Executives say they’re ready for the next wave of climate disruption. The data say otherwise and that disconnect is fast becoming one of the biggest blind spots in corporate strategy, with trillions in assets exposed to rising climate risk.
A recent Capgemini report finds that more than half of global business leaders now rate their organizations as well or fully prepared for the impacts of climate change. Yet when you look under the hood, only 38% have upgraded physical infrastructure, 31% have shifted suppliers to less climate-vulnerable regions, and just 26% have redesigned products or services for future climate conditions.
“Many leaders feel prepared because they have a plan,” explained Cyril Garcia, Capgemini’s head of global sustainability services and corporate responsibility in an interview. “But planning isn’t the same as readiness. The real test is whether those plans translate into decisions, investments, and operational resilience.”
Garcia calls it a “readiness mirage,” where companies believe they’ve built climate resilience when in reality they’ve only built strategy decks.
A Confidence Gap Measured In Degrees And Dollars
The perception gap runs widest in sectors that depend on physical assets and long supply chains, automotive, consumer products, and telecoms. Agriculture, forestry, government, and financial services show greater awareness and prioritization of climate adaptation, but even they lag in implementation.
It’s not just a risk to reputations or ESG scores, climate disruption is already reshaping operating costs, insurance markets, and capital access. “Every year of delay widens the investment gap between companies acting on resilience and those still relying on offsets or long-term pledges,” Garcia warns.
Over half of executives in the study also say the sustainability impact of generative AI is now a board-level topic, yet few have taken steps to mitigate it. For Garcia, this mirrors a broader pattern. “New technologies are being adopted faster than their sustainability implications are understood,” he says. “We’re seeing history repeat itself.”
From Ambition To Alignment
The illusion of readiness extends beyond the corporate sector. Net Zero Tracker’s recently published Net Zero Stocktake 2025 found that while 77% of global GDP is now covered by national net-zero targets and over 70% of the world’s largest listed companies have set one, only 7% of those commitments meet basic integrity standards such as full emissions coverage, interim milestones, and annual progress reporting. Nearly half of major companies and subnational governments still lack any target at all.
At the same time, the 2025 Production Gap Report found that governments are planning to produce 120% more fossil fuels by 2030 than is compatible with a 1.5°C pathway, an increase from just two years ago. Together, the two reports paint the same picture that Garcia sees inside the private sector: an expanding architecture of pledges masking a shortfall in implementation. Ambition is abundant; alignment is scarce.
That gap isn’t confined to governments. A London School of Economics working paper reviewing S&P 500 disclosures found that that companies report, on average, against only 20 % of adaptation & resilience indicators. S&P Global estimates physical climate hazards could cost large firms $25 trillion by 2050, yet only a third have formal adaptation plans. And while financial disclosure frameworks have evolved rapidly around emissions, there’s still no equivalent maturity for adaptation and the risks are accelerating faster than the readiness to absorb them.
Disclosure Isn’t Transformation
Peter Bakker, president and chief executive of the World Business Council for Sustainable Development (WBCSD), sees the same credibility problem playing out in boardrooms worldwide. “Most CEOs still equate disclosure with progress,” he told me. “But publishing a sustainability report doesn’t mean your business model is ready for the next supply-chain shock.”
Bakker argues that the conversation on corporate climate strategy is finally shifting, away from ESG as a reporting exercise and toward competitiveness and resilience. “In Asia, companies talk about sustainability through the lens of industrial policy and long-term competitiveness,” he explains. “That’s a more durable frame than compliance. But the real challenge is execution, turning risk awareness into capital allocation.”
The stakes are rising. Extreme weather, political fragmentation, and resource volatility are creating compound risks, disruptions that hit production, logistics, and finance simultaneously. Yet many companies still treat adaptation as an afterthought. “If a flood takes out your supplier of critical components, your climate disclosures won’t help you,” Bakker says. “Your business will still be offline.”
Boards Are Asking The Wrong Questions
Boards today are consumed with compliance with new standards, navigating new ISSB, CSRD, and TNFD requirements, or managing political backlash against ESG. But they often neglect the operational and financial implications of climate risk. “What boards should be asking,” Bakker says, “is: How exposed are we? How quickly can we recover? And is resilience embedded in how we invest, procure, and innovate?”
Garcia sees progress in a few sectors, particularly finance and energy, where climate scenario planning is now embedded into enterprise risk. But for most, resilience is still viewed as insurance rather than strategy. “The conversation needs to move from climate risk as a sustainability issue to climate readiness as a business-continuity issue,” he says. “That’s how you get investment decisions to change.”
The firms that recognize resilience as a source of long-term competitiveness, and invest accordingly, will capture both investor confidence and market share when shocks hit.
Why the Gap Persists
If the climate readiness gap is so widely recognized, why does it endure? Both Garcia and Bakker trace it to a combination of structural inertia and strategic myopia that runs through markets, governance, and culture alike.
The first barrier is time or rather, how it’s measured. Most companies still operate on quarterly horizons, not climate cycles. Investments in flood-proofing, supply diversification, or water resilience rarely show quick returns, so they languish in pilots or “future planning.” Even credit ratings, built to assess long-term risk, often stop short of fully integrating climate exposure. The result is a system built for efficiency, not endurance.
The second barrier is governance. Climate adaptation often sits within sustainability teams without authority over capital or procurement, which means resilience becomes everyone’s responsibility but under no one’s budget. As Bakker notes, when boards treat sustainability as disclosure rather than performance, “the organization will optimize for optics, not outcomes.”
Data scarcity compounds the problem. In some markets, climate risk information has been politicized, making it harder for executives to assess exposure or model worst-case scenarios. “We’re asking companies to manage climate risk with incomplete visibility,” Garcia says. “That creates paralysis disguised as prudence.”
This biasa is visible even at the sovereign level: a recent CEPR/VoxEU analysis shows that credit rating agencies consider physical climate risk in sovereign ratings, but only marginally, and give scant weight to transition risks. Companies can raise funds for expansion far more easily than for resilience or adaptation. Bakker calls it “a fundamental market mispricing” that will only correct when investors start penalizing fragility as heavily as emissions
Beneath it all lies a cultural blind spot: the tendency to treat climate disruption as tomorrow’s problem rather than today’s operational constraint. “You can’t build resilience if you still see climate as tomorrow’s problem,” Garcia says. “It’s already shaping the cost and continuity of doing business today.” Resilience also depends on coordination across suppliers, regulators, and communities, something no company can do alone. “You can’t de-risk your business if the ecosystem around you remains fragile,” he adds.
That misalignment isn’t accidental; it’s embedded in how companies define success, distribute authority, and allocate capital. The result is a system that optimizes for visibility over capability and that leads to the next distortion: mistaking measurement for management
Mistaking Measurement For Management
New tools are emerging to help close the readiness gap, from S&P’s Climate Transition Assessments to frameworks from Climate Bonds, TPI, and Sustainalytics. But measurement isn’t management. Companies have become fluent in disclosure, not transformation. The systems built to improve transparency were never designed to test resilience. They measure emissions, not exposure; targets, not time-to-recover.
That distinction matters – the corporate world has turned measurement into a proxy for management, assuming that what can be reported can also be controlled. Boards and investors take comfort in dashboards and scores, but those metrics often reflect visibility, not capability. The result is a culture that manages to the metric, not to the risk.
Financial markets reinforce that distortion by rewarding growth and disclosure over durability. Until resilience itself is measured, priced, and rewarded, the illusion of readiness will remain comfortably intact.
Recent AI-driven analysis of corporate climate disclosures, sometimes called the “discourse-versus-emissions” gap, reinforces the point. Researchers found that corporate language often evolves faster than emissions performance. The readiness mirage is one symptom of that larger disconnect between what organizations say and what they do.
AI, Adaptation And The Next Phase Of Sustainability
The same pattern of optimism without readiness is now emerging in digital transformation. Generative AI’s energy and water demands are rising quickly, and the sustainability cost is rarely accounted for. “It’s the same story again,” Garcia says. “We innovate first, then discover the externalities later. The question now is whether companies can build climate-ready digital infrastructure from the start.”
Bakker frames the challenge differently, seeing it as a mindset issue and says, “We need to stop treating adaptation as a defensive cost and start seeing it as an innovation driver,” he says.
The Resilience Imperative
So what would convince either leader that corporate sustainability has crossed the line from compliance to transformation? For Garcia, the signal would be capital discipline, which would see companies redirecting budgets from carbon accounting to resilience investment. For Bakker, it’s governance accountability. “When resilience sits on the main board agenda, not in a subcommittee, that’s when the system starts to change,” he says.
Even the financial architecture built to measure risk remains part of the problem. Sovereign credit ratings, designed to price vulnerability, still underplay climate exposure, a reminder of how deeply the bias against resilience runs through global markets.
Until that bias is corrected, the climate readiness mirage will endure: glowing disclosures, confident CEOs, and a widening gap between promises and preparedness. And as both men warn, the next disruption won’t wait for the next sustainability report.