Environmental risk is financial risk. It’s no longer a distant concern for policymakers or climate scientists and it’s showing up in boardrooms, balance sheets, and investor calls. Extreme weather is disrupting supply chains, water scarcity is driving up production costs, and shifting regulations are altering market dynamics. CDP’s Disclosure Dividend 2025 shows that the companies measuring, disclosing, and acting on their environmental impacts aren’t just “doing the right thing.” They’re outperforming.

Based on disclosures from nearly 25,000 companies worldwide in 2024, the findings demonstrate that transparency is a driver of both financial and strategic returns. CDP calls this the disclosure dividend - the measurable payback companies get when they systematically report environmental data and integrate it into decision-making. And the numbers show that this dividend isn’t marginal; it’s significant.

Defining the Disclosure Dividend

At its core, the disclosure dividend is about unlocking value through transparency. When companies collect, analyze, and disclose environmental data, they uncover risks and opportunities they might otherwise miss. This visibility empowers them to:

Strengthen resilience against environmental shocks
Access new pools of capital and investment
Identify cost savings and efficiency gains
Develop products and services aligned with a low-carbon, sustainable economy

It’s a cycle that builds on itself: measure, disclose, act, and benefit. These benefits aren’t one-off but they compound over time. Year after year, companies that engage in robust disclosure improve decision-making, attract capital, and stay ahead of regulatory shifts.

Environmental Risk is Financial Risk

The global economy could lose up to $38 trillion by 2050 due to environmental risks more than a third of projected GDP. This is not a theoretical forecast. Cocoa prices have hit record highs after extreme weather devastated crops in West Africa. In the US, insurance premiums have doubled since 2017 as climate-related disasters drive up claims.

Over 90% of large companies disclosing through CDP already have processes to identify and assess environmental risks, or plan to within two years. Two-thirds have identified at least one substantive environmental risk to their business, with the most common being policy and regulatory changes. Acute climate impacts like floods and storms, as well as chronic risks such as rising sea levels and drought, follow closely.

These patterns show a growing recognition that environmental threats directly affect financial stability. Businesses that understand their exposure can act early, limit losses, and even turn risks into competitive advantages.

The Size of the Prize

One of the most compelling findings is the return on investment for climate action. For every $1 spent mitigating physical climate risks, companies can generate up to $21 in return—about $7 on average. The median potential opportunity value identified per company is $33.1 million, compared with a median cost of just $4.6 million to realize it.

In 2024 alone, companies reporting to CDP unlocked $4.4 trillion in value from climate-related opportunities. Yet they’ve only tapped a fraction of what’s possible another $13.2 trillion remains identified but unrealized. This gap highlights the untapped potential sitting in corporate data, waiting for action.

Despite this, more than half of companies have yet to meaningfully pivot toward low-carbon or low-water products and services. Those that move now will be better positioned to capture first-mover advantages in emerging green markets.

The Supply Chain Factor

For many companies, the bulk of their environmental impact lies beyond their direct control in their supply chains. On average, 75% of greenhouse gas emissions come from suppliers. That means any meaningful climate strategy must extend beyond a company’s own operations.

Supplier engagement is crucial. Yet only 11% of companies offer financial incentives to suppliers to improve environmental performance. Where they do, the effect is significant: incentivized suppliers are 52% more likely to reduce emissions than those offered training alone.

The report cites companies that actively gather supplier emissions data, provide targeted support, and even reward top performers. Such actions not only reduce overall footprint but also strengthen relationships, improve reliability, and create shared value across the chain.

Tools Still Underused

Despite growing awareness, many companies have not yet adopted some of the most effective tools for building resilience:

Scenario analysis: 21% of companies do not conduct any and have no plans to start.
Internal carbon pricing: Only 19% use it, and often at levels too low to influence decisions.
Climate transition plans: Just 43% of large companies have one, and only 15% of SMEs.

Where plans exist, they’re increasingly incorporating water, biodiversity, and plastics alongside carbon. But without these tools in place, companies risk turning disclosure into a static exercise rather than a catalyst for strategic change.

Regional Variations

The perceived opportunity from environmental action varies sharply by geography. In Japan, the median company identifies $73 million in potential financial gains from climate measures; in China, it’s just $9.8 million. In Canada, the figure is $71 million; in the US, $15 million.

These differences reflect variations in policy, investor expectations, and market maturity. They suggest that in markets with stronger climate signals, companies are more attuned to opportunity and more likely to act.

From Awareness to Action

Disclosure is shifting from a transparency measure to an economic necessity. Companies that act on disclosed data are unlocking measurable returns, but actions still lag behind the scale of the risks and opportunities. Too often, sustainability is treated as an optional add-on rather than integrated into core strategy.

A holistic approach is needed and one that combines awareness, action, and growth. That means:

Building robust environmental management processes
Mapping risks and opportunities across the value chain
Engaging suppliers and offering incentives for improvement
Developing and implementing credible climate transition plans
Innovating in products, services, and business models

The Policy Case for Mandatory Disclosure

The findings make a strong case for mandatory environmental disclosure. When companies are required to measure and report, they’re more likely to manage and improve. This kind of regulation can level the playing field, ensure comparability of data, and encourage laggards to catch up.

With trillions in potential value at stake, policy frameworks that mandate disclosure could accelerate the shift toward sustainable, resilient business models. Regulatory clarity would also give companies the confidence to invest more aggressively in environmental initiatives.

Strategic Mandate

For business leaders, the choice is straightforward: act now, and you can shape the market and secure long-term value; wait, and you risk being overtaken by more agile competitors. Moving early to integrate environmental considerations into strategy positions a company as an investment-worthy, resilient, and forward-thinking player.

“The economics behind disclosure are becoming clear – data driven decisions help to manage business risk and unlock opportunity” said Sherry Madera, CEO of CDP.

“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.”

How we see it moving forward?

The Disclosure Dividend 2025 makes one thing evident: companies that disclose and act are already seeing measurable returns, both financially and strategically. Those returns will only grow as markets, investors, and regulators demand higher environmental performance. The companies that hesitate will find themselves not just behind the curve, but potentially shut out of opportunities that transparency helps unlock.

Business strategy for the future is coming into view. Go beyond reporting for compliance and use disclosure as a tool for transformation. Treat environmental transparency as an investment with compounding returns, not a cost. In doing so, companies won’t just respond to change; they’ll help define it.

Access the full report here - The 2025 Disclosure Dividend - CDP

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