companies are unprepared for the physical risks posed by climate change.

Recent research by S&P Global shows that only 35 per cent of major companies, often regarded as green leaders, have concrete climate adaptation plans in place, leaving trillions of dollars in potential vulnerabilities.

The warning comes ahead of a series of high-stakes climate and development gatherings in New York this September, including the United Nations General Assembly, the World Economic Forum’s Sustainable Development Impact Meetings, and Climate Week NYC, where governments, businesses, and civil society will evaluate progress and identify gaps.

Without urgent intervention, the study projects that the annual financial toll of unmitigated climate impacts could reach $1.2 trillion by the 2050s for these companies.

Industries such as utilities, financial services, and energy are among the most exposed, with extreme heat and water stress cited as the main drivers of loss.

Among the surveyed sectors, utilities and real estate reported the highest rates of physical risk adaptation planning at 58 and 50 per cent, respectively.

“Both sectors are heavily reliant on physical infrastructure, which will increasingly be at risk of damage and disruption from storms, flooding and other climate hazards, absent adaptation,” the report reads.

The study highlights five key sectors lagging behind the cross-sector average of 35 per cent, including information technology and financial services, where only 30 per cent of companies have an adaptation plan.

“Banks, insurers, asset managers and asset owners are exposed to the wider economy through lending, investing or underwriting across industries, which can expose them to the economic and physical impacts of climate change.”

In consumer discretionary and communication services, only 29 and 28 per cent of companies, respectively, disclosed having an adaptation plan. Healthcare lags further, with just 25 per cent of companies reporting plans.

The report notes that while some sectors have historically faced lower direct exposure to physical climate risks, this could change over the coming decades without adaptation.

For Africa, climate change is not a distant threat—it is a daily reality.

Prolonged droughts are devastating crops across the Sahel, while severe floods continue to displace communities in East Africa.

Despite contributing minimally to global emissions, the continent bears the brunt of a rapidly intensifying crisis. As global temperatures rise, reports warn that Africa’s capacity to adapt is dangerously outpaced by the scale of the threat.

In a region where more than 60 per cent of livelihoods rely on climate-sensitive sectors like agriculture, closing this gap is not just a priority—it is a matter of survival.

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At its core, the adaptation gap reflects a shortfall in financial, technological, and societal investments needed to protect vulnerable communities from climate impacts.

As S&P highlights, this gap is widening globally. In Africa—a region disproportionately affected by climate volatility—the consequences of inaction are catastrophic.

The African Development Bank estimates that the continent requires $277 billion (Sh35.8 trillion) annually until 2030 to tackle the climate crisis effectively, yet it currently receives just $30 billion (Sh3.9 trillion) a year.

In Kenya, the cost of reducing emissions and adapting to climate impacts is estimated at Sh2.2 trillion, according to the Nationally Determined Contribution (NDC) submitted to the United Nations Framework Convention on Climate Change on April 30.

“The estimated budget required for the implementation of the adaptation initiatives for the period 2031 to 2035 is $17.7 billion (Sh2.28 trillion),” Kenya notes in its second NDC.