CDP Report Finds Climate Action Delivers High ROI

Companies that are taking proactive steps to address environmental risks are beginning to see significant financial rewards, according to a new report from the global environmental disclosure platform CDP. The 2025 Disclosure Dividend, based on nearly 25,000 corporate reports from 2024, finds that investments in reducing climate risks can deliver returns of up to 21 to 1, with an average return on investment (ROI) of 7 to 1.

The analysis highlights a clear economic case for corporate action on climate risks. CDP’s data shows that every dollar spent on reducing physical climate risks could generate as much as $21 in returns, while the average payback is $7 for each dollar spent. “The economics behind disclosure are clear; data-driven decisions help manage business risk and create opportunities,” said CDP Chief Executive Officer Sherry Madera.

According to the report, companies reported a median of $33.1 million in potential opportunities per firm through environmental action, compared with median costs of $4.6 million to realize those benefits. This results in a seven-fold return on average, demonstrating the strategic and financial value of climate-related disclosure and action.

These benefits are already materializing. In 2024 alone, 12% of companies that disclosed environmental opportunities unlocked $4.4 trillion in environmental value. The report also notes that another $13.2 trillion in potential value remains untapped, showing the extensive range of unclaimed opportunities for firms willing to take action.

Geographic differences impact the scale of opportunities. The data indicates that companies in Japan lead globally in value per opportunity, reporting median potential gains of $73 million per company. Canada follows closely with $72 million. In contrast, the United States and China reported significantly smaller median gains, at $15 million and $10 million per company, respectively. This gap reflects differences in corporate strategies, regulatory environments, and the maturity of climate-related initiatives across markets.

CDP’s findings highlight a gap between risk awareness and actual planning. While 90% of large companies reporting to CDP claim they have or plan to implement environmental risk assessment processes, only 43% currently have a formal climate transition plan. This suggests that while companies are becoming more aware of climate risks, many have yet to turn that awareness into effective strategies to reduce emissions, respond to physical risks, and take advantage of new business opportunities.

Sherry Madera emphasized that disclosure is more than a compliance task; it is the basis of effective climate action. “Our data shows that companies that measure and manage their environmental impacts not only secure their operations for the future but also achieve real financial and strategic benefits. The disclosure dividend is real, and the business case for taking advantage of it has never been stronger,” she said.

The report arrives at a time when climate-related disasters are becoming more frequent and severe, and the costs of inaction are expected to rise sharply. CDP warns that the global cost of failing to address climate risks could reach $38 trillion annually by 2050. This further supports the idea that investing in climate resilience is not just an environmental necessity but also a crucial business choice.

CDP’s research also suggests that companies using climate risk data are better positioned to find and capture new revenue sources, improve their competitive edge, and strengthen their resilience in an increasingly unstable global economy. The ability to quantify risks and opportunities helps management teams prioritize high-impact investments, use capital more effectively, and make strategic decisions that support long-term sustainability goals.

As the push to decarbonize accelerates, CDP’s report shows that companies gaining the most value are those that combine strong risk assessment processes with clear, actionable transition plans. The blend of transparency, strategy, and execution seems to offer the best financial returns while preparing businesses to succeed in a low-carbon future.

For policymakers and investors, the findings provide fresh evidence that corporate climate disclosure is not only about ethics or public relations. It is becoming a major driver of profitability and shareholder value. With trillions of dollars in potential gains still available, CDP’s analysis urges more companies to move beyond disclosure toward decisive climate action.

In its conclusion, the 2025 Disclosure Dividend reinforces a key message: companies that measure, disclose, and act on their environmental impacts are not only helping to tackle one of the world’s most urgent challenges but are also unlocking real and often considerable business benefits. As climate risks grow and the costs of inaction increase, those who delay may find themselves at a disadvantage, missing opportunities that early movers are already embracing.