While the impacts of extreme weather have long been recognized as material business risks, Ceres’ new analysis shows how specific natural disasters are already translating into measurable financial repercussions for the food sector.
Our analysis also highlights how investing in regenerative agricultural solutions can help companies manage escalating risks, such as those posed by the ongoing El Niño, build global supply chain resilience, and protect up to $500 million annually in profits.
The analysis found:
Extreme weather events, fueled by climate change, are causing yield losses across major commodities. Modeling shows that at 3 °C of warming by 2060, the effects of price spikes from acute and chronic climate events could create an increased financial impact for companies purchasing beef, cocoa, coffee, corn, dairy, or soy between twofold and sixfold compared to today.
Traditional risk-hedging strategies have protected companies from commodity shocks, but their effectiveness is eroding. Businesses have relied on established risk management tools, including diversifying sourcing, forward contracts for commodities, and passing costs to customers. These approaches worked well when volatility followed historical patterns of supply and price.
As climate change accelerates, predictability is disappearing. Today, these traditional risk management strategies may delay the financial impact of disruption, but they cannot eliminate the underlying and growing risks posed by increasingly frequent and intense extreme weather events.
Regenerative agriculture is a risk management strategy that builds resilience in the agricultural system. Food companies like Tyson Foods and General Mills could safeguard up to $500 million in profits annually through regenerative agriculture.
This report examines how companies are increasingly impacted by climate change, identifying key elements of an effective regenerative agriculture program that can help investors engage with companies on risk management and identify investment opportunities in leading-edge companies and solutions. It includes case studies that illustrate how companies that heavily rely on certain agricultural commodities, including cattle and coffee, are facing compounding climate-driven challenges to their bottom lines.