What’s happening? A global survey by commercial property insurer FM has found that 72% of large businesses are failing to fully embed climate risk into plans for new site developments. The poll of 800 decision-makers, each from companies generating over $250m annually, highlights a disconnect between perceived and actual exposure to extreme weather. Nearly three-quarters underestimated national exposure to wind or flood risks, despite 95% claiming strong awareness. Swiss Re reported $328bn in climate-related economic losses in 2024. Only 28% of firms are proactively integrating climate resilience into site planning, amid growing pressure from regulators, investors and insurance brokers. (edie)

Why does this matter? As the report highlights, the UN has stated that the number of climate or water-related disasters has increased fivefold over the past 50 years. In the past five years alone, NASA satellite data indicates that the intensity, duration and frequency of droughts and floods have risen dramatically worldwide, with 2024 seeing twice the average level recorded from 2003-2020. Researchers from NASA’s Goddard Space Flight Center cite global warming as the most likely driver, although the intensity of extreme weather events seems to have risen faster than temperatures themselves. While the data is not yet peer-reviewed and another decade is needed to determine if it is a trend, the team is alarmed by this apparent acceleration, something the world is largely unprepared for.

Hotting up – Temperatures are continuing to rise. A recent S&P Global Commodity Insights analysis warns that there is a 50% chance that global warming could hit 2.3C above pre-industrial levels by 2040, potentially causing cumulative economic losses of up to 33%. The research also states that there is a 90% likelihood of a 1.5C increase by that year. Globally, 2024 was the warmest year on record, partly due to a strong El Niño event, which has now dissipated. Nevertheless, 2025 still looks set to be the second or third warmest year. Seasonally, the UK, Japan, South Korea and Spain, all recorded their hottest summers on record this year, demonstrating the need for adaptation measures to protect infrastructure and public health.

Direct impact – Rising temperatures and the increasing number of extreme weather events are having a direct impact on the construction sector. For example, a report by energy solutions provider Aggreko warns that unchecked climate risks could cost the European building industry up to €126bn ($148bn) annually by 2029. Last summer alone, extreme weather led to some €43bn in damages, driven by record heat, floods and storms. In the UK, over 70% of site managers experienced delays from weather disruptions in the past year, while nearly 40% faced financial penalties. Material damage, unsafe conditions and equipment failures were cited as primary causes. Dehumidification, power resilience and climate control measures now need to be considered a must rather than optional extras to overcome climate-related challenges.

Chain reaction – Beyond construction, site planning also needs to consider the impact of extreme weather events on local infrastructure, such as power and transport, alongside supply chains. These indirect consequences could be just as expensive as property damage and interruption to internal operations, each costing an estimated 8% of annual revenue. Jessica Waters, VP, manager, climate and structural resilience at FM also noted that energy efficiency requirements for new buildings bring “fresh challenges”, including unfamiliar wall assemblies or insulation materials that may react differently under high winds.

Staying safe – Another factor to consider is health and safety for both construction workers exposed to the elements and the end users of a building. For example, a report by the World Health Organization and the World Meteorological Organization points out that over 2.4 billion workers worldwide are exposed to extreme heat, leading to 22.85 million occupational injuries. Associated health risks include kidney dysfunction, dehydration and neurological impairments. Furthermore, worker productivity drops by 2%-3% for each degree above 20C.  

Bottom line – Large firms need to move beyond climate awareness toward concrete action in site development. With billions in annual damages and economic losses already being incurred, the cost of inaction is mounting rapidly. Embedding climate resilience in site planning is no longer a forward-thinking strategy – it is a necessary safeguard. As extreme weather intensifies and global temperatures climb, proactive adaptation will determine long-term business viability and societal wellbeing.