For many years, climate change has been viewed as something that exists outside a company’s core business. A global challenge, yes but not something that directly affects daily operations, customer behavior, or revenue. That view is not just outdated it is commercially risky.
Water scarcity as a business-critical risk
A new analysis from HOFOR shows that Copenhagen and the surrounding areas risk running out of groundwater. Not in 50 years, but within a few decades by 2040. This is due to a combination of increased consumption, population growth, and climate change, which is already putting pressure on water resources. Groundwater reservoirs are replenishing more slowly than before, while demand continues to rise. When Denmark’s largest city faces potential water scarcity, climate challenges have clearly moved from the abstract to the acute. This not only changes the framework conditions for the utilities sector but also creates a new level of complexity for urban planning, construction, businesses, and the healthcare sector.
Climate impacts in the daily lives of small businesses
This can have direct consequences for businesses of all sizes. According to HOFOR, water restrictions affect both households and businesses, and for companies that are highly dependent on water, this can hit the bottom line hard. Consider the hair salon on the high street that uses 40–50 liters of water per hair wash. If restrictions are introduced that allow only half the current water usage, how can the business continue to operate without having already invested in new technology? Water-saving fixtures alone are unlikely to solve the problem.
Or take the small café that serves freshly squeezed juice and coffee all day. Without access to ample amounts of clean water, dishwashing, food preparation, and cleaning can quickly become both more expensive and logistically challenging. Added to this are other challenges such as coffee and citrus fruits. Coffee production is already under global pressure due to climate change, which affects yields and drives prices up. The same applies to oranges, which are becoming harder to grow in many regions. At the same time, local florists are also affected both by the need for watering flowers and by the significant amounts of CO₂ required before a flower reaches a Danish flower shop, often sourced from Kenya. A bouquet of flowers also has a substantial climate footprint. According to the magazine Illustreret Videnskab, a bouquet of flowers can emit up to 31.1 kg of CO₂.
Florists, cleaning companies, laundries, and other service businesses therefore risk becoming particularly exposed both financially and climatically. What they all have in common is that they often lack the financial or staffing capacity to rapidly adapt their operations, making them vulnerable in a climate in flux.
The construction sector and the risk of crisis
It is not only small businesses on the high street that will be affected. Companies of all sizes are at risk. The construction sector is a clear example of an industry facing serious climate-related challenges. The sector is under increasing pressure to reduce CO₂ emissions, and there is growing recognition that new construction must be significantly reduced by up to 80% according to some assessments in favour of renovation and reuse. If the market for new construction slows, as climate targets and resource scarcity suggest, large parts of the sector will need to adapt. Without timely adjustment, this could lead to serious consequences, including loss of orders, declining revenue, and potential layoffs.
Small and medium-sized construction companies that have not diversified their business models may face a genuine existential crisis. This is why it is critically important for all companies in the sector, regardless of size, to begin working strategically with ESG reporting. Not only to understand their own risks and vulnerabilities, but also because the construction sector is on the EU’s list of high-risk sectors, which imposes additional requirements for documentation, transparency, and accountability.
The economic importance of nature
But it is not just about water. According to an analysis by PwC and WWF, more than half of the world’s GDP is directly dependent on the health of nature including access to clean water, stable temperatures, fertile soil, and intact ecosystems that support everything from food production to security of supply. Yet many companies still perceive nature as something that sits outside their accounts and strategy. In reality, it is a fundamental pillar of their existence and stability.
When research speaks
Harvard Business School emphasises in its analyses that climate risks can no longer be considered peripheral. Companies that fail to identify, analyse, and integrate climate-related risks into their core business risk losing both market share and investor trust. They highlight two types of risks as particularly significant: physical risks such as storms, floods, and droughts that can damage production facilities, disrupt supply chains, increase operating costs and so-called transition risks. These include changes in policy, regulation, technology, and consumer preferences that can render entire business models obsolete in a short period of time. Harvard particularly stresses that leaders who view ESG as compliance rather than strategy risk being overtaken by more agile and forward-looking competitors.
The World Economic Forum supports this assessment. In its annual Global Risks Report, climate change and biodiversity loss have ranked among the top risks for the global economy for several years. The report highlights the close link between nature crises and social, economic, and geopolitical instability. According to the report, companies that fail to adapt not only risk losing relevance and trust among customers and partners, but may also face reduced access to capital, as investors increasingly shift funds toward companies with strong climate profiles and robust risk management. In short, future competitiveness is already being shaped by companies’ ability to act strategically on climate challenges.
Climate and migration – a new reality
The climate crisis is not only an environmental and business issue. Future projections suggest that between 25 million and 1 billion people could be forced to migrate due to climate change by 2050. The most widely cited estimate is 200 million people equivalent to the current number of international migrants globally. This is an enormous figure, and the consequences will not be evenly distributed.
Such large population movements can lead to political instability, changes in labour markets, strain on urban infrastructure, and shifts in consumption patterns. They can also intensify competition for basic resources such as water, food, and energy particularly in the regions where climate migrants settle. This has far-reaching implications for business operations, planning, recruitment, and cost structures.
For some companies, this may mean labour shortages, especially in low-wage sectors, if workers migrate toward more climate-stable regions. For others, it may result in increased pressure on housing markets, rising wage costs, changing consumer behavior, and new social tensions. At the same time, rising migration and climate-related crises may lead governments to reprioritize resources, increase taxes, or impose additional obligations on businesses in areas such as social responsibility and documentation.
Companies that understand and strategically address these dynamics for example through ESG reporting, scenario-based risk management, and long-term recruitment strategies will be better positioned. In a world where climate and demographics are increasingly intertwined, it is no longer sufficient to plan one year ahead. It is about understanding how major global shifts may end up right on your doorstep.
Understanding the value chain
No company exists in a vacuum. Every business depends on a network of interconnected actors, processes, and resources from raw material extraction and production to transport, distribution, and end use by customers. As climate change accelerates, so does the risk that one link in the value chain may break down. This could be anything from storms disrupting ports, fires in raw material regions, droughts in agriculture, or energy shortages in production.
For companies, this means it is no longer enough to manage their own climate risks alone they must understand the resilience of the entire value chain. How dependent are you on a specific supplier? What happens if transport costs skyrocket? How do your subcontractors document their climate efforts, and what does that mean for your own ESG profile?
Companies that proactively work with ESG across the entire value chain not only stand stronger they also gain a much better position in dialogue with banks, customers, and investors. This is about shifting from reactive risk management to strategic value chain responsibility.
A new understanding of growth
It is therefore time to redefine what business strategy means in a climate-impacted reality. It is about being transparent, decisive, and future-proof. The climate crisis is a mirror of the reality businesses themselves have helped create. And every company should ask itself: what do we see when we look into it?
If we act in time, we can create a new form of growth one that is regenerative, long-term, and resilient. But this requires that we begin to take planetary boundaries just as seriously as the bottom line.