Why Climate Resilience Is Becoming a City's Competitive Advantage

Severe weather is becoming more common, costly and disruptive for cities and businesses alike, and nearly three-quarters of organisations have already experienced losses or work disruptions from weather devastation, according to a 2025 global survey by insurer Marsh. That exposure creates cascading problems including higher insurance costs, work stoppages and water shortages that shutter factories. A growing body of research suggests the cities responding most effectively to this risk are also becoming more attractive to business investment, turning climate resilience from a defensive necessity into a genuine competitive advantage.

 

How the Ranking Works and Who Leads It

 

A report from the Oliver Wyman Forum ranks the business attractiveness of 1,500 cities globally, incorporating climate resilience as one factor shaping that competitiveness. Central and northern European cities including Bern, Oslo and Gothenburg currently rank highest on climate resilience specifically, though the report suggests other cities are positioned to rise as they invest in adaptation measures. The underlying logic is straightforward: businesses increasingly weigh a city's exposure to climate disruption, alongside more traditional factors like labour costs and infrastructure quality, when deciding where to locate operations, talent and supply chains.

 

Protecting Infrastructure From Floods and Extreme Heat

 

A growing number of cities are investing directly in infrastructure that protects against flood and heat devastation. Singapore's climate resilience plans include sea walls for coastal and flood defence alongside mandatory water recycling requirements for new projects in water-intensive industries. São Paulo plans to insulate housing with green areas to help prevent heat-related deaths, harvest rainwater and reduce flash flood runoff, while Johannesburg is planning for high flood-risk areas to be free of housing, offices and critical infrastructure by 2050. These measures share a common approach: rather than responding to disasters after they occur, cities are redesigning infrastructure and land use in advance to reduce the damage a given weather event can cause.

 

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Why Supply Chains Are Reshaping Around Climate Risk

 

Manufacturing hubs concentrated in flood-prone or water-scarce areas face a distinct supply chain risk, and 45 percent of CEOs are planning to reconfigure their company's supply chains, according to 2026 research from Oliver Wyman Forum. Cities positioning themselves as safe, resilient logistics hubs stand to capture that reconfiguration as new investment. The Port of Rotterdam, Europe's largest seaport handling roughly 30 percent of the EU's container traffic, has proposed raising quays and roads and relocating business-critical facilities such as electricity and telecoms infrastructure to higher ground in preparation for rising sea levels.

The stakes are particularly high in Asia, where more than 40 of the region's top 100 manufacturing cities face high flood risk according to Oliver Wyman Forum data. Cities such as Shenzhen, which has built a coastal defence system, may persuade manufacturers to stay rather than diversify to lower-cost countries elsewhere. Cities positioned within "China plus one" supply chain diversification strategies face similar pressure to protect their own attractiveness: Chihuahua, Mexico, has benefited from such supply chain shifts but remains vulnerable to water shortages, and while its use of treated wastewater to irrigate green spaces has eased some pressure, further investment in resilience infrastructure would strengthen its position.

 

Liveability as a Tool for Attracting Talent

 

Climate resilience and liveability together have become central to attracting and retaining skilled workers, from architects to AI engineers, since talent increasingly migrates away from cities affected by excess heat, humidity, frequent flooding or water shortages toward places offering milder climates and resilient infrastructure. Gothenburg exemplifies this combination, offering nearly 3,000 square feet of green space per resident while benefiting from a national initiative to decarbonise its industrial sector and create new jobs. Cities in hotter climates are adapting the same principle differently: Riyadh uses smart cooling systems and reflective building materials, alongside expanded canopies and small green spaces designed to improve walkability despite the region's heat.

 

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Why Public-Private Partnerships Matter

 

Managing the rising costs of climate-related devastation increasingly requires collaboration between cities and the businesses operating within them. Singapore launched a public-private partnership in April 2026 to strengthen business climate resilience in areas including green procurement and sustainable financing, and its financial regulator issued supervisory guidelines requiring financial institutions to manage both their own and their broader portfolios' climate risk through adapted business, governance and risk management models.

 

Why It Matters

 

For businesses, the practical takeaway is that assessing climate risk before making location decisions is becoming as important as evaluating labour costs or infrastructure quality, particularly amid ongoing supply chain and macroeconomic shifts. For cities, the pattern across these examples suggests that investing in clean technology, resilient infrastructure and forward-looking adaptation planning is no longer purely a defensive or environmental measure but a genuine economic development strategy, one that positions a city to capture business investment precisely because severe weather events are becoming more frequent rather than less.

 

Source: The World Economic Forum (WEF)