Disruption is driving business quest for resilience

Risk management has long been an important discipline of business, but after nearly a decade of supply chain disruptions, it has become a defining feature of Board Rooms and corporate strategies. Unhedgeable balance-sheet risks have the power to erode profitability, inflate costs and destabilize operations, whereas orderly management can deliver competitive advantage.

2026 has broken all records when it comes to global heating, exacerbated by a Super El Niño, to create a feedback loop that is compounding risk across physical, geographical and geopolitical boundaries. 

Drought in Europe caused water levels in the Rhine, Po and Danube to fall to such low levels that it halted cargo ships and even cooling of nuclear facilities. Key shipping arteries like the Panama Canal are slowing traffic due to insufficient water and the slowed vessels can carry less cargo. This is in turn forcing shipping into trucking at the same time as fuel prices hit new highs, in turn increasing emissions, slowing speed and increasing scarcity and costs to consumers.

Assets are becoming stranded because just-in-time supply is being disrupted on a macro scale.

At the same time, poor harvests are predicted in Oceania, India, Central America and Southern Africa. Across Europe, farmers have warned of falling production and rising prices because of extreme weather. Shortages of fertilizer because of the war in Iran and volatile energy prices are overlapping shocks affecting businesses in every part of the world.

In the current operating context, resilience is not just about survival but value creation and commercial advantage. Resilience can be built into businesses through a high-speed transition to low-carbon business models. It is a core strategic lever to mitigate risk and futureproof operations. Central to the decarbonization journey is setting science-based targets: a globally recognized standard for excellence in corporate climate action adopted by 12,000 companies representing more than 40% of global market cap.

91% of surveyed companies with SBTi-validated targets reported an overall positive business impact with particularly strong impacts reported around risk, reputation and competitiveness in our report, The Impact of Setting Science-Based Targets on Businesses. 

1. Science-based targets strengthen business resilience and reduce risk

Businesses today operate under significant uncertainty. From shifting policy and regulatory landscapes to physical risks imposed by the climate crisis, it is critical for executives to embed resilience into their operations and strategies.

72% of surveyed companies report that setting SBTi-validated targets improved their resilience against future regulatory changes. This finding parallels academic research that found that setting science-based targets reduces stock price volatility.

2. Science-based targets improve reputation and build stakeholder trust

Company reputation is a core element of corporate value. Whether it be the perception of investors, consumers, or suppliers, companies are increasingly responsive to the interests of their stakeholders and the public at large.

That’s why concrete steps towards decarbonization are so important—they signal dedication to emissions reductions, and distinguish companies from a sea of general sustainability promises. Our report showed that 95% of companies with targets noted a positive overall impact to reputation, including: 

• Stronger investor perception and relationships (80%) 
• Increased credibility within their sector (75%) 
• Improved supplier perception (69%) 
• Stronger consumer trust and brand perception (67%)

3. Science-based targets strengthen entire supply chains

New research from Harvard Business School shows that when companies set science-based targets, it has a ripple effect through the supply chain. Every corporate target increases the odds that their suppliers will engage in climate-related products and services. Each successive target set by a company's customers further increases the odds of them taking climate action themselves. Research by Ecovadis suggests supply chain decarbonization returns of three to six times on investment.

This cascading effect of corporate climate action can unlock climate finance and catalyze further efforts to decarbonize operations and products. But beyond that, given the positive impact target-setting has on resilience, it can be argued that the impact of one science-based target has the potential to result in enhanced resilience up and down entire supply chains. Our own research showed that in addition to the two-thirds (69%) who found that science-based targets improved their perception as a supplier, 74% reported improved alignment with supply chain and customer requirements, and 67% noted better competitiveness compared to peers.

4. Science-based targets help secure better financing terms

Companies report that investor perception is improved by setting targets—and research from the European Central Bank backs this up. Banks across Europe are factoring climate action into their lending decisions, offering better lending terms for those with emissions targets. Around half (48%) of companies surveyed by the SBTi noted that they had improved loan terms and access to capital (44%).

5. Science-based targets are a long-term investment with no impact on profitability, but major benefits in resilience and competitiveness

The path to net-zero is long, and requires investment today for results tomorrow. Setting science-based targets is one way to enhance strategic cohesion and long-term vision, as reported by 80% of companies in our survey. They demonstrate a serious commitment to remaining competitive in the near- and long-term in a carbon constrained world.

Research from Bain indicated that companies can cut 25% of industrial emissions through actions that deliver positive returns, while BCG showed that companies can obtain operating profitability gains of around 5% from sustainability initiatives.

Despite the long-term nature of science-based targets and decarbonization efforts, setting and working towards targets does not harm profitability, but can improve long-term costs and competitiveness, as well as the rate of decarbonization. A study published in October 2026 showed that “having science-based targets in place for more years is consistently associated with faster emission reductions.”

A business case for action

Climate action and business performance are not competing interests: they go hand in hand. Energy efficiency and low-carbon energy reduce vulnerability to price shocks. Localized, diversified supply and cleaner logistics can reduce supply chain disruption and costs, to reduce the number of droughts affecting major shipping arteries and ensure that low-carbon contingencies are available when they do. More sustainable agricultural practices can improve resource management and reduce both exposure to climate risk and contribution to the emissions driving it.

The unhedgeable balance sheet risks are increasingly hedgeable when viewed through the prism of corporate climate action. Not only do businesses hedge the downside, but there is significant upside too, from better lending terms to increased competitiveness. Setting science-based targets is a strong precursor to action: 90% of surveyed companies said it had a positive impact on climate ambition in their company, while 86% said targets had a positive impact on the pace of climate action, such as with emissions reductions and climate-related investments. Get started today at SBTi Services.